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EXAMPLES OF NON-RATIONAL AND BOUNDED RATIONALITY

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Zainub Tariq

on 27 October 2014

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Transcript of EXAMPLES OF NON-RATIONAL AND BOUNDED RATIONALITY

DECISION
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
NON-RATIONAL MODELS
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)
(2) Incremental
(3) Intuition
Bounded Rationality And The Satisficing Model
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
.
EXAMPLES OF
BOUNDED RATIONALITY AND SATISFICING MODEL
EXAMPLES OF
NON-RATIONAL DECISION MAKING
AND BOUNDED RATIONALITY

GROUP MEMBERS
WAJEEHA IQBAL
ZAREEN AZHAR
ZAINAB TARIQ
ZOHRA BAIG
ZUBARIA FAKHAR



EXAMPLES OF
NON-RATIONALITY
MODELS
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
Full transcript