Master of Business Administration: Decision Making Process and Heuristics

RUNNING HEAD: Master of business administration
Master of business administration
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Contents
Part 1: Essay................................................................................................................................................1
Part 2: Case Study Report............................................................................................................................6
Introduction.............................................................................................................................................6
Decision making scenario........................................................................................................................6
Availability...........................................................................................................................................7
Representativeness.............................................................................................................................8
Bounded Rationality............................................................................................................................9
Conclusion...............................................................................................................................................9
References.................................................................................................................................................10
Appendices................................................................................................................................................13

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Part 1: Essay
The purpose of this essay is to provide a brief introduction about the application of decision
making process initiated by the human mind in order to solve complex situations present in real
world. The essay explains the quote given by Herbert A. Simon for the decision making process
of an administrative leader in the environment. Simon explained the concept about rationality in
terms of the heuristics; further the report also explains three discrete concepts that evaluate the
bias in decision making process that are bounded rationality, availability and representative. It
should be noted that the theory of organization cannot subsist without the rational choice of the
theory, which is best described as intendedly rational based on two types of economic man,
consumer and entrepreneur (Thompson, 2018).
Heuristics refers to the mental decision taken by the people present in the society with an aim to
solve the complex issues present with them. Talking about the quote, it should be noted that with
this quote Simon, aims to explains that the human minds holds very little capacity to solve the
complex problems by themselves. These complex issues are regarded as major issues for which
the human mind is incapable to successfully implement activities (Appendices 1). The solution
of these problems is required for the objectively rational behavior in real world. The aspect of
bounded rationality explains that how the judgment is being made by the person in the
environment, apart from evaluating the outcomes of the decision, it also evaluates the class of
environments in which the judgments might fail or succeed (Zsolnai, 2017). These decisions are
fast and do not depend on any aspect resulting to which, there might be a chance of error in this
type of decision making process. Whereas, on the other hand rational behavior refers to the
process of decision making that is dependent on various factors. Due to the presence of such
diversified aspects the human being initiated a decision that provides benefit to them in both
monetary as well as non-monetary terms. The benefits can be attained either in monetary terms
or through fulfillment of emotional needs whereas Simons under this case constantly attempt to
create a theory that involves human behavior and other several characteristics of heuristics
(Wittmer, 2016).
Availability heuristic is dependent upon the way to form a judgment for an issue. The decision
might be dependent upon the profitability margin of the company that might not provide accurate

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decision. For instance, people assume higher percentage in the cases of crimes that includes
violence irrespective of the actual account. This type of decision of people is based on the past
records, opinions etc. (Ajzen, 2015). The concept explained Simon stated that it is important for
people to think rationally in order to take decisions according to the satisfaction level of people
in the environment. He also explained in the theory that the capacity of the mind of an individual
in solving the problem with respect to the actual real-problem is really less (Appendices 2). The
people do not have enough capacity to look at all the available aspects analyze them and take the
right decision (Marshall, Ambrose, McIvor, & Lamming, 2015).
Source: (https://aspirantforum.com/2016/06/13/simons-concept-of-decision-making/)
Further, one of the types of heuristic is the representative heuristic that is also called as the
mental shortcut for decision making process by comparing the real information with the mental
prototype of a human being. For instance, if an elder woman gives love and care to the person in
the environment, then it is regarded as the love and care of their grandmother. Thus, it should be
noted that in the cases of Representative Heuristic, the person uses different dimensions and
categories to implement a judgment. According to Simon, this type of skill of implementing
decision is based on the rationale of a person and is limited to an individual if compared as a
relative problem (Cuesta, et. al., 2015). Further, bounded awareness rationality refers to the
economic behavior of a person towards the decision. The aspect of bounded awareness
rationality covers thee different views between rationality and behavior. It should be noted that