Simon's bounded rational decision model

Herbert Simon is a famous American management scientist and sociologist. Simon used to be a professor at Illinois Institute of Technology. Simon has been a professor of computer science and psychology at Carnegie Mellon University since 1949. 1975, Simon won the Turing Award, the highest prize in computer science; 1978, Simon won the Nobel Prize in Economics. Simon died at 200 1 at the age of 85. Simon's main works include: decision theory in economics and behavioral science, organization, public management, management behavior, and the new science of management decision. He has extensive knowledge and interests. He has profound attainments in management, economics, organizational behavior, psychology, political science, sociology, computer science and so on, and can be called a generalist in social science.

Herbert Simon is a representative of the school of decision theory. Simon was awarded the 1978 Nobel Prize in Economics by the Royal Swedish Institute for his "pioneering research on decision-making procedures in economic organizations".

Management Behaviors is his most important work, which is called "epoch-making" by the Royal Swedish Academy of Science. It is a pioneering work in managing organizational decision-making process. The contribution of Simon's book Management Behavior and its integration theory to economics can be summarized as follows: first, challenge the basic propositions of microeconomics with the basic propositions of "bounded rationality" and "satisfaction criterion"; Secondly, the theory of decision-making process is put forward to tell us how to understand it from the decision-making process of an organization.

Second, organization.

Simon defines management as decision-making in his book Management Behavior, and decision-making is connected in series in the whole organizational activities. Organization is a system composed of individuals as decision makers, and management is decision-making. In order to understand decision-making better, we must first analyze the organization. Because everyone in an organization should consider the key element of organization when making decisions, and its most basic environment is organization.

Simon put forward his own view on organization, which "refers to a complex mode of information exchange and mutual connection between human groups." It provides each member with a lot of information, many decision-making premises, goals and attitudes he needs; It also provides some stable and understandable experiences for each member, so that they can predict what other members will do and how others will react to their words and deeds. "Simon's survey of the organization is based on the following two aspects:

1. Identification

Simon's definition of identity is: "If a person's evaluation of various options when making decisions is based on the consequences of these options on the group, we say that that person agrees with that particular group." The role of identity has both positive and negative aspects. What an organization needs to do is to design its organizational structure scientifically, so as to minimize the negative impact of identity on decision-making.

2. Authority

Simon believes that "as long as someone in the organization allows others to provide decision-making premise to guide their own decision-making, we think this is the phenomenon of authority exercise in the organization." This is consistent with Chester Barnard's thoughts on authority.

Simon analyzed the influence of organization on decision-making process from the perspective of identity and authority, and finally reached an important conclusion: "Formal organization is a plan of division of labor and authority distribution." With the existence of authority, the decision of one member of an organization can influence the behavior of other members, thus making it possible to specialize the decision-making work.

Third, decision-making

Management is decision making. Not only the top management has to make decisions, but all levels of the organization, including workers, have to make decisions. These decisions are in series in the whole organizational activities. Organization is a system composed of individuals as decision makers, and management is decision-making.

People's behavior always has a certain purpose, and organizing activities is also to achieve organizational goals. In order to achieve certain goals, the organization must take certain measures. When the superior in the organization determines a goal, the subordinate will adopt certain methods or means to implement it according to the decision or goal made by the superior. And this method or means has become the goal of the next level. In this way, an uninterrupted "goal-means" chain is formed in the organization, which is consistent with the hierarchical command chain in the organization. The goal of one level in the organization exists as the means of the next level, and the means of this level become the goal of the next level. In order to achieve the established goals, every level in the organization is the unity of goals and means. The continuous chain of "goal11means" formed in the organization is the process of decision-making and implementation.

Fourth, the decision-making elements.

Decision element is a concept put forward by Simon in order to understand and understand the decision-making process of managers more deeply. Simon believes that the so-called decision-making elements can be divided into fact elements and value elements.

Fact elements are some descriptions of the environment and how it works. Whether this description is accurate or not can be judged by empirical observation or verified by experiments. Decisions are always made under certain environmental assumptions, so there are always some factual elements involved. Factual elements can be simply divided into two parts: decision-making skills and knowledge that are helpful to deal with various situations; Relevant information reflected by the environment.

Value element is the expression of managers' preference for something, that is, the value standard reflected by managers' "attitude" towards it. Value elements are the judgments and opinions made by managers according to the performance of factual elements and their own value standards. Simon believes that value elements include both facts and value judgments. Value elements generally include: organizational goals, efficiency standards, justice standards, personal values and so on.

