Herbert Simon Noted That Managers Generally Fail to Make Rational

question 71

Multiple Choice

Herbert Simon noted that managers generally fail to make rational decisions because they are limited by their own values,skills,habits,and unconscious reflexes as well as by incomplete information.What name did Simon give this phenomenon?

• A) Decision framing
• B) Satisficing
• C) Escalation of commitment
• D) Innovation
• E) Bounded rationality

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Definitions:

External Cost

Costs incurred by third parties as a result of an economic transaction, which are not reflected in the transaction's market price, often necessitating government intervention.

Social Cost

The total cost to society, including both private costs incurred by individuals and external costs not accounted for by the market.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period.

Supply Curve

The supply curve is a graphical representation showing the relationship between the price of a good or service and the quantity supplied for a given period, typically upward sloping.