Rationality versus Reality in Decision-Making

Running Head: Decision-making 0
Managing Under Uncertainty

Decision-making 1
Rationality versus reality in decision-making
Decision-making is part of people everyday life and they powerfully influence the life
of others. On the other hand, their lives are depending upon the position of decision-makers.
The understanding of the decision-making practices could help in avoiding bad decisions and
maintaining good decisions. Their understanding of decision-making is more convincing are
not demanding humans to be an irrational being. The development is traceable from
economic rational creature through bounded rationality to the approaches of decision-making.
Competent leaders utilize rational decision-making processes to recognize the problem and
solutions, evaluate alternatives in respect to decision-making (Cascetta, Carteni, Pagliara &
Montanino, 2015). This essay shall also make effort to address the concepts of rationality
versus reality in decision-making. In the following, an effort has been made to discuss this
broad theme and state the discipline will be adopted for the study of decision-making.
In rational decision-making leaders, analyze the problem to accomplish the most
effective choice through different potential alternatives before making a decision. The senior
managers utilize their capability to identify a competent person and take important decisions
without adequate analysis. Any decision-making situation needs to define a problem,
identification of standards, documentation of standards according to preferences, assessment
of alternatives and finally, selection of alternatives with the maximum value (Sen, 2017).
Bounded Rationality is utilizing sufficient information to gain a suitable decision rather than
the best solution (Snead, Magal, Christensen & Ndede-Amadi, 2015). While favourability of
the solutions is been the major concern of decision-making, as it is seen that reality in
decision-making satisfies under bounded rationality conditions. It favors objective data and a
formal procedure of analysis over intuition and subjective. This model of the rationality of
decision-making predicts that the decision maker has the perfect information, resources, and
has cognitive ability to evaluate each alternative against others. The people will make choices
that will maximize benefits and minimizes cost. For instance, many people want to get the
most valuable products at the least possible price and benefits of a certain product. This
model makes unrealistic assumptions, particularly about a person’s capability to possess
information for making decisions. Individual rationality is restricted by their capability to
conduct analysis and reflect through competing alternatives. The more complex a decision,
the greater are the limits to make rational choices (Hoefer & Green Jr, 2016). Researchers in
decision-making have identified three categories, which seem to influence the way people
make decisions: Representative heuristic, adjustment, Availability heuristic, and anchoring.

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In the case of representative heuristic, make the decision-maker evaluate the possibility of
occurrence of an event depends on experiences of similar events. The initial value
considerably influences the procedure of the adjustment irrespective of the rationality in the
alternative of the initial value. The availability heuristic is probably to be available in the
memory of heuristic of the decision maker (Groeneveld, Müller, Buchmann, Dressler, Guo,
Hase & Liebelt, 2017).
The reality in decision-making lies in the aspect of everyday conditions, as decisions
are part of broader activities, which decision maker try to achieve. The decision-making was
going on outside the meaningful relationship, as in reality, it is the point of accomplishing the
broader objectives. It has been noted that decisions are part of the larger tasks comprising of
the issues identification, acting for goals achievement, and understanding of meaningful
solutions, and effects assessment. Decision making, in reality, is the aspect of maintaining
and guiding the constant movement of behaviour focussed towards the set of objectives and
not set of alternative dilemmas. It is frequently affected by the structure of the business and
environment than by system itself. It is a combined function of people experience and
knowledge appropriate for the task (Calabretta, Gemser & Wijnberg, 2017). It is frequently
going on in stressful situations. It is mainly caused by time pressure, threat, conflicting or
incomplete facts, negative physical conditions, interference, performance pressure, team
coordination, multi-information sources, high workload, and rapidly changing the
environment. They determine conditions and factors in decision-making, which frequently
decide the type of the decision and their outcomes. The reality is affected by various factors
i.e. cultural and social background, which influences the connection among people, included
in the process of decision-making and delivers the cultural framework to operate
comfortably. About the structure of the organization, various factors alter the reality of
decision-making in the organization. The amount of time available to make a decision for a
given problem is determined by the environment. Ideal decision-making and the decision
theory are disposed to picture the process, as one in which it is free of restrictions of
resources and time operate by them. The reality of the decision-making process is a range of
practical concern positively influenced by the cultural, organizational, and social environment
(Li, Ashkanasy & Ahlstrom, 2014).
With the broad theme of Rationality versus reality in decision-making, there are
significant problems in studying the nature of decision-making. From the description, it is
agreed that decision-making is a part of life, survival, and success. With respect of decision-