BUS 272 Chapter Notes - Chapter 12: Anchoring, Confirmation Bias, Bounded Rationality

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 272
• Professor: Christopher Zatzick

Document Summary

Decision making can be improved thru systematic thinking & an awareness of common biases. 6-step rational decision-making model: define the problem. Many poor decisions can be traced to decision maker over-looking problem/defining wrong problem: identify criteria relevant to making decision. Brings decision maker"s interests, values & similar personal preference into process b/c not all indivs will consider same factors relevant for any particular decision: allocate weights to criteria, evaluate alternatives, select best alternative. Rational decision-making model assumes decision maker has complete info, able to identify all relevant options in unbiased manner, and choose option w/ highest utility. Most ppl content to find acceptable/reasonable solution to problem rather than optimal one. Choices tend to be limited to neighbourhood of problem symptom & current alternative. Bounded rationality = limitations on person"s ability to interpret, process & act on info. Ppl satisfice, seek solutions that are satisfactory & sufficient. Not always bad, simple process may be more sensible & practical.