On A Daily Basis, People Have To Make Hundreds Of Decisions

On A Daily Basis People Have To Make Hundreds Of Decisions These Deci

On a daily basis people have to make hundreds of decisions. These decisions range from simple (“Should I get out of bed now or stay in for 10 more minutes?”) to more complex (“Should I stay at this company and work my way up or try finding a job somewhere else?”). Each decision includes a number of factors that influence the outcome. For most decisions, simply based on time, we are unable to be truly rational. If one were to apply, by definition, the rational decision making process to each decision we would not be able to get anything done. For example, it could take hours or days to calculate all of the available outcomes of the decision to get up or sleep in for 10 more minutes.

We just can’t do it. We don’t have time. But, for some decisions we are more inclined to be rational while for others we are less inclined to be rational depending on a variety of factors. For this assignment you will compare rational and boundedly rational responses to a scenario of your choosing. Provide an example of a decision to be made.

The decision can be anything you wish, workplace or non-workplace related. Then explain what that decision process would look like if one were to follow the rational decision making model. Then explain what that might look like if one were to follow a bounded rationality model. What are the main differences between these two approaches?

Paper For Above instruction

Decisions permeate every aspect of daily life, ranging from trivial choices to crucial life-altering decisions. Human decision-making processes are complex and influenced by cognitive limitations, time constraints, and available information. Two prominent models that describe how decisions are made are the rational decision-making model and the bounded rationality model. This paper will compare these two models using a personal decision scenario: choosing whether to accept a new job offer or stay in the current position.

Scenario Choice: Accepting a New Job Offer

Imagine an individual, Alex, currently employed in a stable job but considering a new offer from a different company. The decision involves various factors such as salary, work environment, career growth prospects, commute time, and personal values. Alex must evaluate whether accepting the new job aligns with long-term goals or if staying is more beneficial. This scenario provides a concrete example to analyze how the decision could be approached through different decision-making models.

The Rational Decision-Making Model

The rational decision-making model is a systematic process grounded in logic and comprehensive analysis. It involves several sequential steps:

1. Identify the problem or decision: Recognize the need for choosing between staying or leaving.
2. Gather information: Collect detailed data about the current job and the new offer, including salary packages, benefits, work culture, growth opportunities, and location.
3. Generate alternatives: List possible options such as Accepting the new job, staying in the current role, or negotiating better terms.
4. Evaluate alternatives: Assess the pros and cons of each option quantitatively and qualitatively, considering long-term impacts.
5. Make a decision: Select the option that maximizes benefits and minimizes drawbacks based on thorough analysis.
6. Implement and follow-up: Act on the decision and monitor outcomes.

Applying this model to Alex’s scenario, he would meticulously gather all relevant information, perhaps create a comparison chart, calculate the potential financial and career growth benefits, and carefully weigh each factor. This process, while thorough, is time-consuming and may not be practical in fast-paced situations or when information is incomplete.

The Bounded Rationality Model

The bounded rationality model, introduced by Herbert Simon, recognizes human cognitive limitations and suggests that individuals seek a satisfactory solution rather than an optimal one. The decision process under bounded rationality involves more simplified and satisficing approaches:

1. Recognize the decision need: Alex acknowledges the decision must be made.
2. Limit information search: Instead of exhaustive data collection, Alex gathers only essential information, such as basic salary and immediate job conditions.
3. Generate feasible options: Focuses on a few workable alternatives based on heuristics or past experiences.
4. Evaluate options satisficingly: Chooses the first option that meets minimum acceptance criteria rather than searching for the absolute best.
5. Act and adapt: Implements the decision and adjusts if necessary based on feedback and outcomes.

In Alex’s case, he might quickly compare only crucial factors such as salary increase and commute time, discarding other considerations or delaying in-depth analysis. This approach allows for faster decision-making, which is more aligned with real-world cognitive limitations but may result in suboptimal choices.

Differences Between the Two Approaches

The primary distinction between the rational and bounded rationality models lies in their complexity and assumptions about human cognition. The rational model assumes that individuals have complete information, unlimited time, and cognitive ability to evaluate all possibilities thoroughly, aiming for the optimal decision. Conversely, the bounded rationality model acknowledges that humans are limited in their processing capabilities and, therefore, rely on heuristics, simplifications, and satisficing strategies to make timely decisions.

While the rational approach is ideal in theory, it is often impractical in daily decision-making tasks due to constraints like time and information availability. Bounded rationality offers a more realistic perspective, accepting that humans manage limited resources efficiently, even if it means settling for decisions that are "good enough."

Conclusion

Understanding the differences between rational and boundedly rational decision-making models enhances awareness of how decisions are made in real life. Recognizing these models can help individuals and managers develop more effective strategies for decision-making, aligning procedures with cognitive and contextual limitations. The choice of model depends on the specific context, importance, and urgency of the decision, but acknowledging human limitations is crucial for realistic and practical decision processes.

References

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