Bounded Rationality: Managerial Decision-Making and Data

ABSTRACT

Herbert Simon’s concept of bounded rationality, often cited in classical works, has evolved to include managerial decision-making. This paper brings the concept of bounded rationality and satisficing further forward into the data age to identify if satisficing behaviors still exist now that managers “have the data,” a previous limitation in decision-making. In the past, data was a commonly cited void in managerial decision-making. Nonetheless, Simon wrote that time is a primary scarcity in the data age.¹ We survey managers about their data usage and analytics habits, their individual and organizational use of data, as well as data quality. We find that while data is omnipresent, data quality, utility, and value are inconsistent and remain as limitations to managerial decision-making. These findings suggest that satisficing behaviors can and do exist even in the age of data-at-your-fingertips.

KEYWORDS:

• Decision-making
• data driven decisions
• bounded rationality
• satisficing
• managerial decisions

Disclosure statement

No potential conflict of interest was reported by the author(s).