Satisficing

Definition

Satisficing is a decision-making strategy where an individual or organization sets a minimum acceptable level of a desired outcome and chooses the first option that meets or exceeds that level, rather than attempting to identify and select the optimal solution. This concept is closely tied to the context of managerial decision-making, programmed and nonprogrammed decisions, barriers to effective decision-making, and strategies for improving the quality of decision-making.

5 Must Know Facts For Your Next Test

1. Satisficing is a decision-making strategy that prioritizes finding a solution that meets a minimum acceptable standard, rather than searching for the optimal solution.
2. Satisficing is often used in situations where the decision-maker faces constraints such as limited time, information, or cognitive capacity, which make it difficult to identify and evaluate all possible alternatives.
3. Programmed decisions, which are routine and repetitive, are more likely to involve satisficing, while nonprogrammed decisions, which are novel and complex, are more likely to involve optimization.
4. Barriers to effective decision-making, such as cognitive biases and organizational politics, can contribute to the use of satisficing strategies.
5. Improving the quality of decision-making may involve techniques like expanding the decision-maker's information and cognitive resources, as well as fostering a culture that encourages critical thinking and the pursuit of optimal solutions.

Review Questions

• Explain how the concept of satisficing relates to the overview of managerial decision-making.
  • Satisficing is a key concept in the overview of managerial decision-making. Managers often face constraints such as limited time, information, and cognitive resources, which can make it challenging to identify and evaluate all possible alternatives. In these situations, satisficing allows managers to make decisions by setting a minimum acceptable standard and selecting the first option that meets or exceeds that level, rather than searching for the optimal solution. This decision-making strategy reflects the bounded rationality that managers often face and can be a practical approach when facing complex, nonprogrammed decisions.
• Describe how the use of satisficing relates to the distinction between programmed and nonprogrammed decisions.
  • The decision-making strategy of satisficing is more likely to be employed in the context of programmed decisions, which are routine and repetitive, compared to nonprogrammed decisions, which are novel and complex. Programmed decisions often have well-defined criteria and constraints, allowing managers to quickly identify solutions that meet a minimum acceptable standard. In contrast, nonprogrammed decisions typically involve a greater degree of uncertainty and ambiguity, making it more challenging to define clear criteria for satisficing. In these situations, managers may be more inclined to pursue optimization and the identification of the best possible solution, rather than simply satisficing.
• Analyze how barriers to effective decision-making, such as cognitive biases and organizational politics, can contribute to the use of satisficing strategies.
  • Barriers to effective decision-making, such as cognitive biases and organizational politics, can significantly influence the use of satisficing strategies. Cognitive biases, such as the availability heuristic or confirmation bias, can lead decision-makers to rely on limited information or to favor options that are readily available, rather than thoroughly evaluating all alternatives. Similarly, organizational politics and power dynamics can create pressures to make decisions that satisfy the minimum requirements of key stakeholders, rather than pursuing the optimal solution. In these situations, satisficing becomes an attractive decision-making strategy, as it allows managers to make decisions that meet a minimum acceptable standard while minimizing the cognitive effort and political risks associated with a more comprehensive, optimizing approach.

Related terms

Bounded Rationality:

The concept that an individual's decision-making is limited by the information they have, the cognitive limitations of their mind, and the finite amount of time they have to make a decision.

Optimization: The process of finding the best or optimal solution to a problem, typically by maximizing or minimizing a specific objective function.

Heuristics:

Simple, rule-of-thumb strategies that people use to form judgments and make decisions, especially in complex or time-pressured situations.