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Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. Irrational decision is more counter to logic. The decisions are made in haste and outcomes are not considered. [57]
Rational choice theory provides a framework to explain why groups of rational individuals can come to collectively irrational decisions. For example, while at the individual level a group of people may have common interests, applying a rational choice framework to their individually rational preferences can explain group-level outcomes that ...
Rational irrationality is not doublethink and does not state that the individual deliberately chooses to believe something he or she knows to be false. Rather, the theory is that when the costs of having erroneous beliefs are low, people relax their intellectual standards and allow themselves to be more easily influenced by fallacious reasoning, cognitive biases, and emotional appeals.
Predictably Irrational: The Hidden Forces That Shape Our Decisions is a 2008 book by Dan Ariely, in which he challenges readers' assumptions about making decisions based on rational thought. Ariely explains, "My goal, by the end of this book, is to help you fundamentally rethink what makes you and the people around you tick.
As decision-makers have to make decisions about how and when to decide, Ariel Rubinstein proposed to model bounded rationality by explicitly specifying decision-making procedures as decision-makers with the same information are also not able to analyse the situation equally thus reach the same rational decision. [16]
Rationalization encourages irrational or unacceptable behavior, motives, or feelings and often involves ad hoc hypothesizing. This process ranges from fully conscious (e.g. to present an external defense against ridicule from others) to mostly unconscious (e.g. to create a block against internal feelings of guilt or shame).
Traditional game theory is a primarily normative theory as it seeks to pinpoint the decision that rational players should choose, but does not attempt to explain why that decision was made. [14] Rationality is a primary assumption of game theory, so there are not explanations for different forms of rational decisions or irrational decisions. [14]
Marketers can take advantage of rational ignorance by increasing the complexity of a decision. If the difference in value between a quality product and a poor product is less than the cost to perform the research necessary to differentiate between them, then it is more rational for a consumer to just take his chances on whichever of the two is more convenient and available.