satisficing

Simon’s Satisficing Strategy In A Nutshell

Simon’s satisficing strategy is a decision-making technique where the individual considers various solutions until they find an acceptable option. Satisficing is a portmanteau combining sufficing and satisfying and was created by psychologist Herbert A. Simon. He argued that many individuals make decisions with a satisfactory (and not optimal) solution. Satisfactory decisions are preferred because they achieve an acceptable result and avoid the resource-intensive search for something more optimal.

Understanding Simon’s satisficing strategy

Simon is also the father of bounded rationality.

Indeed, humans lack the cognitive resources to make optimal decisions. We have little understanding of outcome probabilities and can rarely evaluate relevant outcomes with sufficient precision. Furthermore, our memories tend to be unreliable.

Given these limitations, a more realistic approach involves logical and reasoned decision making. Simon called this process “bounded rationality”. Here, satisficing individuals make decisions that are based on certain, non-exhaustive criteria.

Satisficing versus maximizing

Satisficing is not exclusively driven by cognitive limitations. It also seeks to maximize utility, or the extent to which a task or choice is pleasant or desirable. 

For many years, behavioral economists assumed that task desirability was linked to how much information the decision-maker had at their disposal. 

But this is untrue. To prove this, consider the key differences between a satisficer and a maximizer:

  1. The satisficer is not attached to the very best outcome. As a result, they experience less regret and higher self-esteem than their maximizing counterparts – who tend to be outcome-dependent perfectionists.
  2. The satisficer can move on after deciding, while the maximizer needlessly expends more time and energy ruminating.
  3. The satisficer does not obsess over other options and is happier for it. Conversely, the maximizer makes decisions based on external comparisons and not on their own needs or pleasure. This tends to make them unhappier.

Examples of Simon’s satisficing strategy

Consider the consumer who has a leaking pipe in their basement on a weekend. The best solution to this problem is replacing the pipe, but this entails finding a suitable plumber and is an expensive fix. Instead, the consumer chooses to stem the leak with a temporary sealant. While the sealant is by no means a permanent fix, it is satisfactory enough to stem the leak and saves time, money, and energy.

Satisficing has implications for copywriting and web design too. Visitors will tend not to stay on a company site for long unless there are obvious and satisfactory solutions to their problems.

The strategy can also be seen in consumer psychology. When choosing a product such as a pipe sealant, the consumer is looking for the simplest, most readily available option. While more effective solutions exist, they do not come into consideration. 

For example, an office worker might purchase a single piece of accounting software despite there being more benefit in buying the whole suite. A fitness fanatic may purchase a low-quality pair of earphones to use while running, despite several competitor products offering better sound rendition.

Key takeaways

  • Simon’s satisficing strategy is a form of decision making that advocates satisfactory and not optimal solutions.
  • Simon’s satisficing strategy avoids cognitive overload in the often fruitless search for optimal outcomes. These outcomes result in needless expenditure of time, energy, or money.
  • Simon’s satisficing strategy has applications in consumer psychology and user design. Consumers who adopt the strategy tend to be happier and have higher self-esteem than those who opt to maximize the outcomes of decision making.

Read Next: Bounded Rationality, Heuristics, Biases.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"