Question

Tonya decided to purchase a piece of equipment from a domestic company instead of an overseas company despite the domestic company's higher cost and lower quality. Her decision was based on uncertainty that the foreign shipment would meet her production deadline. According to Herbert Simon, Tonya was feeling the effects of _____.

Answer 1

Answer:

Bounded rationality.

Explanation:

Tonya was feeling the effects of bounded rationality. According to Herbert Simon, people’s rationality is limited when making a decision. The rationality is limited by the information the person has, by the cognitive limitations and the time available to make the decision. In this case, if Tonya had been really rational she would have chosen the overseas company. However, she lacked information about shipment and that uncertainty led her to choose the domestic company instead, even if it had many disadvantages.