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Questions and Answers
Managers defined by unbounded rationality make choices that are consistently rational and perfectly objective.
Managers defined by unbounded rationality make choices that are consistently rational and perfectly objective.
True
Bounded rationality allows managers to seek out all possible alternatives before making a decision.
Bounded rationality allows managers to seek out all possible alternatives before making a decision.
False
Escalation of commitment refers to the tendency of managers to abandon previous decisions when they find new evidence against them.
Escalation of commitment refers to the tendency of managers to abandon previous decisions when they find new evidence against them.
False
Intuitive decision making relies primarily on analytical data and objective metrics.
Intuitive decision making relies primarily on analytical data and objective metrics.
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Managers with bounded rationality will typically select the first alternative that satisfactorily solves a problem rather than the one that maximizes outcomes.
Managers with bounded rationality will typically select the first alternative that satisfactorily solves a problem rather than the one that maximizes outcomes.
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Study Notes
Unbounded Rationality
- Managers make choices that maximize value, considering constraints.
- Assumes decision-makers are perfectly rational, objective, and logical.
- Assumes a clearly defined problem with all viable alternatives identified.
- Assumes a specific goal to maximize organizational outcomes, rather than personal gain.
Bounded Rationality
- Decisions are made rationally, but limited by information processing capabilities.
- Decision-makers don't explore all alternatives.
- Managers "satisfice" – choosing the first acceptable solution rather than maximizing.
- Escalation of commitment is an influence: maintaining a previous decision despite evidence of its flaws.
- Intuitive decision-making is also an influence: Decisions based on experience, feelings, and accumulated judgment.
Decision-Making Influences
- Decisions are based on: past experiences, feelings/emotions, ethical values/culture, skills, knowledge, and training.
- Managers use subconscious data to inform decisions.
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Description
Explore the concepts of unbounded and bounded rationality in management decision-making. This quiz examines how different influences affect choices made by managers in organizational settings. Understand the balance between rationality and the limitations faced in decision-making processes.
