Rationality in decision-making

It is widely believed that the element of rationality should also be present in decision making. In this regard, it is said that the decisions taken by the managers can be effective if they are also rational. However, the meaning of the term rationality, particularly in the context of decision-making, is not clear. The purpose of decision-making is to achieve an objective. Rationality requires that the person making the decision should be aware of the alternative courses of action that can be used to achieve the objectives. Similarly, the person should have complete information and also the ability to properly analyze the alternative courses of action available for achieving the objective. At the same time, it is also required that there should be the desire to find the appropriate solution and for this purpose the selected alternative should be capable of achieving the objective. In this regard, rationality can be described in terms of objective and intelligent action. In case of rationality, there is also a behavioral nexus present between the ends and means. This means that if the appropriate means have been selected for achieving the desired ends, the decision can be described as a rational. However it is not possible that there can be complete rationality in the process of decision-making, particularly in case of management decisions. The decisions are made for future and therefore there is always a certain amount of uncertainty involved in it. In the same way, it is also very difficult to identify the entire alternative that may be available to achieve the objectives. This can be particularly true in cases where an opportunity may be involved to do the things that have not been done earlier. Even the latest software may not be able to properly evaluate all the available alternatives.

Rationality also has other limitations. These limitations are related with time, information and also related with certainty. Therefore, although the managers want to be rational while making a decision, they have to satisfy with limited rationality only. The reality is that the managers cannot be totally rational while making a decision. For example, sometimes the aversion to risk that is present among the managers may interfere with the desire of the managers to select the possible solution. In this way, the element of risk may also act as a limitation. A large number of managers want to play it safe and therefore, they take risk only by remaining within the limits of rationality and also, keeping in view the size and nature of the risk.