OBHR 2P91 Chapter Notes -Satisficing, Sunk Costs, Bounded Rationality

• School: Brock University
• Department: Organizational Behaviour and Human Resources
• Course: OBHR 2P91
• Professor: Diane Miller

Document Summary

Decision making: the process of developing commitment to some course of action. Rational decision making model: maximizing decision making. Bounded rationality: using less than perfect decision making processes. Reasons: time and energy, limited capability to process information, organization politics. We satisfice rather than maximize: select the first acceptable solution rather than an optimal solution. Prospect theory: framing options as losses or gains. >>>>> risk taking or risk avoidance: a gain of a given amount is much less attractive than the loss of the same amount is averse (feel losses more than gains, adapt more quickly to gains than losses. The reference point adjusts more quickly to gains: we perceive equal size gains (or losses) differently depending on the relative amounts that we are dealing with. Escalating commitment (theory: continuing on a losing course of action or throwing good resources after bad. Reasons: sunk costs, self-justification (image management, to be consistent (image management, framing.