Decision Making

To improve how we make decisions in organizations, we must understand the decision making
errors people commit.
So we are going to tackle these errors, after a brief overview of the rational decision-making
model.
As stated in the book, best decision makers are rational and make consistent, value-maximizing
choices within specified constraints.
These decisions follow a six-step rational decision-making model.
Assumptions of the model:
o Decision maker has complete information
o Is able to identify all the relevant options in an unbiased manner
o And chooses the option with the highest utility
In the real world, people are usually content to find an acceptable or reasonable solution rather
than an optimal one.
Bounded Rationality is the notion that in decision making, rationality of individual is limited by
the information they have, the cognitive limitations of their minds, and the finite amount of
time they have to make decisions.
Because the human mind cannot formulate and solve complex problems with full rationality, we
operate within the confine of bounded rationality.
Intuitive decision making is an unconscious process created from distilled experience.
In certain instances, relying on intuition can improve decision making. But the key is neither to
abandon nor rely solely on intuition but to supplement it with evidence and good judgment.