Question

The rational model of organisational decision-making has been subjected to a number of criticisms from theorists who have developed theories that seek to capture how decision-making actually happens in practice in less-than-rational ways. Discuss the theory of how decision-making actually happens in practice with reference to any one of the following list of theories:

The theory of ‘bounded rationality’ and ‘satisficing’ developed by Simon and colleagues;
The theory of individual cognitive biases, explained with reference to any one type of bias (‘availability bias’, ‘anchoring and adjustment bias’, or ‘confirmation bias’);
The garbage can theory of organisational decision-making developed by Cohen, March & Olsen.

Answer 1

The theory of bounded rationality and satisficing suggests that decision-makers are limited in their ability to process all information and settle for satisfactory solutions. Individual cognitive biases, such as the availability bias, can also impact decision-making. The garbage can theory emphasizes the messy and chaotic nature of organizational decision-making.

Step-by-step explanation:

In the realm of organizational decision-making, the rational model has been criticized for not accurately capturing how decisions are made in practice. One theory that offers an alternative perspective is the theory of 'bounded rationality' and 'satisficing' developed by Simon and colleagues. This theory suggests that decision-makers are limited in their ability to process all available information and instead settle for satisfactory solutions that meet a certain threshold. It recognizes that decision-making is influenced by cognitive limitations and the complexity of real-world situations.

Another theory that sheds light on decision-making in practice is the theory of individual cognitive biases. One example of such bias is the 'availability bias', where people tend to rely on readily available information when making decisions, without fully considering other relevant factors. This bias can lead to inaccurate judgments and suboptimal decision outcomes.

Furthermore, the garbage can theory of organizational decision-making developed by Cohen, March & Olsen emphasizes that decision-making is often a messy and chaotic process, where decisions are made opportunistically and influenced by various factors such as timing, chance, and power dynamics. This theory challenges the notion of a rational decision-making process and acknowledges the inherent uncertainty and ambiguity in organizational decision-making.