26 July 2012

The Decision Making Process

Classical Model:
a. Structured problem
b. Clearly defined
c. Certain environment
d. Complete information
e. All alternatives and consequences are known
f. Optimizing decision: choose absolute best among alternatives

Classical model only happens in perfect world



The classical decision model views the manager as acting rationally in a certain world. The assumption is that a rational choice of the preferred course of action will be made by decision maker who is fully informed about all possible alternatives. Here, the manager faces a clearly defined problem and knows all possible action alternatives, as well as their consequences. As a result, he or she makes an optimizing decision that gives the absolute best solution to the problem.

Behavioral Model
a. Unstructured problem
b. Not clearly defined
c. Uncertain environment
d. Incomplete information
e. Not all alternatives and consequences known
f. satisficing decision: choose first satisfactory alternatives.

Behavioral Model happens in world today,we acts with cognitive limitations,bounded rationality



Behavioral scientists question the assumptions of perfect information underlying the classical model. Perhaps best represented by the work of scholar Herbert Simon, they instead recognize cognitive limitations to our human information-processing capabilities. These limits make it hard for managers to become fully informed and make optimizing decisions. They create bounded rationality, such that managerial decisions are rational only within the boundaries set by available information and known alternatives, both of which are incomplete.
Because of cognitive limitations and bounded rationalities, the behavioral decision model assumes that people act with only partial knowledge about the available action alternatives and their consequences. Consequently, the first alternative that appears to give a satisfactory resolution of the problem is likely to be chosen. Simon, who won Nobel Prize for his work, calls this the tendency to make satisficing decisions-choosing the first satisfactory alternative that comes to your attention. The behavioral model is useful in describing how many decisions get made in the ambiguous and fast-paced problem situations faced by managers.
For example, we say this coach is the best in the world,but in reality we haven't test every single people in the world to be a coach,we select only a few.Thus, we can not say he is the best,instead we can say among the best.This is what we call behavioral model,we only choose the first "satisfactory"

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