Abstract

Firms make decisions on a daily basis in order to determine the course of their daily operations. Their decisions demonstrate how effectively a firm can meet its bottom line given their constraints. One key element that significantly affects the nature of decision-making is how firms choose to define their bottom line. Most firms, more specifically, Microfinance Institutions (MFIs) tend to have a social and a financial bottom line. This can be explained by the fact the MFIs exist in order to provide financial services to the unbankable population around the world. Economists propose a standard theory of rationality that is based on root assumptions to explain decision-making with respect to utility. The alternative theory of rationality, which contradicts standard optimizing, is a theory based on pluralist satisficing. Accordingly, it supports the notion that MFIs ought to use sufficient means in order to attain enough of the multiple ends of an MFI. With multiple ends, we can establish the distinction between instrumental and non-instrumental values. With two types of values, the alternative theory of satisficing supports the existence of the plurality of values. Pluralism lends the ends to the possibility of incommensurability and indeterminacy, which also determines whether the ends of MFIs are competing.m By examining and analyzing the two theories of rationality, I will use considerations of the nature of an MFI to determine which theory better understands the rational decision-making of MFIs. One of the main considerations that have to be made is the extent to which the analysis of rationality of an MFI changes between the different theories of rationality.

Advisor

Burnell, Barbara

Second Advisor

Thomson, Garrett

Department

Economics; Philosophy

Publication Date

2011

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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© Copyright 2011 Christopher Miller