MHR 523 Chapter Notes - Chapter 7: Subjective Expected Utility, Bounded Rationality, Availability Heuristic

• School: Ryerson University
• Department: Human Resources
• Course: MHR 523
• Professor: Robin Church

Document Summary

Decision making: the conscious process of making choices among alternatives with the intention of moving toward some desired state of affair. Rational choice paradigm: the view in decision making that people should-and typically do- use logic and all available information to choose the alternative with the highest value. Subjective expected utility: the probability (expectation) satisfaction (utility) resulting from choosing a specific alternative in a decision. Bounded rationality: the view that people are bonded in their decision making capabilities, including access to limited information, limited information processing, and tendency toward satisficing rather than maximizing when making choices. Implicit favorite: a preferred alternative that the decision maker uses repeatedly as a comparison with other choices. Anchoring and adjustment heuristic: a natural tendency for people to be influenced by an initial anchor point such that they do not sufficiently move away from that point as new information is provided.