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EXAMPLES OF NON-RATIONAL AND BOUNDED RATIONALITY
Transcript of EXAMPLES OF NON-RATIONAL AND BOUNDED RATIONALITY
A decision is a choice made from among available alternatives. Decision making is the process of identifying and choosing alternative courses of action.
TYPES OF DECISION MAKING MODELS
The two approaches managers may take to making decisions are:
Rational Model of decision making (Classical model)
Non-rational models of decision making
Nonrational models of decision making explain how managers make decisions.decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions. The non-rational models are descriptive rather than prescriptive.
Three nonrational models are :
(1) Satisficing (bounded rationality)
Bounded Rationality And The Satisficing Model
suggests that managers seek alternatives until they find one that is satisfactory, not optimal. The concept suggests that the ability of decision makers to be rational is limited by numerous constraints, such as complexity, time and money, and their cognitive capacity, values, skills, habits, and unconscious reflexes known as
BOUNDED RATIONALITY AND SATISFICING MODEL
NON-RATIONAL DECISION MAKING
AND BOUNDED RATIONALITY
Once a Motorola-led consortium called Irridium developed a clunky satellite-linked mobile phone that weighed 1 pound, could not be used inside buildings or moving cars, and cost $3,000. Instead of waiting to improve the technology, Irridium tried to market the mobile phone, a clear and costly example of non-rational decision making.
Once a Pepsi company launched a new flavored drink and sent it for testing in a near-by area. But later on launched it at a different site which resulted in poor outcome.
Example of a task is to sew a patch onto a pair of jeans.
Example of job application for a graduate finance manager