Theoretical Analysis on Congnitive Limitations

Theoretical Analysis II

Throughout the academic world there are many definitions and theories for bounded rationality. Herbet A Simon “proposed bounded rationality as an alternative basis for the mathematical modelling of decision-making, as used in economics, political science and related disciplines. It complements "rationality as optimisation", which views decision-making as a fully rational process of finding an optimal choice given the information available”. (Selton, 2001) Allais gives the assertion that bounded rationality as (Human psychology is invariant in time and space, in other words it can be represented by invariant functions). These meanings represent the idea we are limited in making decisions when there are limitations around whether it be limited cognitive skills, time or information. There are potential issues that arose in the background summary that relate to bounded rationality and in turn affected the decision maker. (Allais, 1952)

A cognitive limitation (Publisher, 1999) is a potential issue that could have affect the decision maker. Cognitive limitation is the lack of functioning or processes of perception, memory, judgment, and reasoning, as contrasted with emotional and volitional processes. With the decision maker allowing concessions, all of those concessions could have been thrown out the window. If the managers, had lack of perception with current day events in Australia regarding race and religion, greater issues would of arisen and placed inadvertent pressure on the managers. With no reasoning involved, the decision makers would have been faced with potential issues stemming from lack of workers resulting in poor results, and disharmony within that certain group.

Limitations in time would have bounded the decision maker from making an authorised and effective decision. Given the period of 28 days, the time in preparing, and ensuring that the concessions