What is Bounded Rationality Model of Decision-Making? The concept provides a review of the practical decision-making process and explores the model’s strengths, limitations and implications by comparing it to the rational behaviour model.

Bounded Rationality Model of Decision-Making

Concept Overview

Bounded Rationality Model of Decision-Making

Bounded Rationality Model of Decision-Making Definition

There are two primary models or theories for decision-making: the Rational model and the Bounded rationality model. In the former, a decision-maker attempts to optimise the decision by selecting the best possible alternative. In the latter, rationality of individuals is limited by the information they have, cognitive limitations and time constraints (Kalantari, 2011).

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Business Application

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Further Reading

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  • Bozeman, B. and Pandey, S.K. (2004) Public Management Decision Making: Effects of Decision Content. Public administration review, Vol. 64(5), pp. 553-565.
  • Conlisk, J. (1996) Why Bounded Rationality? Journal of Economic Literature, pp. 669-700.
  • Eisenhardt, K.M. and Zbaracki, M.J. (1992) Strategic Decision Making. Strategic Management Journal, Vol. 13, pp. 17.
  • Epstein, M.J. and Widener, S.K. (2010) Identification and Use of Sustainability Performance Measures in Decision-Making. Journal of Corporate Citizenship, Vol. 40, pp. 43-73.

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