Bounded Rationality and Decision Making in Organizations


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The definition of Bounded Rationality is to

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1. What is the term that describes when managers select the first alternative that is good enough due to the fact that costs in time and effort are too great to optimize?

2. What is a term for shortcuts in making a quick decision to maintain mental activity?

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About This Quiz & Worksheet

The questions on this quiz/worksheet combo will evaluate your knowledge of rational decision making in business and the bounded rationality model. To pass the quiz, you'll need to be able to define related terms and identify the heuristic in use in a given example.

Quiz & Worksheet Goals

These resources will assess you on the following:

  • Defining bounded rationality and another term for the bounded rationality model
  • The term for choosing a 'good enough' alternative
  • The term for a decision-making shortcut
  • Examples of shortcuts in action

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on bounded rationality and decision making in business
  • Interpreting information - verify that you can read information regarding the bounded rationality model and what it explains and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about types of decision making

Additional Learning

To learn more about the factors involved in managers' decisions and the constraints they face, review the corresponding lesson called Bounded Rationality and Decision Making in Organizations. This lesson covers the following objectives:

  • Understand the process of rational decision making
  • Know who created the bounded rationality model
  • Review the four assumptions of the model and related vocabulary terms