Analysis of the Behavioral Decision Making Theory

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Analysis of the Behavioral Decision Making Theory|

Introduction:
For many of us, when we take a look at a multinational corporation, we become fascinated by its image, such as its revenue, massive head quarters, the span of chains it has in different countries etc. We tend to judge by its magazine features and attributes. We measure the company’s success based on those attributes. However, success for every company, no matter the size, always starts from the interior. In order to become reputable, the company needs to have skilled workers, solid internal resources, plenty of capital, and most important managers and executive leaders. In general it’s the company’s strength of management that determines how the company will operate. The theory of management can be traced back to the times of the pyramids in Egypt. As time went by, different ideals and perspectives about management emerged. One of the most notable was during the 1950’s, when a man named Herbert Simon laid the foundation for a management theory based on a psychological perspective: The Behavioral Decision making theory. In short, the theory emphasized that, managers don’t have all the information on all possible consequences and alternatives, created from their decisions. From this perspective, this theory can be applied to any professional setting. The fact is every manager, in every company has to go through this cognitive limitation process, when it comes to decision making, which makes this theory applicable and true in its terms. Biography/History:

Herbert Simon as a child was educated in the Milwaukee’s public system schools where he started to develop interests in science. His parents seemed to have the most influence on his extra ordinary thinking. They installed in him, to be curious, and to question the unthinkable. Upon graduating high school, Simon attended The University of Chicago and pursued a degree in political science. During his tenure at The University of Chicago, Simon was able “to conduct a study of the administration of the Milwaukee Recreation Department. It was this study that later on inspired him to focus on how administrators made decisions” (Gale Group, 2008). It was then, he became dissatisfied with the traditional decision making theories models such as the Comprehensive rational, and began to further analyze decision making. After graduating from the University of Chicago, Simon was hired by the International City Managers Association and began to be recognized as an expert. Simon described, the most important years of his scientific career between the years 1955-1956. “It was during this time that Simon along with Allen Newell and Clifford Shaw began using computers to study problem-solving behavior” (Gale Group, 2008). While doing this, they would observe individuals as they worked through problems, and recorded the subject’s explanations on those logical problems. They would than input the feedback into a computer program. “Together, Simon, Allen, and Shaw developed Logic Theorist and General Problem Solver, the first computer programs to simulate human reasoning in solving problems” (Gale Group, 2008). This work was at the foundation of the developing field of artificial intelligence and would later lead to him write the second version of Administrative Behavior, which laid the foundations of bounded rationality. For his ground breaking research, Simon received offers to teach at Carnegie Mellon University, where he structured their School of Business Administration, however his greatest accomplishment would come in “1978 when he received the Nobel Peace Prize, in economic science for his research into the decision-making process within organizations” (Gale Group, 2008). Simon passed away at the age of 84, in 2001. He will always be remembered as the originator of Bounded rationality, and a man that stood for science and discovery.

Summary of Management Technique:
Taking a further look into the...
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