Decision-making

Question 1

Benefits and negative outcomes of compensatory and non-compensatory strategies?

Answer 1

Comp = searches all aspects, but highly demanded.
Non-comp = goes with good solution, but not optimal.

Question 2

Factors that have an effect on decision-making?

Answer 2

Time; lack of information; limited cognitive capacities; contextual - f.e. peer-pressure.

Question 3

What does Max Weber say about choice-making?

Answer 3

Based on habits and norms; action not meaningful unless it’s goal-oriented; not influenced by emotions.

Question 4

What is the difference between the Behavioral theory and Homo-economicus perspective on decision-making?

Answer 4

1)Microeconomics = firms have one goal - profit.
Human behavior - is predictable.
2)Multiple stakeholders-> multiple objective of the firm.
Every objective is accounted for, so it goes further than homo economicus.

Question 5

Herbert Simon’s bounded rationality

Answer 5

Bounded rationality - human thinking lacks willpower and is limited.
Science - learned tool of survival

Question 6

Mowle’s perspective on decision-making

Answer 6

Reflexivity helps in solving problems

Question 7

Positive Theory of Agency

Answer 7

Decision-making is based on the connection between the Principal and Agent.
Firm is based on connections of contracts.
Theory analyzes how these connections affect human behavior and how the organization is formed.

Question 8

The Theory of Principal and Agent

Answer 8

Agent makes decisions of interest to firm, not because feelings of being useful, but because motivational factors (money).