Utility, Maximizing, and the Satisficing Concept: A Historical Approach at Reconciliation

Abstract

Utility is used in both economic and business theories of decision-making. The tradition utility approach using maximizing concepts seems at odds with the concept of satisficing behavior. The relation between utility and the satisficing concept is suggested to be that satisficing refers to a process of adaptive behavior by which an economic unit strives to attain a satisfactory level of utility for higher ranking objectives before turning to lower-ranking objectives. There is no necessary inconsistency between utility and satisficing, although the assumption of maximization must be replaced, in positive analysis, by that of satisficing since the scope referred to by each of the concepts, positive and normative, is quite different. This paper uses historical material to develop a model, which is then used to analyze those relations.

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