Satisficing refers to a decision-making strategy that aims for a satisfactory or adequate result rather than the optimal one.
Updated: Jun 11, 2024

3 key takeaways

Copy link to section
  • Satisficing involves choosing an option that meets a minimum threshold of acceptability rather than seeking the best possible outcome.
  • The concept challenges the traditional economic assumption that individuals always aim to maximize utility or profit.
  • Satisficing is based on the idea that individuals face cognitive and informational limitations, making it impractical to always seek the optimal solution.

What is satisficing?

Copy link to section

Satisficing is a decision-making behavior that focuses on finding a satisfactory or acceptable solution rather than the optimal one. This concept, introduced by economist and psychologist Herbert A. Simon, recognizes that individuals and organizations often operate under constraints such as limited information, time, and cognitive processing power. As a result, they opt for solutions that are “good enough” rather than the best possible.

In contrast to the traditional economic assumption that individuals always seek to maximize utility or firms aim to maximize profit, satisficing suggests that people are more likely to settle for an alternative that meets certain criteria of acceptability.

This approach is more realistic given the practical limitations individuals face in gathering and analyzing information.

How does satisficing work?

Copy link to section

Satisficing works by setting a threshold of acceptability or a minimum standard that a potential choice must meet. Once an option that meets this threshold is found, the decision-maker selects it without further consideration of other alternatives. This process involves:

  1. Defining criteria: Establishing the minimum requirements or standards that an acceptable solution must satisfy.
  2. Searching for alternatives: Exploring available options to find one that meets the predefined criteria.
  3. Selecting the first satisfactory option: Choosing the first alternative that meets the acceptability threshold, rather than continuing the search for the optimal choice.

Cognitive and informational limitations

Copy link to section

Herbert Simon argued that real-world decision-making is constrained by cognitive and informational limitations. Individuals often do not have the ability to process all available information or evaluate every possible option.

Instead, they rely on heuristics and rules of thumb to make decisions more efficiently. Satisficing acknowledges these limitations and provides a more practical model of decision-making behavior.

Behavioral theory of the firm

Copy link to section

The concept of satisficing underlies the development of the behavioral theory of the firm. This theory suggests that firms, like individuals, do not always aim to maximize profit.

Instead, they seek to achieve satisfactory levels of various goals, such as sales targets, market share, or managerial satisfaction. This perspective contrasts with the traditional view of firms as profit-maximizers and offers a more nuanced understanding of organizational behavior.

Applications of satisficing

Copy link to section

Satisficing is applicable in various fields, including economics, psychology, and organizational behavior. It provides a realistic framework for understanding decision-making processes in contexts where optimal solutions are difficult or impossible to determine.

Consumer behavior

Copy link to section

In consumer behavior, satisficing explains why individuals often settle for products that are “good enough” rather than the best available. Given the vast number of choices and the limited time to evaluate them, consumers typically select products that meet their needs and preferences without exhaustive comparison.

Organizational decision-making

Copy link to section

In organizational decision-making, satisficing is used to understand how managers and employees make choices under constraints. For example, when hiring new employees, a manager might select a candidate who meets the necessary qualifications and fits the company culture, rather than continuing the search for the perfect candidate.


Copy link to section

Policy-makers often rely on satisficing when designing and implementing policies. Given the complexity of social and economic issues, they aim for solutions that achieve acceptable outcomes within practical constraints, rather than seeking optimal solutions that may be unattainable.

Benefits and challenges of satisficing

Copy link to section

Understanding the benefits and challenges of satisficing provides a comprehensive view of its practical implications and limitations.


Copy link to section
  • Realistic decision-making: Satisficing offers a more realistic model of decision-making by acknowledging cognitive and informational limitations.
  • Efficiency: It allows for quicker decisions by avoiding exhaustive searches for the best option, saving time and resources.
  • Practicality: Satisficing provides a practical approach to decision-making in complex and uncertain environments.


Copy link to section
  • Suboptimal outcomes: By definition, satisficing does not aim for the best possible outcome, which can lead to suboptimal results.
  • Subjectivity: The criteria for acceptability can be subjective and vary among individuals, making it difficult to standardize or predict decisions.
  • Potential for complacency: Relying on satisficing might lead to complacency, where decision-makers settle for mediocrity instead of striving for improvement.

Examples of satisficing in practice

Copy link to section

To better understand satisficing, consider these practical examples that highlight its application in different contexts.

Copy link to section

A job seeker might use satisficing by accepting the first job offer that meets their minimum salary requirement, desired location, and work-life balance preferences, rather than continuing to search for the perfect job.

Everyday purchases

Copy link to section

When shopping for groceries, a consumer might choose the first brand of a product that meets their price and quality criteria, rather than comparing every available option to find the absolute best deal.

Business strategy

Copy link to section

A company might adopt a satisficing approach when entering a new market by launching a product that meets basic consumer needs and is competitive, rather than waiting to develop a product that is the best in every aspect.

Understanding satisficing and its implications is crucial for realistic and efficient decision-making. If you’re interested in learning more about related topics, you might want to read about bounded rationality, decision-making processes, and behavioral economics. 

Sources & references
Risk disclaimer
AI Financial Assistant
Arti is a specialized AI Financial Assistant at Invezz, created to support the editorial team. He leverages both AI and the knowledge base, understands over 100,000... read more.