Dear Cimi,
Satisficing is a method for making a decision from a set of
alternatives when one does not know much about the possibilities ahead
of time. In such instances, there may be no way of obtaining a 'best'
or optimal solution in order to stop searching for further
alternatives. Satisficing takes the shortcut of setting an adjustable
aspiration level which if attained, will be 'good enough' and then
seeks a solution that will exceed these bounds. Satisficing is a form
of bounded rationality. In today's complex world, not even the most
powerful computers can process all the information, even if they could
obtain it, that humans need to make fully rational decisions. The term
was introduced by Herbert A. Simon in his book 'Models of Man, Social
and Rational, Mathematical Essays on Rational Human Behaviour in a
Social Setting' (1957). An American social scientist, Simon was
awarded the Nobel Prize in 1978 for his 'pioneering research into the
decision-making process within economic organizations'. In a stream of
articles, Simon questioned the mainstream economists' view of
economic man as a lightning-quick calculator of costs and benefits.
Simon's proposed alternative view was of people's rationality as
'bounded'. Because getting information about alternatives is costly,
and because the consequences of many possible decisions cannot be
known anyway, argued Simon, people cannot act the way economists
assume they act. Instead of maximizing their utility, he argued, they
'satisfice'. He proposed that humans look for a course of action that
is satisfactory, good enough, reasonable or acceptable. Quite simply,
Simon expressed the view that humans don't have the wits to optimize.
He called this less ambitious view of human decision-making 'bounded
rationality' or 'intended rational behaviour' and 'satisficing'.
Decision making is typically described as 'choosing among
alternatives'. This is simplistic because decision making is a
process.
The basics of decision making include defining problems, gathering
information, generating alternatives, and choosing a course of action.
A manager or employee can base various types of decisions on the
nature of the problem to be solved, the possible solutions available,
and the degree of risk involved.
The conditions under which individuals make decisions are influenced
by developments and events that they can't control but that may in the
furture influence the results of their decisions. The conditions under
which decisions are made can be classified as certainty, risk and
uncertainty.
Certainty is the condition under which individuals are fully informed
about a problem, alternative solutions are known, and the results of
each solution are totally predictable. The condition of certainty at
least allows exact anticipation (if not control) of events and their
consequences. This condition means that both the problem and
alternative solutions are totally known and well-defined. Once an
individual has identified alternative solutions and their expected
results, making the decision is relatively easy. The decision maker
simply chooses the solution with the best anticipated result.
Risk refers to the condition under which individuals can define a
problem, specify the probability of certain events, identify
alternative solutions, and state the probability of each solution
leading to the desired result. Risk generally mans that the problem
and alternative solutions fall somewhere between the extremes of being
certain and being unusual and ambiguous. Probability is the percentage
of times that a specific result would occur if an individual were to
make a specific decision a large number of times.
Objective probability is the likelihood that a specific result will
occur, based on hard facts and numbers. Sometimes an individual can
determine the likely result of a decision by examining past records.
Subjective probability is the likelihood that a specific result will
occur, based on personal judgment and beliefs. Such judgements vary
among individuals, depending on their intuition, previous experience
with similar situations, expertise, and personality traits.
Uncertainty is the condition under which an individual doesn't have
the necessary information to assign probabilities to the outcomes of
alternative solutions. In fact, the individual may not even be able to
define the problem, much less identify alternative solutions and
possible outcomes. Uncertainty oftem suggests that the problem and the
alternative solutions are both ambiguous and highly unusual.
Dealing with uncertainty is an important facet of the jobs of many
managers. Managers, teams, and other professionals often need to
absorb uncertainty by using their intuition, creativity, and all
available information to make a judgment regarding the course of
action (decision) to take.
No single decision-making method can be used in the various situations
encountered by managers and employees. As a start, the decision maker
needs to define accurately the problem at hand, move on to generating
and evaluating alternative solutions, and finally make a decision. The
considerations of certainty, risk and uncertainty provide and
underpinning to the basic types of decisions - routine, adaptive, and
innovative. They relfect the types of problems encountered and the
types of solutions considered.
The types of problems that managers and others deal with range from
the relatively common and well defined to the unusual and ambiguous.
Managers and other professionals must deal with unusual and ambiguous
problems. When the number of such problems escalates with short time
frames for resolution, a pattern of fire fighting may occur with
linked elements, such as the following, creating unsatisfactory
results. Solutions are incomplete,
problems recur and cascade, urgency supersedes importance or some
problems become crises.
