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| '''Satisficing''' is a [[decision-making]] strategy or cognitive [[heuristic]] that entails searching through the available alternatives until an acceptability threshold is met.<ref>{{cite book |first=Andrew |last=Colman |year=2006 |title=A Dictionary of Psychology |location=New York |publisher=Oxford University Press |page=670 |isbn=019861035}}</ref> This is contrasted with [[optimal decision]] making, an approach that specifically attempts to find the best alternative available. The term ''satisficing'', a [[portmanteau]] of ''satisfy'' and ''suffice'',<ref>{{cite book |first=Ken |last=Manktelow |year=2000 |title=Reasoning and Thinking |location=Hove |publisher=Psychology Press |page=221 |isbn=0863777082 }}</ref> was introduced by [[Herbert A. Simon]] in 1956,<ref>{{cite journal |title=Rational Choice and the Structure of the Environment |last=Simon |first=H. A. |journal=[[Psychological Review]] |volume=63 |issue=2 |year=1956 |pages=129–138 |doi=10.1037/h0042769 }} (page 129: "Evidently, organisms adapt well enough to ‘satisfice’; they do not, in general, ‘optimize’."; page 136: "A ‘satisficing’ path, a path that will permit satisfaction at some specified level of all its needs.")</ref> although the concept "was first posited in ''[[Administrative Behavior]]'', published in 1947."<ref name=Brown2004>{{cite journal|last1=Brown|first1=Reva|title=Consideration of the Origin of Herbert Simon's Theory of 'Satisficing' (1933-1947)|journal=Management Decision|volume=42|issue=10|year=2004|pages=1240–1256|doi=10.1108/00251740410568944}}</ref><ref name=AB1947>{{cite book | last = Simon | first = Herbert A. | authorlink = Herbert A. Simon | title = [[Administrative Behavior]]: a Study of Decision-Making Processes in Administrative Organization | publisher = Macmillan | location = New York | year = 1947 | edition=1st | oclc = 356505}}</ref> Simon used satisficing to explain the behavior of decision makers under circumstances in which an optimal solution cannot be determined. He pointed out that human beings lack the cognitive resources to [[optimization|optimize]]: We can rarely evaluate all outcomes with sufficient precision, usually do not know the relevant probabilities of outcomes, and possess only limited memory. Simon formulated the concept within a novel approach to rationality, which takes into account these limitations. He referred to this approach as [[bounded rationality]]. Notice furthermore that some [[consequentialism|consequentialist]] theories in [[moral philosophy]] use the concept of satisficing in the same sense, though most call for optimization instead.
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| == In decision-making ==
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| In decision making, satisficing explains the tendency to select the first option that meets a given need or select the option that seems to address most needs rather than the “optimal” solution.
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| :Example: A task is to sew a patch onto a pair of jeans. The best needle to do the threading is a 4 inch long needle with a 3 millimeter eye. This needle is hidden in a haystack along with 1000 other needles varying in size from 1 inch to 6 inches. Satisficing claims that the first needle that can sew on the patch is the one that should be used. Spending time searching for that one specific needle in the haystack is a waste of energy and resources.
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| Satisficing also occurs in consensus building when the group looks towards a solution everyone can agree on even if it may not be the best.
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| :Example: A group spends hours projecting the next fiscal year's budget. After hours of debating they eventually reach a consensus, only to have one person speak up and ask if the projections are correct. When the group becomes upset at the question, it is not because this person is wrong to ask, but rather because the group has already come up with a solution that works. The projection may not be what will actually come, but the majority agrees on one number and thus the projection is good enough to close the book on the budget.
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| In many circumstances, the individual may be uncertain about what constitutes a satisfactory outcome.
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| :Example: An individual who only seeks a satisfactory retirement income may not know what level of wealth is required—given uncertainty about future prices—to ensure a satisfactory income. In this case, the individual can only evaluate outcomes on the basis of their probability of being satisfactory. If the individual chooses that outcome which has the maximum chance of being satisfactory, then this individual's behavior is theoretically indistinguishable from that of an optimizing individual under certain conditions.<ref>{{cite journal |last=Castagnoli |first=E. |first2=M. |last2=LiCalzi |year=1996 |title=Expected Utility without Utility |journal=Theory and Decision |volume=41 |issue=3 |pages=281–301 |doi=10.1007/BF00136129 }}</ref><ref>{{cite journal |last=Bordley |first=R. |first2=M. |last2=LiCalzi |year=2000 |title=Decision Analysis Using Targets Instead of Utility Functions |journal=Decisions in Economics & Finance |volume=23 |issue=1 |pages=53–74 |doi=10.1007/s102030050005 }}</ref><ref>{{cite journal |last=Bordley |first=R. |first2=C. |last2=Kirkwood |year=2004 |title=Preference Analysis with Multiattribute Performance Targets |journal=Operations Research |volume=52 |issue=6 |pages=823–835 |doi=10.1287/opre.1030.0093 }}</ref>
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| Satisficing is often a good option when making a decision, but it can also be detrimental if used the wrong way.
