There are several models of decision-making which are as follows :-
1.The economic rationality model
This model comes from the classical economist models, in which the decision maker is perfectly and completely rational in every way. In this, following conditions are assumed. a. The decision will be completely rational in means ends sense. b. There is a complete and consistent system of preferences that allows a choice among alternatives. c. There is a complete awareness of all the possible alternatives. d. Probability calculations are neither frightening nor mysterious. e. There are no limits to the complexity of computations that can be performed to determine the best alternatives.
2.The social model :-
At the opposite extreme from the economic rationality model is the social model drawn from psychology. Sigmund Freud viewed humans as bundles of feelings, emotions and instincts, with their behaviour guided by their unconscious desires. These processes have even an impact in the international arena as they provide some basic rules of protocol.
3.Simon’s bounded rationality model :-
To present a more realistic alternative to the economic rationality model, Herbert Simon proposed an alternative model. He felt that management decision-making behaviour could be described as follows a. In choosing between alternatives, manager attempt to satisfy or looks for the one which is satisfactory or “good enough”. Examples of satisfying criteria would be adequate profit or share or the market and fair price. b. They recognise that the world they perceive is drastically simplified model of the real world. They are content with the simplification because they believe the real world is mostly empty anyway. c. Because they satisfy rather than maximise, they can make their choices without first determining all possible behaviour alternatives and without ascertaining that these are all the alternatives. d. The managers treat the world as empty, they...