The types of solutions available also range from the known and
well-defined to the untried and ambiguous. Managers and other
professionals often must develop solutions that are untried and
ambiguous.
Routine decisions are the standard choices made in response to
relatively well-defined and common problems and alternative solutions.
How to make various routine decisions is often covered by established
rules or standard operating procedures or, increasingly, in computer
software, such as computerized airline reservation systems. Managers
and employees need to guard against the tendency to make routine
decisions when a problem actually calls for an adaptive decision.
Doing so results in active inertia - the rigid devotion to the status
quo by attempting to do more of the same old thing better.
The key to the continuing usefulness of routine decisions is to review
constantly the need to retain or change them through meaningful
strategic and tactical planning.
Adaptive decisions refer to choices made in response to a combination
of moderately unusual problems and alternative solutions. Adaptive
decisions typically involve modifying and improving on past routine
decisions and practices. Adaptive decisions often reflect the concept
of convergence - a business shift in which two connections with the
customer that were previously viewed as competing come to be seen as
complementary. Adaptive decisions also reflect the concept of
continuous improvement - which refers to a management philosophy that
approaches the challenge of product and process enhancements as an
ongoing effort to increase the levels of quality and excellence.
Innovative decisions are choices based on the discovery,
identification, and diagnosis of unusual and ambiguous problems and/or
the development of unique or creative alternative solutions.
The material presented to this point provides the foundation for
discussing three models of decision making: rational, bounded
rationality, and political. These models have been developed to
represent different decision-making processes, and each provides
valuable insights into those processes.
The rational model prescribes a set of phases that individuals or
teams should follow to increase the likelihood that their decisions
will be logical and optimal. A rational decision results in the
maximum achievement of a goal within the limitations of the situation.
The rational model usually focuses on means - how best to achieve one
or more goals. Moreover, this process may be used to assist in
identifying, evaluating, and selecting the goals to be pursued.
Phase 1: Define and Diagnose the Problem
Phase 2: Set Goals
Goals are results to be attained and thus indicate the direction
toward which decisions and actions should be aimed. General goals
provide broad direction for decision-making in qualitative terms.
Operational goals state what is to be achieved in quantitative terms,
for whom and within what time period.
Phase 3: Search for Alternative Solutions
Phase 4: Compare and Evaluate Alternative Solutions
Phase 5: Choose among Alternative Solutions
Phase 6: Implement the Solution Selected
Phase 7: Follow-Up and Control
The bounded rationality model represents people's tendencies (1) to
select less than the best goal or alternative solution, (2) to engage
in a limited search for alternative solutions, and (3) to have
inadequate information and control over external and internal
enironmental forces influencing the outcomes of decisions.
Satisficing is the practice of selecting an acceptable goal or
alternative solution rather than searching extensively for the best
goal or solution. An acceptable goal might be easier to identify and
achieve, less controversial, or otherwise safer than the best
available goal.
Individuals usually do not make an exhaustive search for possible
goals or alternative solutions to a problem. They tend to consider
options until they find one that seems adequate. Some research
suggests that adding information does not yield better decisions than
the smaller amount of information originally available.
Bounded rationality also suggest that people frequently have
inadequate information about the (1) precise nature of the problems
facing them, (2) range of feasible alternatives, and (3) consequences
of each alternative. These conditions create a condition of ignorance
- the lack of relevant informaiton or the incorrect interpretation of
the information that is available.
References:
http://pespmc1.vub.ac.be/ASC/SATISFICING.html
http://www.utilitarianism.com/satisfice.htm
http://www.albany.edu/~dkw42/s3_factor&satif.html
http://cepa.newschool.edu/~het/profiles/simon.htm
http://www.argospress.com/Resources/risk-management/ysatis.htm
http://www.decisionsciences.org/Newsletter/Vol32/32_2/32_2vaz.pdf
http://instruction.bus.wisc.edu/mcarpenter/research/amj02_repo.pdf
www.iun.edu/~bnwcls/w430/orgpol.ppt
facultyfp.salisbury.edu/vxmagoon/chp06.ppt
bized.ac.uk/current/news/2002_3/251102_ec_apr.htm
http://members.aol.com/reosoft/classes/manresp/chap08.htm
http://216.239.53.104/search?q=cache:U7zh6UyMxZIJ:www.ait.unl.edu/siau/1997/mgmt457/lecture2.rtf+satisficing,+satisficing+and+managers&hl=en&ie=UTF-8 |
