RATIONAL DECISION MAKING

Constant prefer whenever you travel abroad.

NO TIME OR COST ORIENTATION

It is assumed that there is no limitation of time and cost in rational decision. It means you can take too much time or cost regarding collecting information.

MAXIMUM PAYOFF

Keeping in view the problem, the alternative, which is being chosen, must pay back maximum value.
BEST INTEREST OF ORGANIZATION

While in rational decision, it is also assumed that the decision must be for best economic interest of organization.

So all these assumptions should be applied to any rational decision-making.

LIMITS OF RATINALITY

Keeping in view various studies we suggest that decision-making of ten veers

From the logical consistent and systematic process that rationality implies.

Let us examine some important insights.

INFORMATION PROCESSING CAPACITY

Decision makers are usually individuals and their information processing capacity is limited. They can hold only few information in their memory not thousands individuals create simple models.

QUALITY OF INFORMATION

Many decision maker select information, which are easily accessible ignoring the quality of information. In this way important information have a less weight than the information, which are easily accessible.

If you have to collect information from Karachi company then you must go to Karachi and not rely upon the information provided by any other company or person.

COMMITMENT PREMATURELY TO A SPECIFIED ALTERNATIVE

Sometime, the decision makers have commitment to specific alternatives clearly in the decision-making and in this way important alternative may be ignored.

DIVERGENT INTERESTS

The existence of divergent interests ensures that there will be different in goals, alternative and consequences. It means at one and same time a decision makers has many goals. For examples, to invest in productivity sector, to invest in same sector, to invest in trading sector. It is also limited the rational decision process.

TME AND COST

Time and cost also limits the rational decision process because now a days every managers and organizations have limited time and cost for research method.

CULTURE AND ORGANIZATION

In same or you can say that in many organization there culture is so strict one and cannot appropriate the innovation work of employees and therefore it also limits the boundless of rational decision.

BOUNDED RATIONALITY

In bounded rationality, managers construct simplified models that extract the essential features from the problem without capturing all their complexity.

S.P ROBBINS:

“Behavior that is rational without the parameters of a simplified model that captures the essential features of a problem”

DAVID C. MARTIN:

“I accept that suggests that you only get satisfaction regarding the problem and cannot achieve maximum value.

SATISFACTION

It means that an individual does not set an optimum goal in decision problems.

But instead of establishes a very limited range of goal that would be acceptable.

S.P ROBBINS:

“Acceptable of solution that are enough” about satisfaction.

Now finally we review of decision-making process of both rational and bounded rationality.