COST ACCOUNTING
INFORMATION FOR DECISION MAKING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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operating under time constraints.
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limited in their capacity to acquire and process information.
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subject to cognitive biases.
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All of the above
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Detailed explanation-1: -What is Bounded Rationality? Bounded rationality is a human decision-making process in which we attempt to satisfice, rather than optimize. In other words, we seek a decision that will be good enough, rather than the best possible decision.
Detailed explanation-2: -Bounded rationality examples For example, people are likely to take more risks when they are happy and less likely to take risks when they are frightened. This can lead to suboptimal decisions, as people make decisions based on emotion rather than facts and logic.
Detailed explanation-3: -At this individual level, four principles define bounded rationality and underlie its application to organizations and institutions. As summarized by Bryan Jones ( 2003 ), these principles are intended rationality, adaptation, uncertainty, and trade-offs.
Detailed explanation-4: -Herbert Simon introduced the term ‘bounded rationality’ (Simon 1957b: 198; see also Klaes & Sent 2005) as a shorthand for his brief against neoclassical economics and his call to replace the perfect rationality assumptions of homo economicus with a conception of rationality tailored to cognitively limited agents.