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| :Example: When considering a medical issue such as a diagnosis, satisficing is not the best decision making strategy to use. On the other hand, when choosing an outfit or an option from a menu, it can be helpful. When there is an unlimited amount of information available and it is necessary to eliminate options, satisficing is beneficial because it helps the person making the decision effectively and efficiently reach a conclusion.<ref>{{cite book |last=Sternberg |first=R. J. |year=2009 |title=Cognitive Psychology |edition=5th |location=Belmont, CA |publisher=Wadsworth |isbn=049550629X }}</ref>
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| === Satisficing and optimization ===
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| One definition of satisficing is that it is [[Optimization (mathematics)|optimization]] where ''all'' costs, including the cost of the optimization calculations themselves and the cost of getting information for use in those calculations, are considered. As a result, the eventual choice is usually sub-optimal in regard to the main goal of the optimization, i.e., different from the optimum in the case that the costs of choosing are not taken into account.
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| ==== Satisficing as a form of optimization ====
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| Alternatively, satisficing can be considered to be just [[constraint satisfaction]], the process of finding a solution satisfying a set of constraints, without concern for finding an optimum. Any such satisficing problem can be formulated as an (equivalent) optimization problem using the [[Indicator function]] of the satisficing requirements as an [[objective function]]. More formally, if {{math|<var>X</var>}} denotes the set of all options and {{math| <var>S</var> ⊆ <var>X</var>}} denotes the set of "satisficing" options, then selecting a satisficing solution (an element of {{math|<var>S</var>}}) is equivalent to the following optimization problem
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| : <math>\max_{s\in X} I_{S}(s)</math>
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| where {{math|I<sub>s</sub>}} denotes the [[Indicator function]] of {{math|<var>S</var>}}, that is
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| :<math>I_{S}(s):=\begin{cases} \begin{array}{ccc} 1 &,& s\in S\\
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| 0 &,& s\notin S
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| \end{array}
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| \end{cases} \ , \ s\in X</math>
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| A solution {{math|<var>s</var> ∈ <var>X</var>}} to this optimization problem is optimal if, and only if, it is a satisficing option (an element of {{math|<var>S</var>}}). Thus, from a decision theory point of view, the distinction between "optimizing" and "satisficing" is essentially a stylistic issue (that can nevertheless be very important in certain applications) rather than a substantive issue. What is important to determine is '''what''' should be optimized and '''what''' should be satisficed. The following quote from Jan Odhnoff's 1965 paper is appropriate:<ref>{{cite journal |last=Odhnoff |first=Jan |year=1965 |title=On the Techniques of Optimizing and Satisficing |journal=The Swedish Journal of Economics |volume=67 |issue=1 |pages=24–39 |jstor=3439096 }}</ref>
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| {{quote|In my opinion there is room for both 'optimizing' and 'satisficing' models in business economics. Unfortunately, the difference between 'optimizing' and 'satisficing' is often referred to as a difference in the quality of a certain choice. It is a triviality that an optimal result in an optimization can be an unsatisfactory result in a satisficing model. The best things would therefore be to avoid a general use of these two words.}}
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| ==== Satisficing applied to the utility framework ====
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| In [[economics]], '''satisficing''' is a [[behavior]] which attempts to achieve at least some [[minimum]] level of a particular [[Variable (mathematics)|variable]], but which does not necessarily maximize its value.<ref>{{cite book |chapterurl=http://huwdixon.org/SurfingEconomics/chapter7.pdf |chapter=Artificial Intelligence and Economic Theory |title=Surfing Economics: Essays for the Inquiring Economist |authorlink=Huw Dixon |first=Huw |last=Dixon |year=2001 |location=New York |publisher=Palgrave |isbn=0333760611 }}</ref> The most common application of the concept in economics is in the behavioral [[theory of the firm]], which, unlike traditional accounts, postulates that producers treat [[Profit (economics)|profit]] not as a goal to be maximized, but as a constraint. Under these theories, a critical level of profit must be achieved by firms; thereafter, priority is attached to the attainment of other goals.
