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Bounded Rationality in Decision Making

This document presents an overview of the bounded rationality model of organizational decision making. It describes how decision makers have limited mental abilities and motivation due to factors like time constraints, and thus aim to "satisfice" by choosing the first alternative that meets a minimum level of acceptability rather than aiming for the absolute best solution. Key aspects of the model include the assumptions that managers select satisfactory alternatives using heuristics or rules of thumb rather than fully evaluating all options.

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gagan
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22 views4 pages

Bounded Rationality in Decision Making

This document presents an overview of the bounded rationality model of organizational decision making. It describes how decision makers have limited mental abilities and motivation due to factors like time constraints, and thus aim to "satisfice" by choosing the first alternative that meets a minimum level of acceptability rather than aiming for the absolute best solution. Key aspects of the model include the assumptions that managers select satisfactory alternatives using heuristics or rules of thumb rather than fully evaluating all options.

Uploaded by

gagan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

PRESENTATION

OF
ORGANISATIONAL BEHAVIOUR

ON

BOUNDED RATIONALITY MODEL



PRESENTED BY:


GAGAN SINGH
BOUNDED RATIONALITY MODEL

• Also known as The Administrative Model of decision


making
•
• Decision makers are assumed to be forced by mental
and motivational limitations to “satisfice” first
alternative that is good enough
•
• A predetermined minimum criteria
•
• Does not expend the energy necessary to find the very
best alternative
•
• List of alternatives
.
• Bounded Rationality means that the ability of
managers to be perfectly rational in making
decisions is limited by such factors as cognitive
capacity and time constraints
•
• Four assumptions:


managers select the first alternative that is
satisfactory

managers recognize that their conception of the world is
simple

managers are comfortable in making decisions without
determining all the alternatives

managers make decisions by rule of thumb or
heuristics(shortcuts)


FLOW CHART

Information processing External Time and cost

abilities Factors limits internal

 Bb

BOUNDED RATIONALITY


Organizational Decision Personal

Objectives Maker Factors


Satisficing

decisions

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