Unit 1 Essay Managerial Decision Making

Managerial Decision-Making Name Institution Managerial Decision-Making Question 1 Discuss bounded rationality. In your discussion, explain the term as well as its importance in rational managerial decision-making. Bounded rationality is the idea that in making decisions, reasonableness of individuals is limited by the data they have, the cognitive limitations of their minds, and the limited amount of time they have to make decisions. In the process of decision making, the people involved may not have to necessary ability and resources to come to the best overall choice. They therefore simplify the choices available by applying their rationality. This concept was brought up by Herbert Simon. Human being for the most part are rational beings but they have the emotional part that is irrational and this affects their actions. Bounded rationality is a very important concept in the area of behavioral decision research (Bazerman and Moore, 2009). Bounded rationality is relevant in that it complements reasonableness as optimization, which views decision-making as an entirely rational process of getting an optimal choice with the information available. The bounded rationality concept revises the assumption that human being are rational entities to explain the fact that entirely rational decisions are often not possible in practice