Asked by aradhana mehra on May 25, 2024
Verified
Which of the following is an assumption of the bounded rationality model?
A) Managers are aware of all the possible alternatives.
B) Managers have a consistent system of preferences, which is used to choose the best alternative.
C) Managers can calculate the probability of success for each alternative.
D) Managers develop shortcuts, called heuristics, to make decisions in order to save mental activity.
Bounded Rationality
A concept that decision-makers are limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make decisions.
Heuristics
Mental shortcuts or rules of thumb that simplify decision-making processes.
Preferences
Individual choices or inclinations towards certain options, objects, or outcomes over others.
- Recognize the assumptions and limitations of different decision-making models, including bounded rationality.
Verified Answer
SL
Sonia LopezMay 29, 2024
Final Answer :
D
Explanation :
The bounded rationality model assumes that individuals make decisions using heuristics to simplify the decision-making process, acknowledging that they cannot process all information or consider every possible alternative due to cognitive limitations.
Learning Objectives
- Recognize the assumptions and limitations of different decision-making models, including bounded rationality.