Chapter 5 (155-171)

Chapter 5 (155-171) - Chapter 5, pg. 155-171 (book) I. Link...

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Chapter 5, pg. 155-171 (book) I. Link between perception and individual decision making A. Decisions - choices made from among two or more alternatives B. Problem - a discrepancy between some current state of affairs and some desired state II. How should decisions be made A. The rational decision making process a. Rational - making consistent, value maximizing choices within specified constraints b. Rational decision making model - a model that describes how individuals should behave in order to maximize some outcome 1. Define the problem, 2. Identify the decision criteria, 3.Allocate weights to the criteria, 4. Develop the alternatives, 5. Evaluate the alternatives, 6. Select the best alternative c. Assumptions of the model 1. Problem clarity- problem clear, decision maker has complete info 2. Known options- can list the viable alternatives 3. Clear preferences- alternatives can be ranked and weighted on importance 4. Constant preferences- the weight of the options are stable over time 5. No time or cost constraints
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This note was uploaded on 05/12/2008 for the course BUAD 304 taught by Professor Cummings during the Fall '07 term at USC.

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Chapter 5 (155-171) - Chapter 5, pg. 155-171 (book) I. Link...

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