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Rational Choice Model for Business Decision Making

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Our manager, Mr. Myers, wants to congratulate you on your decision to take the next step in your career choice. He knows that the procedure for the promotion is outrageous, but he knows you have what it takes to be a managerial consultant for Value Topics Inc. With that in mind, he tells you that the board of directors has given him the first assignment for you to complete and pass. He explains that the board wants you to prepare a report discussing the rational choice model for business decision making. He also explains that the report must outline the steps in bounded rationality and rational decision making.

Primary Task Response: Within the Discussion Board area, write up to 3 paragraphs that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas.

750-900 words in which you discuss the rational choice model for business decision making. In you posting, you must also outline the steps in bounded rationality and rational decision making. For full credit, you must address the following in your posting:

Discuss the rational choice model for business decision making.
Outline the steps in bounded rationality and rational decision making.
Discuss System 1 and System 2 thinking.
Discuss the judgmental heuristics of the idea of implementing a new line of clothing.
Discuss the availability heuristics of the idea of implementing a new line of clothing.
Discuss the representative heuristic of the idea of implementing a new line of clothing.

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1) Discuss the rational choice model for business decision making.

Rational choice model is based on the premises that humans always take the most logical decision that yield them maximum benefit while minimizing the harm or negative consequences. In other words, individuals take decisions that maximizes their personal advantage. This theory is based on the assumption that an individual possesses has the capability and time to weigh or evaluate every possible decision, as well as knows perfect information about the consequences of each action. However, these assumptions leads to several limitations of using this theory as there are limitations related to human abilities as ability to gather full knowledge about the consequence of particular decision.

However, the rational choice model is still beneficial in terms of breaking down complex decisions to address them in more effective manner, characterize goals, problems to address all needs and requirements.

Reference: ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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