Rationality and Intuition

non-rational models of decision making: assumes that decision making is nearly always uncertain and risky, making it difficult for managers to make optimal decisions
two types of non-rational decision making: satisficing and intuition
non-rational models are descriptive, describing how managers actually make decisions

non-rational decision making is modeled using the concept of bounded rationality
- developed in the 1950s by economist Herbert Simon
- suggests that the ability of decision makers to be rational is limited by numerous constraints…
- complexity, time and money, cognitive capacity, etc.
model 1= satisficing model: managers seek alternatives until they find one that is satisfactory, not optimal
- because of constraints, managers don’t make an exhaustive search for the best alternative

model 2 = intuition: making a choice without the use of conscious thought or logical interference
stems from both:
- expertise: a person’s explicit and tact knowledge about a person, a situation, an object, or a decision opportunity
- is known as a holistic hunch
- automated experience: the involuntary emotional response to those same matters

trust your intuitive judgements
seek feedback
test your intuitive success rate
challenge your intuition
1. think of counterarguments to your intuition, then challenge those counterarguments

ethics: standards of right and wrong that influence behavior
ethics officers: someone trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas

decision tree: a graph of decisions and their possible consequences
- used to create a plan to reach a goal