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| More formally, as before if {{math|<var>X</var>}} denotes the set of all options {{math|<var>s</var>}}, and we have the payoff function '''{{math|<var>U</var>(<var>s</var>)}}''' which gives the payoff enjoyed by the agent for each option. Suppose we define the optimum payoff {{math|<var>U</var><sup>*</sup>}} the solution to
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| <math>\max_{s\in X} U(s)</math>
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| with the optimum actions being the set '''{{math|<var>O</var>}}''' of options such that {{math|<var>U</var>(<var>s<sup>*</sup></var>) {{=}} ''U''<sup>*</sup>}} (i.e. it is the set of all options that yield the maximum payoff). Assume that the set '''{{math|<var>O</var>}}''' has at least one element.
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| We now introduce the idea of the '''Aspiration level''' as introduced by [[Herbert Simon]] and developed in economics by Richard Cyert and James march in their 1963 book "A [[Behavioral theory of the firm]]".<ref>{{cite book |last=Cyert |first=Richard |last2=March |first2=James G. |year=1992 |title=A Behavioral Theory of the Firm |edition=2nd |publisher=Wiley-Blackwell |isbn=0-631-17451-6 }}</ref> The aspiration level is the payoff that the agent aspires to: if the agent achieves at least this level it is satisfied, and if it does not achieve it, the agent is not satisfied. Let us define the aspiration level '''{{math|''A''}}''' and assume that {{math|''A'' ≤ ''U''<sup>*</sup>}}. Clearly, whilst it is possible that someone can aspire to something that is better than the optimum, it is in a sense irrational to do so. So, we require the aspiration level to be at or below the optimum payoff.
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| We can then define the set of satisficing options '''{{math|<var>S</var>}}''' as all those options that yield at least '''{{math|<var>A</var>}}''': {{math|<var>s</var> ∈ <var>S</var>}} '''if and only if''' {{math|<var>A</var> ≤ <var>U</var>(<var>s</var>)}}. Clearly since {{math|<var>A</var> ≤ <var>U</var><sup>*</sup>}}, it follows that {{math|<var>O</var> ⊆ S}}. That is, the set of optimum actions is a subset of the set of satisficing options. So, when an agent satisfices, then she will choose from a larger set of actions than the agent who optimizes. One way of looking at this is that the satisficing agent is not putting in the effort to get to the precise optimum or is unable to exclude actions that are below the optimum but still above aspiration.
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| An equivalent way of looking at satisficing is '''epsilon-optimization''' (that means you choose your actions so that the payoff is within epsilon of the optimum). If we define the "gap" between the optimum and the aspiration as '''{{math|ε}}''' where {{math|ε {{=}} ''U''<sup>*</sup> − ''A''}}. Then the set of satisficing options '''{{math|<var>S</var>(ε)}}''' can be defined as all those options '''{{math|<var>s</var>}}''' such that {{math|<var>U</var>(<var>s</var>) ≥ <var>U</var><sup>*</sup> − ε}}.
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| ==== Other applications in economics ==== | |
| Apart from the behavioral theory of the firm, Applications of the idea of satisficing behavior in economics include the Akerlof and Yellen model of [[Menu costs]] popular in [[New Keynesian macroeconomics]].<ref>{{cite journal |last=Akerlof |first=George A. |last2=Yellen |first2=Janet L. |year=1985 |title=Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria? |journal=[[American Economic Review]] |volume=75 |issue=4 |pages=708–720 |jstor=1821349 }}</ref><ref>{{cite journal |last=Akerlof |first=George A. |last2=Yellen |first2=Janet L. |year=1985 |title=A Near-rational Model of the Business Cycle, with Wage and Price Intertia |journal=[[The Quarterly Journal of Economics]] |volume=100 |issue=5 |pages=823–838 |doi=10.1093/qje/100.Supplement.823 }}</ref> Also, in economics and [[Game theory]] there is the notion of an [[Epsilon equilibrium]], which is a generalization of the standard [[Nash equilibrium]] in which each player is within '''{{math|ε}}''' of his or her optimal payoff (the standard Nash-equilibrium being the special case where '''{{math|ε {{=}} 0}}''').
