Managerial Economics Essay Example | Topics and Well Written Essays - 3000 words

Managerial Economics - establish ExampleRationality is considered as an important aspect of the behavioural theory (Simon, 2001). There is a exceed between the behaviour and rationality and they are connected by the concept of finis making. A finding making process is common in an organization where the managers have to take various decisions in secernate to achieve the mission of the organization (Ethiraj and Levinthal, 2004). The aim for this paper is to evaluate the effectiveness of bounded rationality and the unfavourable outline of how the heuristics creates biasness towards decision making. The research would offer a scope to have a detailed analysis of bounded rationality as explained by Herbert Simon.According Herbert Simon (1961), rationality in behavioural characteristics of a somebody considers a relation of efficacy between the presumed end and the means to reach them (Kahneman, 2003). According to the researcher, the human beings overleap in their rational behavi our due to the different aspects that is the rationality requires knowledge as well as understanding of the situation. However, the decision makers cannot be always called as rational because since they are likely to take decisions ground on the available data and are unable to incorporate new information within their decision making process. According to the researcher, the organization must have a clear organizational goal so that the employees can work hard in aver to achieve the goal (Simon, 2001). The organizations would have benefits for developing the organizational goals that helps in the organizational decision making process. It is said when the organizational members experience bounded rationality, managing the situations becomes much more(prenominal) difficult and the organizations are supposed to use both formal and informal control mechanisms in order to make the employees perform rationally (Simon, 2001).A theory of rational behaviour involves both the rationality of the several(prenominal) as well