How to distinguish and verify fact elements and value elements? Simon thinks; "Generally speaking, the distinction between value elements and fact elements is equivalent to the distinction between goals and means." In other words, what is the purpose of human action is a question of value judgment, and the value elements cannot be judged by investigation or experiment. The most appropriate action to achieve this goal belongs to the issue of factual elements, which can be tested to determine its authenticity. Management involves more facts.

V. bounded rational decision-making model

(A) bounded rationality

Regarding rationality, Simon gave a clear definition in "The Cornerstone of Modern Decision Theory". "Rationality refers to a way of behavior: it is suitable for achieving the specified goal; But also within the given conditions and limitations ".

Simon believes that "the focus of management theory is the definition of rational and irrational aspects of human social behavior." From the psychological point of view, he demonstrated that the rationality of human behavior is within the given environmental limits, that is, the so-called rationality is limited rationality, which is determined by human psychological mechanism.

(B) the "economic man" theory of defects

The philosophy of rational decision-making mode comes from the traditional theory of "economic man". "Economic man" was first put forward by the Italian economist Pareto, and this idea was clearly expressed for the first time in Adam Smith's The Wealth of Nations. The theory of "economic man" is based on a series of assumptions:

1. The agent knows all the possible actions, knows which action can achieve the greatest effect, and can obtain all the information about the surrounding environment.

2. People are always acting rationally and can choose the best one from all actions: the assumption that the behavior is completely rational.

Thus, as an "economic man", human behavior is completely rational, and economic man pursues the best decision and the best result. The hypothesis of "economic man" only reflects people's self-interest and rationality, and is a highly abstract simplification of real people. However, it does not exist in reality. First of all, the uncertainty and instability of the environment make it impossible for economic people to obtain a series of information about the environment; Secondly, due to their own physiological factors and the resulting limitations of cognition, emotion and attitude, even if the economic man has mastered all the information of the environment, he can't handle all the information completely rationally.

(C) Simon's bounded rational decision-making model

The basic propositions of Simon's decision theory are bounded rationality and satisfaction criterion. The basic content is:

? 1. The limitation of external factors leads decision makers to behave as bounded rationality in decision-making. The limitations of these external factors include: the uncertainty and variability of macro-environment, the incompleteness of information collection and the change of organization. First of all, because the current situation is not necessarily consistent with future changes, decision makers cannot make decisions in a programmed mode. Secondly, due to the incompleteness of information collection, decision makers can't get all the next action plans. Finally, organizational change includes organizational change, organizational goal transfer and organizational structure change. As an individual in an organization, it is inevitable to be disturbed by organizational changes when making decisions. Compared with the behavior of economic man, the rationality of behavior is bound to be discounted. Most of the above contents belong to the factual factors in decision-making elements.

2. Internal thinking leads decision makers to behave as bounded rationality in decision-making. These internal factors mainly include: the decision maker's foresight of the future, the lack and limitation of the decision maker's ability to use information, the influence of personality, the role of subjective factors and emotional factors. First of all, the future development trend is uncertain, and decision makers will have some deviations in their predictions. Decision-making is future-oriented, so the accuracy of decision-makers' judgment on the future will always be limited to a certain extent. Secondly, even if the decision-maker has all the known information of decision-making behavior, due to the limitation of his own conditions, his ability to make full use of the information is limited, and the probability of making an accurate judgment on the information and choosing the best scheme is not "1". Finally, personality, attitude and motivation affect the decision-making process and results, and the order of information collection and people's thinking inertia pose great challenges to the scientific decision-making behavior. Therefore, the decision-making mode of decision-makers should be bounded rationality rather than omniscient rationality, and the human choice mechanism should be the adaptive mechanism of bounded rationality rather than the optimal mechanism of complete rationality.

3. Bounded rationality determines the satisfaction principle of decision-making behavior. Based on bounded rationality, Simon proposed to replace "economic man" with "administrative man" and "satisfaction" with "optimization". Complete rationality leads the decision-maker to seek the best measures, while limited rationality leads him to seek the measures that meet the requirements or are satisfactory.

Abstract of intransitive verbs

The contribution of Simon's book Management Behavior and its integration theory to economics can be summarized as two aspects: one is the decision theory of "bounded rationality" and "satisfaction criterion"; Secondly, the theory of decision-making process is put forward. Simon's bounded rational decision-making model has created a new situation in management decision-making theory, which can explain more choice examples, conform to more actual situations and better describe people's realistic choice process, so it can be used as a more realistic description theory.