satisficing

Definition:
An alternative view of the behaviour of entrepreneurs which states that they seek to make satisfactory profits rather than pursue a goal of PROFIT MAXIMIZATION. The concept owes much to the seminal work of Simon, who observes that the notion of satiation plays no role in classical economic theory, while it enters rather prominently in the treatment of motivation in psychology. In most psychological theories, the motive to act stems from drive, and action terminates when the drive is satisfied. Moreover, the conditions for satisfying drive are not necessarily fixed, but may be specified by an aspiration level that self-adjusts upward or downward on the basis of experience. Simon argues that to explain business behaviour in terms of this theory, we must expect the firm's goals to be not maximizing profit, but attaining a certain level or rate of profit, holding a certain share of the market, or a certain level of sales.

Cross-References:
[profit maximization]

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