MGHB02H3 Lecture Notes - Lecture 11: Bounded Rationality, Cognitive Bias, Confirmation Bias

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11. 1 define decision making and differentiate well-structured and ill-structured problems. Decision making: the process of developing a commitment to some course of action. Decision making involves making a choice among several action alternatives + a process that involves more than simply an final a choice among alternatives + the commitment of resources such as time, money or personnel. Well-structured problems: existing state is clear, the desired state is clear and how to get from one state to the other is fairly obvious. A program is used to short circuit the decision-making process from problem identification to solution (e. g. rules, routines, standard operating procedures, or rules of thumb) Ill-structured problems: existing and desired states are unclear and the method of getting to the desired state is unknown (high risk and strong political consideration) 11. 2 compare and contrast perfectly rational decision making with decision making under bounded rationality.

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