MG 210 Lecture Notes - Lecture 7: Bounded Rationality, Satisficing, Rationality

• School: Quinnipiac University
• Department: Management
• Course: MG 210
• Professor: Julia M.Fullick- Jagiela

Document Summary

Decision (making a choice from two or more alternatives). Identify the problem (obstacle that makes it difficult to achieve a goal/purpose; discrepancy between existing and desired conditions). Identify decision criteria (factors that are important to resolving problems): allocate weights to criteria. a. Implement alternative and gain commitment: evaluate decision effectiveness a. Rational decision making (choices that are logical and consistent while maximizing value). Assumptions of rationality: the problem is clear and unambiguous, a single, well-defined goal is to be achieved, all alternatives and consequences are known, the final choice will maximize the payoff. Bounded rationality (decision making that"s rational, but limited by an individual"s ability to process information): managers satisfice rather than maximize. Escalation of commitment (an increased commitment to a previous decision despite evidence it may have ) Affect-initiated decisions (based on feelings or emotions). Cognitive-based decisions (based on skills, knowledge, and training). Subconscious mental processing (use data from subconscious mind).