Herbert Simon (1916-2001) is most famous for what is known to economists as the theory of bounded rationality, a theory about economic decision-making that Simon himself preferred to call “satisficing”, a combination of two words: “satisfy” and “suffice”.

The Rational Decision-Making Process

1. Step 1: Identify the Problem.
2. Step 2: Establish Decision Criteria.
3. Step 3: Weigh Decision Criteria.
4. Step 4: Generate Alternatives.
5. Step 5: Evaluate Alternatives.
6. Step 6: Select the Best Alternative.

Unbounded rationality is the generalized rationality of connectedness represented mathematically, of spirituality, and of right decision/negotiation. Operational procedures for defining/solving and validating a problem in group decision and negotiation under unbounded rationality are discussed.

Simon (1977) said that such a systematic process involves three major phases: intelligence, design, and choice. He later added a fourth phase: implementation. Monitoring can be considered a fifth phase—a form of feedback.

Decision making has following distinct phases:- 1. Defining the Problem 2. Analysing the Problem 3. Developing Alternative Solutions 4.

Decision making phases involves 4 major phases: intelligence, design, choice and implementing. The decision making process starts with the intelligence phase. In this phase, the decision maker examines reality, identifies and defines the problem. In the design phase, a model that represents the system is constructed.

Alternatives should reflect substantially different approaches to the problem or different priorities across objectives, and should present decision makers with real options and choices. But often these recommendations encompass value judgments that are better made by decision makers.

Chapter 12

The Design Phase is where you look at the many potential solutions and narrow down the choices to determine the most effective and efficient way to construct the solution. The Design Phase answers the questions about “how” you will build the best solution.