Final answer:
The Behavioral approach describes actual managerial decision-making, while the Normative approach prescribes how decisions should be made. The economic model is normative, not a literal description of actual decision-making. Behavioral economics enriches our understanding by examining the reasons behind seemingly 'irrational behavior'.
Step-by-step explanation:
The approach that describes how managers actually make decisions is known as the Behavioral approach, while the approach that defines how a decision-maker should make decisions is called the Normative approach. Therefore, the correct answer is a) Behavioral, Normative.
The economic model of decision-making is not intended as a literal description of how individuals, firms, and governments actually make decisions. It is rather a normative model, suggesting how decisions should be made based on rational choice theory, assuming that agents are rational and will seek to maximize their utility. In contrast, behavioral economics attempts to incorporate psychological insights into economic models, accounting for the fact that actual decision-making often deviates from the pure rationality assumed by traditional models. Behavioral economists have highlighted that what might seem like irrational behavior might have deeper underlying reasons, thus broadening our understanding of decision-making processes.