Satisficing Theory

Classical decision-making theory presumes decision makers to be rational actors who seek optimal or maximum solutions. This model, also known as rational choice, suggests that decision makers follow a linear sequence to arrive at a solution:

• 1.
  Identify desired outcome(s) in light of the organization's goals and objectives.
• 2.
  Consider all possible alternatives.
• 3.
  Consider the consequences of each alternative.
• 4.
  Select the alternative that will most likely result in the desired outcome.

Inherent in this model is the assumption that a decision maker is capable of knowing all possible solutions as well as all consequences and will consider each equally. Herbert A. Simon, the originator of satisficing theory, asserts that the classical decisionmaking model is an ideal rather than practical strategy. He suggests that inherent limitations within organizations and decision makers themselves preclude the use of the pure rationality required by the classical model. Rather, decision makers employ bounded rationality. That is, they act rationally within the constraints of external and internal limitations.

These external limitations include, for example, the multifaceted structure of organizations. This structural complexity limits the information to which any one person within the organization has access. Thus, with only limited access to information, a decision maker is precluded from considering all possible alternatives or knowing all possible consequences of any alternative. Similarly, organizations tend to have multiple and, oftentimes, conflicting goals. Multiple or conflicting goals may prevent any one solution from being “best” in that a particular solution may maximize one goal while inhibiting another. Moreover, and perhaps more important, because decision makers are human, they have internal limitations that prevent them from employing pure rationality. For instance, all humans have unconscious biases that cause them to accept some data while rejecting others. In addition, humans have a limited cognitive capacity to manage complexity. As a result, humans attempt to simplify highly complex situations. Again, this causes a decision maker to ignore some data in favor of others.

Therefore, because decision makers are constrained by this bounded rationality, they are incapable of identifying the optimal solution. Rather, they search for the first alternative that is at least minimally satisfactory. That is, they seek to satisfice.