Herbert Simon (1916-2001)
American winner of the Nobel Prize for Economics in 1978 and an expert in decision making (pictured right).
Administrative Behaviour (1947)
Management is decision making, and decisions are made in three
1. The intelligence activity
Finding situations that require a decision.
2. The design activity
Inventing, developing and analysing possible courses of action.
3. The choice activity
Choosing one course of action from the various alternatives that achieves the organization’s objectives.
Managers (administrative man):
i.e. managers choose a decision that is satisfactory or ‘good enough’ to achieve an
2. Are forced to satisfice because of bounded rationality
Bounded rationality is...
How the quality and rationality of decisions are restricted (or bounded) by inadequate information, intellect
3. Don’t act as economic
(i.e managers don't choose the best possible decision to maximize profit).
There are two types of decision:
Repetitive and routine decisions, dealt with by procedure and habit.
New, intuitive and creative decisions that don’t have a procedure e.g. strategy decisions.
To reduce costs an organization should maximize the number of programmed decisions and
electronically process them as much as possible.
Key quote on decision
Decision making is at the heart of administration.