Research

1.0 Executive Summary

This report provides an analysis for boundless rationality concepts and how it causes biasness in decision making. Secondly the report analyses how concepts of bounded rationality can be applied in different scenarios to give a clear understanding of them. Upon its findings the report will make recommendations to managers and organization employees on how to avoid boundless rationality. The methods of analysis include literature review of currently available resources along with an-depth analysis of boundless rationality.

The various recommendations include:

I. Ensure that they follow a rationale step to step decision making process

II. Avoid stereotypical inferences in decision making process

III. Use decentralization and delegating in decision making process to avoid heuristic biasness

IV. Use lexicographic strategies to overcome satisfice biasness

Table of Contents

1.0 Executive Summary 0

2.0 Introduction 2

2.1 Satisfice 3

2.2 Heuristics 4

2.3 Adaptation 6

2.4 Uncertainty 7

3.0 Conclusion 7

4.0 Application of the four concepts of Boundless Rationality real world situations 8

4.1 Application of satisfice concept to real world scenarios 8

4.2 Application of heuristics to real world scenarios 10

4.3 Application of adaptation concept to real world scenarios 11

4.4 Application of uncertainty concept to real world scenarios 12

5.0 Recommendations 13

6.0 Conclusion 13

References 14

2.0 Introduction

Human beings tend to act irrational under situations that are quite complex in nature that creates biasness in their decision making process. This causes the decision makers to behave like satisficers because they only look for satisfactory solution instead of an optimal one. Principal of bounded rationality refers to the small ability of the human minds to create and sort out complex problems in comparison to the problems’ size that needs objective rational behavior to fit in the real world...