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Decision-Making Theories: Rationality Concepts

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Decision-Making Theories: Rationality Concepts

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Questions and Answers

What is a key assumption of unbounded rationality in decision making?

Managers often prioritize personal interests over organizational outcomes.

Managers make decisions based on feelings and past experiences.

Decision makers often rely on intuition rather than logical reasoning.

Decision makers have identified all viable alternatives to a problem. (correct)

Which statement accurately describes bounded rationality?

Decision makers typically escalate their commitment without any reservations.

Decision makers prioritize maximizing outcomes over personal interests.

Managers have perfect knowledge of all alternatives available.

Individuals are often limited by their ability to process information. (correct)

What does the term 'escalation of commitment' refer to in decision making?

Making decisions based solely on emotional responses.

Increasing commitment to a previous decision despite signs of its ineffectiveness. (correct)

Choosing the best alternative by thoroughly analyzing all options.

Deciding based on consensus rather than individual judgment.

Which factor is NOT generally associated with intuitive decision making?

<p>Detailed data analysis (B)</p> Signup and view all the answers

In the context of decision making, how do managers typically utilize data from their subconscious mind?

<p>To help inform their decisions based on accumulated judgment. (A)</p> Signup and view all the answers

Study Notes

Unbounded Rationality

Managers make choices that maximize value, considering constraints.
Assumes perfectly rational, objective, logical decision-makers.
Assumes complete problem definition and viable alternative identification.
Assumes a clear, specific goal.
Assumes choice maximizes outcomes for the organization, not individual gain.

Bounded Rationality

Managers make rational decisions but with limitations in information processing.
Assumes incomplete knowledge of all alternatives.
Assumes "satisficing" (choosing the first satisfactory option) rather than maximizing.
Escalation of commitment: Increased dedication to a prior decision despite negative evidence.
Intuitive decision making: Decisions based on experience, feelings, and accumulated judgment.
Factors influencing decisions: past experiences, feelings/emotions, ethics/culture, skills/knowledge/training.
Incorporates data from the subconscious.

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Description

Explore the essential theories of unbounded and bounded rationality in decision-making. This quiz covers the assumptions and implications of each theory, highlighting how managers navigate choices with varying levels of rationality. Test your understanding of these critical concepts in organizational decision-making.