Transcript Decision Making Process

The Rational
Decision-Making Process
The Rational Decision Process
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Four stages:
Problem Identification
Criteria Definition
Alternative Generation and Evaluation
Implementation
The Rational Decision Process
This model assumes that the optimizing
decision maker is rational. That is, an
individual who makes consistent, valuemaximizing choices within specific
constraints.
When we look at this model keep in mind
that the final (decision-making step before
implementation) requires computing the
optimal decision based on an evaluation of
the alternatives.
The Rational Decision Process
Also referred to as The Methodical
Approach
Or
Traditional Problem Solving Model
The Model
Formulating the problem (which
involves its detection, identification and
definition
Interpreting the problem
Constructing course of action
Decision-making
Implementation
Expansion of the Model
1. Formulating the problem - the way a
problem is identified and defined will
determine the actions that we decide to
take to solve a problem
Expansion of the Model
2. Interpreting the problem - the
opportunity to find an effective solution
to a problem is highest when we
develop a thorough understanding of
the problem.
Expansion of the Model
2. Interpreting the problem a). Understand the facts and place the facts
into proper relationship with each other.
b). A great deal of analytical thinking may be
required to identify the essential facts and
analyze the relationship between them.
Expansion of the Model
2. Interpreting the problem Therefore, this stage is referred to as
“interpretation” because the problem solver
has to go through a process of explaining and
interpreting the available information about
the problem situation before gaining a
complete understanding.
Expansion of the Model
3. Constructing courses of action - is a
creative process which includes
collecting ideas, generating ideas.
Expansion of the Model
Constructing courses of action This stage is one that problem solvers
tend to jump into right away. Because
of this they often fail to solve the
problem because they have not taken
proper care to define or diagnose the
problem.
Expansion of the Model
4. Decision-making - entails evaluating
the proposed courses of action against
the relevant criteria.
Expansion of the Model
Decision-making –
- Involves some risk taking because of the
uncertainty of the outcome of events
based on one’s judgment to implement.
- Part of decision-making is coming to
terms with the fact that we have to act on
our judgments.
Expansion of the Model
5. Implementation – making a decision
to act is not Implementation.
Implementation requires a plan of
action based on our cumulative work of
the earlier stages.
Expansion of the Model
Implementation –
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Implementation of a plan must be
carefully executed especially when the
implementation affects other individuals.
If others are involved, some care may be
required to help them adjust to the
changes that will take place.
Assumptions
The Rational Decision-Making Model
contains a number of assumptions.
1. Problem clarity – the problem is clear
and unambiguous. The decision maker
is assumed to have complete
information regarding the decision
situation.
Assumptions
2. Known options – it is assumed that the
decision maker can identify all the
relevant criteria and can list all the
viable alternatives. Further, the
decision maker is aware of all the
possible consequences of each
alternative.
Assumptions
3. Clear preferences – Rationality
assumes that the criteria and
alternatives can be ranked and
weighted to reflect their importance.
Assumptions
4. Constant preferences – It is assumed
that the specific decision criteria are
constant and that the weights
assigned to them are stable over time.
Assumptions
5. No time or cost constraints – The
rational decision maker can obtain full
information about criteria and
alternatives because it is assumed that
there are no time or cost constraints.
Assumptions
6. Maximum payoff – The rational
decision maker will choose the
alternative that yields the highest
perceived value.
Creativity
The rational decision maker needs
creativity to produce novel and useful
ideas.