Bounded Rationality Model or Administrative Man Model

An alternative model, one not bound by the above assumptions, has been presented by Simon. This is bounded rationality model, also known as the administrative man model. 

As the name implies, this model does not assume individual rationality in the decision process. Instead, it assumes that people, while they may seek the best solution, usually settle for much less because the decisions they confront typically demand greater information processing capabilities than they possess. They seek a kind of bounded (or limited) rationality in decisions. 

The concept of bounded rationality attempts to describe decision processes in terns of three mechanisms. 

Sequential attention to alternative solutions : People examine possible solutions to a problem sequentially. Instead of identifying all possible solutions and selecting the best (as suggested in the ecologic model), the various alternatives arc identified and evaluated one at a time. If the first solution fails to work it is discarded and the next solution is considered. When an acceptable (that is 'Good enough' and not necessarily 'the best') solution is found, the search is discontinued. 

Use of heuristics : A heuristic is a rule which guides the search for alternatives to areas that have a high probability  for yielding satisfactory solutions. For instance, some 

companies continually select Management graduates from certain institutions because-in the past such graduates have performer well for the company. According to the bounded 

rationality model, decision makers use heuristics to reduce large problems to manageable proportions so that decisions can be made rapidly. They look for obvious solutions or 

previous solutions that worked in similar situations. 

Satisfying : Whereas the ecologic model focuses on the decision maker as an optimizer, this  model sees him or her as a satisfies. An alternative is optimal if : 

1. there exists a set of criteria that permits all alternatives to be compared; and 
2. the alternative in question is preferred, by these criteria, to all other alternative

An alternative is satisfactory if : 

1. there exists a set of criteria that describes minimally satisfactory alternatives; and 
2. the alternative in question meets or exceeds all these criteria.  

  A Bounded Rationality Model of Decision Making

Based on these three assumptions about decision makers, it is possible to outline the decision process as seen from the standpoint of the bounded rationality model. As sh

own in Figure, the model consists of eight steps :

1. Set the goal to be pursued or define the problem to be solved. 
2. Establish an appropriate level of aspiration or criterion level (that is, when do ' you know that a solution is sufficiently positive to be acceptable even if it is not perfect ?). 
3. Employ heuristics to narrow problem space to a single promising alternative. 
4. If no feasible alternative is identified (a) lower the aspiration level, and (b) begin the search for a new alternative solution (repeat steps 2 and 3). 
5. After identifying a feasible alternative (a), evaluate it to determine its acceptability (b). 
6. If the identified alternative is-unacceptable, initiate search for a new alternative solution (repeat steps 3-5). 
7. If the identified alternative is acceptable (a) implement the solution (b). 
8. Following implementations, evaluate the case with which goal was (or was not) attained (a), and raise or lower level of aspiration accordingly on future decisions of this type. 

As can be seen, this decision process is quite different from the ecologic model. In it we do not seek the best solution : instead, we look for a solution that is acceptable. The search behavior is sequential in nature (evaluating one or two solutions at a time). Finally, in contrast to the prescriptive ecologic model, it is claimed that the bounded rationally model is descriptive; that is it describes how decision makers actually arrive at the identification of solutions to organisational problems.