A Behavioral Model of Cost Reduction
AbstractThree aspects of bounded rationality seem important for decision theory: (1) the existence of goals, (2) the search for improvement, and (3) long-run success. Two important criteria of long-run success are (a) the probability of survival, and (b) the long-run average rate of growth of performance (relative to one or more goals). One obstacle to the development of mathematical theories of resource allocation based on bounded rationality has been the absence of a clear and precise formulation of what is meant by "satisficing." In this paper I develop a few related mathematical models of satisficing in an uncertain environment, and apply them to the analysis of cost-reduction and technical change. An additional theme is that the allocation of resources in an organization is significantly influenced by the allocation of decision-making effort.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 6 (1975)
Issue (Month): 1 (Spring)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Zhi Tang & Jintong Tang, 2012. "Entrepreneurial orientation and SME performance in China’s changing environment: The moderating effects of strategies," Asia Pacific Journal of Management, Springer, vol. 29(2), pages 409-431, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.