Reference no: EM133284893 , Length: word count:500

Topic: Decision making and it's impact on business

Question 1) explain what is administrative or bounded rationality decision making model (this is about not thinking outside the square, only making quick rational decisions and that are bias)

Question 2) what can management do to improve the decision making? (Without the biases, and actually making a good decisojn that isn't rushed) Name a strategy

Question 3) what can employees do to improve the decison making? (Without the biases, and actually making a good decisojn that isn't rushed) name a strategy

Administrative or Bounded Rationality Decision-Making

Model

The rational decision-making model describes an idealised view of decision making, or how decision-makers should go about the process. However, there is ample evidence that the rational model doesn't explain what people actually do, mainly because people's rationality is limited and bounded.

The administrative or bounded rationality model offers a more realistic picture of what decision making actually looks like in real life and within organisations. In particular, rather than seek out all possible alternatives and data about those alternatives, we base our decisions on a limited and often very biased subset of information.

Rather than seek out the best alternative or options, we often satisfice, meaning that we quickly accept an alternative or option that is "good enough" or meets the minimum requirements.

There are many inter-related reasons why we engage in satisficing. For example, you may recall that we are susceptible to a number of perceptual biases, including selective attention, categorisation and confirmation bias. All of this potentially limits our ability to be objective and rational. In fact, perceptual biases potentially introduce errors and decision biases in all steps of the rational model.

Related to this, many decision problems are complex and potentially anxiety provoking, and this anxiety can be resolved once the decision is made. Thus, satisficing is much quicker than optimising.

Decision-makers are often faced with imperfect or incomplete information and must be able to make a decision quickly and under time pressure. Again, there often isn't time, or there doesn't feel like there is time, to seek out additional information.