Bounded Rationality

A process of making decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity.

Once, we have identified a problem, we begin to search for criteria and alternatives. The criteria are unlikely to be exhaustive. We identify alternatives that are highly visible and that usually represent familiar criteria and tried and tested solutions. Next, we begin reviewing the alternatives, focusing on choices that differ little from the current states until we identify the one that is ‘good enough’ – that meets an acceptable level of performance. Thus, ends our search. Therefore, the solution represents a satisfying choice

– the first acceptable one we encounter – rather than an optimal


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Organizational Behavior by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.