MGT 3200 Study Guide - Midterm Guide: Standard Operating Procedure, Bounded Rationality, Availability Heuristic
Document Summary
P -- specific procedures developed 4 repetitive & routine problems; 1st- line; rule complex or standard operating procedure used in making the decision; different; ** every programmed decision was @ one point or another & non- programmed decision: what does the traditional economic model assume about decision- makers? (2 assumptions) Decisions are made under conditions of certainty (a) managers seek to maximize benefits {or minimize costs} (b) managers are completely rational. Decisions are made under bounded rationality rather than complete satisficing rather than maximizing. You don"t know everything, try but its limited! A labor saving device, a short cut, a rule of thumb. Advantages: (a) time savings & (b) they may produce more good decisions than bad decisions. Disadvantages: we adopt heuristics often w/o being aware of them; they implicitly guide our judgment which can be a major drawback if we over rely on them b/c they can lead to errors, sometimes severe errors;
