COMMERCE 1BA3 Lecture Notes - Lecture 8: Bounded Rationality, Satisficing, Irreversible Process

14 views2 pages
2 Aug 2016
Department
Professor
Individual Decision Making
The process of developing a commitment to some course of action -Escalation of Commitment (theory)
Humans increase their commitment to a decision the more they put in time, money, and ego
Bridges to ethical and unethical decisions
A form of problem-solving
Rational Decision Making Process
Identify problem - which uni to do undergrad; look at every single uni
Search for relevant info
Develop alternative solutions to the problem
Evaluate alternative solutions
Choose best solution
Implement chosen solution
Monitor and evaluate chosen solution
Ill-structure problem vs well-structured
Perfect Vs Bounded Rationality
Perfect: completely informed, perfectly logical, and oriented towards economic gain
-Economic Person who is a perfect, cool, calculating, decision-maker
Not used bc:
1. A fully rational brain is ideal; everything is assessed but we don't do that
2. Suggests that decisions are made based on careful, calculated understating of
everything
3. Describes how decisions should be /above the water line: code of ethics but not always
perfect
4. Just prescriptive; a guideline
****Bounded: relies on limited info and that reflects time constraints and political considerations
9 reasons why bounded/ or not perfectly rational/why our brains don't make rational decisions:
Framing: how a problem is framed or worded can lead us to certain conclusions/decisions; we
fall for them; ex: referendum in politics; gain/lose language
Cognitive biases: we fall for these; heuristics = judgement shortcut; ***ex: availability bias
(when we use past events and the associated decisions depending upon how available they are in
our memory); representativeness bias (when we make a decision which is representative of a
stereotype or belief) - remember examples (pg 368)
Problems with how to identify problems: (pg389) our brains screw up when we try to identify
the real problem; we suffer defend against mechanism (often distorted bc bring in things that
matches and take out those that don't); *read it in the textbook; jumping to solutions/conclusions
bc of our background in our technical area expertise: if focused on accounting/marketing, would
focus on sales/advertising bc clouded with way of thinking: fixates on the problem as a marketing
prob; attention to symptoms rather than problems/ digging deeper: morale problem, bc of poor
pay vs job design doesn't match it
find more resources at oneclass.com
find more resources at oneclass.com
Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
1 Booster Class
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Class Notes
Textbook Notes
30 Verified Answers
Study Guides
1 Booster Class