satisficing
satisficing A term used in economic theory to describe how people make rational choices between options open to them and within prevailing constraints. Herbert A. Simon (Administrative Behaviour, 1957) argued that decision-makers can rarely obtain and evaluate all the information which could be relevant to the making of a decision. Instead, they work with limited and simplified knowledge, to reach acceptable, compromise choices (‘satisficing’), rather than pursue ‘maximizing’ or ‘optimizing’ strategies in which one particular objective is fully achieved. Satisficing is sometimes also referred to as a strategy of disjointed incrementalism.
The adoption of satisficing models instead of maximizing models of behaviour has been found useful in the theory of the firm and corporate behaviour. For example, to maximize its profits a firm needs complete information about its costs and revenues, which in practice is available only after the event. Satisficing models replace the search for the optimum outcome, which may be unattainable, with rules of thumb and compromises which work well enough. See also BOUNDED RATIONALITY; ORGANIZATION THEORY.
The adoption of satisficing models instead of maximizing models of behaviour has been found useful in the theory of the firm and corporate behaviour. For example, to maximize its profits a firm needs complete information about its costs and revenues, which in practice is available only after the event. Satisficing models replace the search for the optimum outcome, which may be unattainable, with rules of thumb and compromises which work well enough. See also BOUNDED RATIONALITY; ORGANIZATION THEORY.
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satisficing