PR 662 Lecture Notes - Lecture 84: Satisficing, Bounded Rationality

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Rational decision-making model: define the problem, identify the decision criteria, allocate weights to the criteria, develop the alternatives, evaluate the alternatives, select the best alternative. Seldom actually used: more of a goal than a practical method. Decision-making is done by individuals but occurs in organizations. There are some models that can help us in thinking through decision-making in organizations. Although this is a good model it is more of a goal than a practical method. Assumptions of the rational decision making model: complete knowledge of the situation, all relevant options are known in an unbiased manner, the decision-maker seeks the highest utility. This model assumes a perfect world in order to make decisions. It assumes that there is complete information, that every option has been identified and that there is a maximum payoff. Bounded rationality: humans have limited information processing capacity.

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