Bounded Rationality In Decision-Making: What Is It?

I talk about searching for a particular alternatives. There are two ways that we think decision-making might happen. The first way is based on rational decision-making, where we have all of the possible alternatives available and then we rank order the alternatives from best to least. Then, we select the best alternative. The trouble is is that very few people actually make decisions in this way. Most make decisions through using simple rules because we are boundedly rational. There is so much that we can learn and know. One of the ways in which we make decisions is for searching for alternatives. As Levinthal and Knudsen (2007) put it, first we search for alternatives and then we evaluate these alternatives. When we search for alternatives we perform a satisficing algorithm. We look for alternatives that are good enough, rather than the best possible. I am thinking about this because of Epley and Gilovich’s (2006) paper that suggest we adjust (search) until we find an adequate solution. This reminded me of my thoughts about searching for solutions to problems. When do we stop searching for solutions? When we find an adequate solution, not a perfect solution. This implies that there are many more problems than solutions to sort through, because we will never find the optimal solution. What can you do? 1. Search until you find a good enough solution to solve the immediate problem. 2. This will drive additional problems for you to fix in the future. Epley, N., T. Gilovich. 2006. The anchoring-and-adjustment heuristic: Why the adjustments are insufficient. Psychological Science. 17(4) 311-318. Knudsen, T., D.A. Levinthal. 2007. Two faces of search: Alternative generation and alternative evaluation. Organization Science. 18(1) 39-54. Nickerson, J.A., T.R. Zenger. 2004. A knowledge based theory of the firm - The problem-solving perspective. Organization Science. 15(6) 617-632. Check out: What Is The Scientific Research Process? - Thesis Help    • The Scientific Research Process Explained   What Is A Best Practice?: Should You Imitate Best Practices?    • Best Practices in Business: Should You Imi...   What Is The Purpose Of R&D & What Are Some Examples Of Research And Development Activities?    • Research and Development: Why R&D Can Boos...   What Does Thomas Friedman Mean By The World Is Flat And Is It True A Decade Later?    • The World Is Flat by Thomas Friedman: Is I...   Digital Platform Strategy: Platform Strategies Are Trickier Than They First Appear    • Digital Platform Strategy: Why Platforms A...   What Is Learning?    • What Is Learning and Why Does It Matter to...   Noise As Signal In Learning From Rare Events    • Noise as Signal: Learning From Rare Events   7 Reasons Why I Am (Not) A Fan Of The MVP (Minimum Viable Product)!    • Minimum Viable Product: When MVPs Help and...   The Strangeness of Saying “Congratulations On Your Beautiful Baby,” And Business Strategy    • A Strange Business Strategy Lesson From So...   How To Become An Expert At Something: Deliberate Learning, And 10000 Hours Of Practice    • How to Become an Expert With Deliberate Pr...   Experimentation, Test, & Learn: The Benefits Of Trying Something New - Lessons From Barefoot Running    • Experimentation and Test-and-Learn Strategy   ************* David Maslach is a research professor of entrepreneurship, innovation, and business strategy, I discuss topics, such as behavioral science, strategy, innovation, and entrepreneurship, and apply these to my new peer proofreading and editing platform. Topics include the sharing economy, altruism, investing in technology, starting a business, and bounded rationality. My favorite videos pertain to incentives, goal setting, and learning from failure to drive behaviors such as weight loss, stopping telemarketers, creating novel technologies, and creating new movements. https://r3ciprocity.com: Peer proofreading and editing platform A new platform where you can earn credits by editing other people's documents. Use these credits to have your own work edited. If you do a good enough job, you can convert these credits to money. The goal of the platform is to get people to 'pay it forward' and help other people out by creating incentives for people to give back. Check out https://www.r3ciprocity.com Please subscribe to the Youtube channel:    / @r3ciprocityteam