ADMS 2400 Chapter Notes - Chapter 12: Confirmation Bias, Bounded Rationality, Risk Aversion
28 Oct 2016
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Decision choice made from two or more alternatives: rational decision making process. Rational consistent, value maximizing choices with specified constraints. Assumes decion maker has complete information and identify all relevant options in unbiased manner: however, rarely occur. How do individuals actually make decisions: usually made by judgment, bounded rationality in considering alternatives. Reduce problem to level they can comprehend. Bounded rationality construct simplified models that extract essential features from problems without capturing all their complexity. Applying in workplace: criteria evaluation is often not exhaustive. Just find familiar criteria: choose satisficing choice first acceptable choice discovered. Least rational way: very fast decision and engages emotions. Experience may be a better factor than anything. High trust valued managers work with intuition. Uncertainty made people rely on their intuition. Most experts skeptical in efficient decision making from intuition. Rely heavily on experience, impulse, and convenience.
