ABSTRACT
The economic approach to decision making revolves around four basic axioms which are to a large extent interdependent. First, decision making is rational. Second, decision makers have explicit goals. Third, decision making involves careful evaluation of all relevant costs and benefits. And fourth, in trying to attain their goals, decision makers seek to optimise. It must straightaway be made clear that economists do not regard these axioms as describing what always happens in fact. That the canons of rationality, goal stipulation, cost benefit evaluation and optimisation are sometimes, perhaps often, departed from in the real world of affairs is admitted. There is, too, a constant problem of reconciling the necessary speed of decision making with the desirability of measured data and deliberation. Economists believe, however, that these approaches to decision making are feasible, that they are pursued at least to an extent which makes possible certain predictions about organisational behaviour, and, most important for our purposes, that the active pursuit of these approaches can help organisations to be more efficient.
