RATIONAL DECISION MAKING
MODEL
1. RECOGNIZE, DEFINE
• PROBLEM
• OPPORTUNITY
RATIONAL DECISION MAKING
MODEL
• GATHER “RELEVANT” INFO
• DIAGNOSE CAUSE(S)
• ASSUMPTIONS!
• BE AWARE OF THEM
UNDERSTAND THEM
REARRANGE
“NEW DOOR”
TO MAKE
ONE WORD.
IN WHAT ORDER
ARE THESE NUMBERS?
854917632
PROBLEMS WITH DEFINING
PROBLEM
•
•
•
•
•
TASK INSTRUCTIONS
PERCEPTIONS
“EXPERIENCE”
“MENTAL SETS”
JUDGEMENTAL
PROBLEMS WITH DEFINING
PROBLEM(CONT’D)
•
•
•
•
•
“SOLUTION MINDED”
NOT ENOUGH INFORMATION
NOT ENOUGH TIME
CONFUSING PROBLEM AND CAUSE(S)
INITIAL “SUCCESS/FAILURE”
PROBLEMS WITH DEFINING
PROBLEM(CONT’D)
• LIMITED/BOUNDED RATIONALITY
–
–
–
–
LIMITED CAPACITY/CAPABILITY
SATISFICING
SEQUENTIAL ATTENTION
BARGAINING
“BEHAVIORAL MODEL”
RATIONAL DECISION MAKING
MODEL
2. DEVELOP ALTERNATIVES
3. EVALUATE ALTERNATIVES
– UNDERSTAND CONSEQUENCES
RATIONAL DECISION MAKING
MODEL
4. CHOOSE (DECIDE)
5. IMPLEMENT
6. EVALUATE, CONTROL
TYPES OF DECISIONS
• PROGRAMMED
– REPETITIVE
– ROUTINE
– HANDLED WITH DEFINITE APPROACH
TYPES OF DECISIONS
• NON-PROGRAMMED
– UNIQUE
– NONRECURRING
– HANDLED WITH CUSTOM RESPONSE
DECISION CONDITIONS
• CERTAINTY
– 100% SURE
• RISK
– REASONABLE ESTIMATE OF
PROBABILITY
• UNCERTAINTY
– CANNOT EVEN ESTIMATE PROBABILITY
DECISION MAKING STYLES
• DELIBERATE/RATIONAL
• IMPULSIVE
DECISION MAKING
TECHNIQUES
• INDIVIDUAL
• GROUP
– BRAINSTORMING
– NOMINAL
– DELPHI
FOCUS
• STRATEGIC
• OPERATING
• TACTICAL
TOOLS
• MARGINAL ANALYSIS
• COST-BENEFIT
• EXPERIENCE
• EXPERIMENTATION
TOOLS
• MATHEMATICAL MODELS
• DECISION TREE
• CHARTS
SETTING PRIORITIES
URGENT
NOT
URGENT
IMPORTANT
I
II
NOT
IMPORTANT
III
IV
“WE SELDOME HAVE TIME
FOR THE IMPORTANT
BECAUSE WE ARE WORKING
ON THE IMMEDIATE
AND THE IMMEDIATE IS
SELDOM THE IMPORTANT”
- Peter Drucker