A major concern with some researchers is whether the thought processes involved in decision making are suitable for producing the best outcomes. However, a wealth of evidence indicates that people do not generally think in the way rational principles are described by decision theory. This implies to some researchers that people require education in decision-making techniques (e.g. Baron and Brown 1991), but there are some who question the appropriateness of those models and claim that simpler processes can be highly successful.
For tasks that have an answer, the rational model of decision-making can be used to determine the optimal one. Multiple criteria can complicate the rational model. The decision maker must assign weights to these criteria of how important each is compared to the others. While the decision still appears to fit the rational model, assumptions have been built into the solution. Criterion weights are assumptions because they are based on the values and preferences of the decision maker.
A focus on biases and rhetoric of irrationally (Lopes, 1991) has overshadowed the idea of heuristics, which is that they were useful in providing reasonable solutions, given
Individuals in organizations can decide rationally but more often they use an expert model of information processing. They generate and explore only a limited number of decision alternatives. They use their pre-existing knowledge and simple rules of thumb, called heuristics, to make a decision. Decision makers also act with incomplete information. This is called bounded rationality. The term satisficing is used to describe the decision maker’s choice of the first alternative that meets, to a satisfactory degree, the requirements of the problem. Some organization members may base a decision on their intuition. This is called deciding by gut feeling. These intuitive decisions may be seen as irrational but can lead to very positive results. But perhaps the simplest reasons for making a decision is the fact that you recognize something. This can be a very profitable strategy: Borges et al. (1999) found that stock portfolios constructed on the basis of the company name recognition were more successful than those constructed by business students on the basis of knowledge. Stock portfolios involving foreign companies are also more likely to be based on name recognition than those involving home companies, because there is less knowledge available.
Example Essays Home
