Compare and contrast the rational decision-making model and bounded rationality.

Question

What will be an ideal response?

Answer 1

Examples should include in the rational decision-making model, the problem (or
opportunity) is defined, and then information is gathered and analyzed. Based on this
information, a broad set of alternatives or possible courses of action are identified. Next,
these alternatives are analyzed in terms of the feasibility, costs, and benefits. A decision
is based upon the analysis of the alternative courses of action (i.e., the decision with the
lowest costs and greatest benefit). The final step is to develop a specific set of action
steps for the implementation of the decision. This model includes a number of
assumptions. Decision makers must have complete information, be able to develop an
exhaustive list of alternatives, weight them, and then choose a decision with the highest
value and/or lowest cost to the organization. Bounded rationality means that decision
makers have limits on their ability to assimilate large amounts of information. What this
means is that decision makers simplify complex problems to limit the amount of
information processing needed. Within the boundaries of this simplified model, they
behave rationally. In addition to limiting the information analyzed, they also limit the
number of alternatives considered. They accept the first acceptable alternative they
encounter rather than continue their information search, analysis, and alternative
generation until they find an optimal one.