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| === Endogenous aspiration levels ===
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| What determines the aspiration level? This can come from past experience (some function of an agent's or firm's previous payoffs), or some organizational or market institutions. For example, if we think of managerial firms, the managers will be expected to earn [[normal profits]] by their shareholders. Other institutions may have specific targets imposed externally (for example state-funded universities in the UK have targets for student recruitment).
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| An economic example is the [[Huw Dixon|Dixon]] model of an economy consisting of many firms operating in different industries, where each industry is a [[oligopoly|duopoly]].<ref>{{cite journal |last=Dixon |first=H. |year=2000 |title=Keeping Up with the Joneses: Competition and the Evolution of Collusion |journal=Journal of Economic Behaviour and Organization |volume=43 |issue=2 |pages=223–238 |doi=10.1016/S0167-2681(00)00117-7 }}</ref> The endogenous aspiration level is the average profit in the economy. This represents the power of the financial markets: in the long-run firms need to earn normal profits or they die (as [[Armen Alchian]] once said “This is the criterion by which the economic system selects survivors: those who realize positive profits are the survivors; those who suffer losses disappear”<ref>{{cite journal |last=Alchian |first=A. |year=1950 |title=Uncertainty, Evolution and Economic Theory |journal=[[Journal of Political Economy]] |volume=58 |issue=3 |pages=211–222 |jstor=1827159 }}</ref>). We can then think what happens over time. If firms are earning profits at or above their aspiration level, then they just stay doing what they are doing (unlike the optimizing firm which would always strive to earn the highest profits possible). However, if the firms are earning below aspiration, then they try something else, until they get into a situation where they attain their aspiration level. it can be shown that in this economy, '''satisficing''' leads to [[collusion]] amongst firms: competition between firms leads to lower profits for one or both of the firms in a duopoly. This means that competition is unstable: one or both of the firms will fail to achieve their aspirations and hence try something else. The only situation which is stable is one where all firms achieve their aspirations, which can only happen when all firms earn average profits. In general, this will only happen if all firms earn the joint-profit maximizing or collusive profit.<ref>Dixon (2000), Theorem 1 page 228. for a non-technical explanation see [http://www.huwdixon.org/SurfingEconomics/chapter8.pdf Chapter 8],[http://www.huwdixon.org/SurfingEconomics/index.html Surfing Economics] by Dixon H</ref>
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| == In psychology ==
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| === As a personality trait ===
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| Some research has suggested that satisficing/maximizing and other decision-making strategies, like [[personality]] traits, have a strong genetic component and endure over time. This genetic influence on decision-making behaviors has been found through classical [[twin studies]], in which decision-making tendencies are self-reported by pairs of twins and then compared between monozygotic and dizygotic twins.<ref>{{cite journal |last=Simonson |first=I. |last2=Sela |first2=A. |year=2011 |title=On the heritability of consumer decision making: An exploratory approach for studying genetic effects on judgment and choice |journal=Journal of Consumer Research |volume=37 |issue=6 |pages=951–966 |doi=10.1086/657022 }}</ref> This implies that people can be categorized into "maximizers" and "satisficers", with some people landing in between.
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| === Relationship with happiness ===
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| The distinction between satisficing and maximizing not only differs in the decision-making process, but also in the post-decision evaluation. Maximizers tend to use a more exhaustive approach to their decision-making process: they seek and evaluate more options than satisficers do to achieve greater satisfaction. However, whereas satisficers tend to be relatively pleased with their decisions, maximizers tend to be less happy with their decision outcomes. This is thought to be due to limited cognitive resources people have when their options are vast, forcing maximizers to not make an optimal choice. Because maximization is unrealistic and usually impossible in everyday life, maximizers often feel regretful in their post-choice evaluation.<ref>{{cite journal |last=Schwartz |first=B. |last2=Ward |first2=A. |last3=Monterosso |first3=J. |last4=Lyubomirsky |first4=S. |last5=White |first5=K. |last6=Lehman |first6=D. R. |year=2002 |title=Maximizing versus satisficing: Happiness is a matter of choice |journal=Journal of Personality and Social Psychology |volume=83 |issue=5 |pages=1178–1197 |doi=10.1037/0022-3514.83.5.1178 }}</ref>
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| == In survey methodology ==
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| As an example of satisficing, in the field of [[social cognition]], [[Jon Krosnick]] proposed a theory of [[statistical survey]] '''satisficing''' which says that optimal question answering by a survey respondent involves a great deal of [[cognitive]] work and that some people would use satisficing to reduce that burden. Some people may shortcut their cognitive processes in two ways:
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| * Weak satisficing: Respondent executes all cognitive steps involved in optimizing, but less completely and with [[bias]].
