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THE RATIONAL DECISION MODEL (Models Of Decision-Making Behaviour)

Decision-Making models are based on three models of man:1.0 Economic Man 2.0 Administrative Man 3.0 Social Man

Economic Man Model

Administrative Man Model

Social Man Model

The Continuum Of Decision-Making Behaviour 1.0 Economic Man Model Or Econological Model:The classical approach to decision making in economics has used the economic man model and is essentially a theory of decision making under conditions of certainty. The economic man is completely rational.He always select that alternative which gives him the greatest advantage. He makes his search for the best alternative in a planned, orderly and logical manner. Decision making is characterized by the following features under economic man model:1.0:-The decision making is completely rational in the means-ends sense. Economic man always identifies clearly the ends to which he wants to reach and the means which are available for the purpose. 2.0:- Economic man is rational in that he can order his various preferences according to his hierarchy of values and the actually make his choice so as to maximize some desired value. Normally this desired value would be equivalent to organizational goal attainment and goal of profit. 3.0:- The economic man theory is closely related to a concept of organizational rationality. 4.0:- It is a Normative theory rather than Descriptive theory.This model prescribe how decisions should be made.

Criticisms :1.0 :-The model does not adequately portray how decisions are actually made. 2.0:- Model lacks realism,because the conditions under which economic man makes decision are seldom available. 3.0 The fully rational decision is an infrequent mode except when it relates to technical tasks. 2.0 Administrative Man Model or Bounded Rationality Model:A more realistic descriptive model of decision making is based on the administrative man which has been developed by Herbert Simon. Simons administrative man uses only limited rationality because of limited information-processing skills. Decision makers simply do not have full knowledge of all alternatives and their consequences.There fore,there is certain amount of limit on rationality which has been called by Simon as bounded rationality. The decision making behaviour of this model may be summarized as follows:1.0 :-In choosing among alternatives, administrative man attempts to satisfy or look for the alternative which is satisfactory or good enough.examples of satisfying criteria may be adequate market share, adequate profit, fair price etc. 2.0 :-Because an administrative man satisfies rather than maximixes,his search for alternative is sequential or incremental. If the first alternative does not work only the, does he need to make a search for another.As soon as workable alternative is found ,he discontinues his search. 3.0 :-An administrative mans search for alternative is guided by his experience. He uses heuristics (rule of thumb) or tricks to trade,or from force of habit to reduce the area of his search to manageable limits.


Economic-(Normative ) 1.Man goes to search for all the alternatives and select that gives him the greatest advantage. 2.0 This model is prescriptive. 3.0 This model prescribes how decisions should be made.

Administrative(Bounded) It continues to search alternatives until he finds one that meets some personal level.

This is descriptive model. It describes how decisions are actually made.

3.0 Social Man Model:The completely irrational social man model is developed by classical psychologists.Frued,in particular said that man being a bundle of feelings, emotions and instints is guided by his unconscious desires.He is also subject to social pressures and influences.Obviously,such a person is not capable of making rational management decisions.The well-known experiment by Solomon Asch demonstrates that this world is full of irrational conformists. Bibliography Prasad, L. M. (2004). Principles and Practicle of Management. New Delhi: Sultan Chand & Sons. REDDY, P. C. (2008). PRINCIPLES OF MANAGEMENT. NEW DELHI: Tata McGraw-Hill.