Bounded Rationality in Decision Making

Questions and Answers

What is meant by 'bounded rationality' in decision-making?

Making decisions based solely on emotions.

Considering only the outcomes that benefit oneself.

Making decisions by evaluating every possible option.

A simplified process of making decisions by interpreting essential problem features. (correct)

Which of the following steps is NOT part of the Rational Decision-Making Model?

Identify the decision criteria.

Define the problem.

Evaluate the alternatives.

Trust your intuition. (correct)

In the context of ethical decision-making, what impacts an individual's perception of their freedom to act?

Duties towards people affected by their actions. (correct)

Peer pressure and social norms.

The potential financial outcome.

Personal beliefs and values.

What characterizes a rational decision-making model?

Consistently maximizing value within specified constraints. Signup and view all the answers

What defines an intractable problem?

A problem that may change or become irrelevant during the decision process. Signup and view all the answers

What is bounded rationality primarily a response to?

The overwhelming complexity of decisions Signup and view all the answers

What does the concept of 'satisficing' refer to in decision-making?

Choosing an acceptable solution that is not necessarily optimal Signup and view all the answers

Which scenario best illustrates an intractable problem?

A situation where too much analysis alters the nature of the decision Signup and view all the answers

Why might a simplified approach to decision-making be more sensible at times?

It requires less time and resources to implement Signup and view all the answers

What challenge does bounded rationality present in ethical decision-making?

It limits the exploration of moral consequences Signup and view all the answers

Study Notes

Rational Decision-Making and Bounded Rationality

Rational decision-making involves making consistent, value-maximizing choices based on all available information.
Bounded rationality recognizes limitations in our ability to process information, leading to a simplified problem-solving approach.
Decision-makers often perceive only essential features of complex problems, ignoring the full complexity involved.

Challenges with Rational Decision-Making

Gathering extensive information and analyzing multiple criteria can be time-consuming and costly, often impractical.
Complex problems may not yield optimal solutions, as they exceed the capacity of rational decision-making frameworks.
Intractable problems can evolve or become irrelevant while decision-making processes are still underway, diminishing the value of the time spent.

Satisficing

Due to bounded rationality, individuals often satisfice, seeking solutions that are adequate rather than optimal.
Acceptable, "good enough" solutions can sometimes be more practical than exhaustive rational analyses.

Ethical Decision-Making Considerations

Bounded rationality can impact ethical decisions, introducing systematic errors in judgment.
Perceptions of freedom and rights in decision-making are influenced by the responsibilities to those affected by our choices (e.g., the dilemma of taking the last doughnut in a communal setting).

Steps in the Rational Decision-Making Model

Steps involve defining the problem, identifying decision criteria, allocating weights, developing alternatives, evaluating them, and selecting the best one.
Each step requires rigorous analysis and systematic organization of thoughts and information, which may not always be feasible.

Description

Explore the concept of bounded rationality and its impact on decision-making processes. This quiz evaluates understanding of how limited cognitive abilities influence our problem-solving approaches and decision outcomes. Reflect on the simplified methods we employ when faced with complex problems.