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| * Strong satisficing: Respondent offers responses that will seem reasonable to the interviewer without any memory search or information integration.
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| Likelihood to satisfice is linked to respondent ability, respondent [[motivation]] and task difficulty
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| Regarding survey answers, satisficing manifests in:
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| * choosing explicitly offered no-opinion response option
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| * choosing socially desirable responses
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| * non-differentiation when a battery of questions asks for ratings of multiple objects on the same response scale
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| * acquiescence response bias, which is the tendency to agree with any assertion, regardless of its content
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| == See also ==
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| {{div col|4}}
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| * [[Alpha-beta pruning]]
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| * [[Decision theory]]
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| * [[Flipism]]
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| * [[Frame problem]]
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| * [[Homo economicus]]
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| * [[Optimism bias]]
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| * [[Portmanteau]]
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| * [[Principle of good enough]]
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| * [[Rationality]]
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| * [[Rational ignorance]]
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| * [[Satisfiability]]
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| * [[Utility maximization problem]]
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| {{div col end}}
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| == References ==
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| {{Reflist|30em}}
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| == Further reading ==
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| *{{cite journal |first=Michael |last=Byron |title=Satisficing and Optimality |journal=[[Ethics (journal)|Ethics]] |volume=109 |issue=1 |year=1998 |pages=67–93 |doi=10.1086/233874 }} A paper on satisficing considered from a [[philosophy|philosophical]] viewpoint.
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| *{{cite book |last=Byron |first=M. |year=2004 |title=Satisficing and Maximizing: Moral Theorists on Practical Reason |location=New York |publisher=Cambridge University Press |isbn=052181149X }}
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| *{{cite book |first=J. N. |last=Bearden |first2=T. |last2=Connolly |chapter=On Optimal Satisficing: How simple policies can achieve excellent results |editor1-first=T. |editor1-last=Kugler |editor2-first=J. C. |editor2-last=Smith |editor3-first=T. |editor3-last=Connolly |editor4-first=Y. J. |editor4-last=Son |title=Decision Modeling in Uncertain and Complex Environments |publisher=Springer |location=New York |year=2008 |isbn=9780387771311 }}
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| *{{cite book |first=Huw |last=Dixon |chapterurl=http://huwdixon.org/SurfingEconomics/chapter8.pdf |chapter=Donut world and the duopoly archipelago |title=Surfing Economics: Essays for the Inquiring Economist |publisher=Palgrave |location=New York |year=2001 |isbn=0333760611 }}
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| *{{cite journal |last=Holbrook |first=A. |last2=Green |first2=M. |last3=Krosnick |first3=J. |year=2003 |title=Telephone versus Face-to-Face Interviewing of National Probability Samples with Long Questionnaires: Comparisons of Respondent Satisficing and Social Desirability Response Bias |journal=[[Public Opinion Quarterly]] |volume=67 |issue=1 |pages=79–125 |doi=10.1086/346010 }}
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| *{{cite journal |last=Krosnick |first=J. |year=1991 |title=Response Strategies for coping with the cognitive demands of attitude measures in surveys |journal=Applied Cognitive Psychology |volume=5 |issue=3 |pages=213–236 |doi=10.1002/acp.2350050305 }}
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| *{{cite book |last=Simon |first=H. A. |year=1957 |title=Models of Man: Social and Rational |location=New York |publisher=Wiley }}
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| *{{cite journal |last=Simon |first=H. A. |year=1978 |title=Rationality as a Process and Product of Thought |journal=[[American Economic Review]] |volume=68 |issue=1 |pages=1–16 |jstor=1816653 }}
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| *{{cite book |last=Simon |first=H. A. |year=1983 |title=Reason in Human Affairs |location=Stanford |publisher=Stanford University Press |isbn=0804711798 }}
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| == External links ==
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| *[http://pespmc1.vub.ac.be/ASC/SATISFICING.html ''Web Dictionary of Cybernetics and Systems'' definition of "satisficing"]
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| *[http://www.moshe-online.com/satisficing/ A web page dedicated to a discussion on the "satisficing" vs "optimizing" debate.]
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| *[http://video.google.com/videoplay?docid=6127548813950043200 Schwartz's Tech Talk ("The Paradox of Choice - Why More Is Less") given at Google on April 27, 2006]
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| [[Category:Underlying principles of microeconomic behavior]]
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| [[Category:Heuristics]]
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| [[Category:Organizational behavior]]
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