Rational and Non-Rational Decision Making

Question 1

What is Reasoning?

Answer 1

Taking stock of available evidence and coming to conclusions without bias.

Question 2

What is rationalising?

Answer 2

Using reason to arrive at a conclusion that is either consciously or unconsciously desired.

Question 3

What is the end goal of Rational Behaviour?

Answer 3

Maximisation of profits in the case of business and utility.

Question 4

What is necessary to make a rational choice?

Answer 4

An objective exists and the decision-maker selects an alternative that promises to meet that objective.

Question 5

What is Non-Rational Decision-Making?

Answer 5

Commitment to a theory that does not apply to the situation or ignores relevant information.

Question 6

How can a decision become Non-Rational?

Answer 6

If beliefs are illogical, inconsistent, self-contradictory, deficient, too specific, or partly/wholly false.

Question 7

What are the factors that affect Rational Behaviour?

Answer 7

• Information - too much or inaccuracies
• Time and Cost Constraints
• Communication Failures
• Precedents
• Perception and Judgement of the decision-maker

Question 8

What is Maximising Behaviour?

Answer 8

Maximising personal preferences, and having complete knowledge of how to do so.

Question 9

What are the issues with Maximising Behaviour?

Answer 9

• Objectives may change
• Known alternatives may not be all
• Public opinion/Political pressure may make the choice unacceptable
• Quantifying all outcomes may not be possible

Question 10

What is Satisficing Behaviour?

Answer 10

Finding a satisfactory rather than an optimum course of action.