Bounded rational , what is advantage and disadvantage ?

What is the Bounded Rationality?

Bounded rationality means that the manager seeks to adopt the rational approachable in decision making, Bounded rationality is a hypothesis that advice that there are boundaries to how rational a decision maker can actually be.  If the decision factors do not trade with mankind, the probability of rationality increases.  Since managers cannot make perfect decisions, they satisfied, choosing instead the first alternative that is ‘good enough’. while this is similar to students choosing a college that is within their decision frame, as opposed to viewing all 5,000 available colleges and universities.  Satisficing involves a shortcut, intuitive access to decision making, which is mentioned to as heuristics is blocked by certainly limitations such as limited resources, otherwise lack of information and capability to analyze limited decisions.

What Advantage of bounded rational?

Firstly, there is abundant empirical evidence that it is significant. Also the models of bounded rationality have examined themselves in a wide range of impressive work. And the standard justifications for putting on bounded rationality are improbable and their logic cuts both ways. Next, deliberation about an economic decision is a pricy activity, and good economics needed that we entertain all costs in bounded rational decision making.

What disadvantage of bounded rational?

(a) Limited Resources

Resources consist of time, money, equipment and workforce. Resources that are limited can influential decision making. For instance, assuming that previously the organization had planned to fix up several new branches, but at the same time, its income had diminished due to an economic downturn. As a solution, the plan to put up new branches was held over. Note that cause to the limited fiscal resources, moreover , what was done is not the same with what had been originaly planned.

(b) Excessive Additional Information

Progress in technology has caused information dumping to occur. More or less data can be easily receive, but at the same time will due to troubles to the director. This is because the director is unable to cover all the information that is usable. As a consequence, only certain information is viewed. Therefore, decisions made may not be the better as not all information is brought into thoughtfulness.

(c) Memory Problems

Storage problems can make difficulties for the handler. However the information is usually recorded,caused sometimes information is also looked out over or unrecorded.

In deposit to form rational decisions, all needed information needed to be received.Next To compile all these needed information, might involve time and high costs. Perhaps not all the data can be collected. Thus, an optimal decision cannot be reached,

(d) Expertise Problems

Expertise problems cause the decision maker to face-off problems in setting up, understanding and summarizing the information usable. This is also because there no person is an expert in every sector. Nevertheless the data can be analyzed by computer, the decision maker will even require specific skills to interpret the solutions that have been received. As a result of this lack of expertise,caused of the valuation made may not be the well.