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Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
Basic Decision making Models
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Basic Decision making Models

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Basic Decision making Models

Basic Decision making Models

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  • Choice shift- Group discussion causes individuals to exaggerate their initial stance and move toward extremes. Riskier More cautious Groupthink- Tendency for members of a highly cohesive group to seek consensus so strongly that they fail to appraise alternatives objectively. Tendency for members of a highly cohesive group faced with a collective threat to seek consensus so strongly that they fail to do a realistic appraisal of other alternatives, which may be correct. Escalation of commitment- Occurs when people continue to commit resources to a failing course of action .
  • Choice shift- “ I’m sticking to my idea!” Group think - “Go with the flow.” Escalation of Comitment = “It won’t fail this time if we try harder.”
  • Be as participative and as fair as you can Whatever decision you make – some people will be happy and some will not Build and maintain a trusting decision making environment – will keep the zone of acceptance broad Better to make a decision that is informed and satisfies your conscience
  • Rational decision making model Recognize and define the problem Identify the objectives of the decision and the criteria Allocate weights to the criteria List and develop the alternatives Evaluate the alternatives Select the best alternative Implement the decision Evaluate/assess the decision Criteria includes constraints such as cost, time of implementation etc. Situations and circumstances are rarely so simple
  • A Modified Rational Decision Making Process Model. People are restricted in the information need to make a decision. Bounded Rationality makes 4 assumptions. The 4 Assumptions of Bounded Rationality Definition of situation and available information is incomplete and inadequate Managers are comfortable in making decision without first examining all alternatives ( heuristics /past experiences) satisficing Managers select the first alternative that is minimally acceptable . (s atisficing) Both info. and definition of the situation are incomplete and inadequate to some degree. Managers are comfortable making decisions without determining all the alternatives. Managers use judgment shortcuts to make decisions. ( heuristics /past experiences) Bounded Discretion limits decision alternatives that fall within the bounds of current moral and ethical standards.
  • Small, incremental changes are made in directions consistent with the mission or policy. Mixed scanning is the medical model. Use focused trial and error. Be tentative and cautious. If uncertain, procrastinate. Stagger your decisions. If uncertain, fractionalize decisions. Hedge your bets. Be prepared to reverse your decision Mixed scanning is the way medical doctors make decisions. Unlike the muddlers, they know what the are trying to achieve. They muddle with direction (good health is the guide.) They make tentative decisions (initial diagnose) and then prescribe a treatment. They do not wait for all the information before they begin treatment. If treatment does not work, they try a different path. But the paths are all directed by the health of the patient. Muddling has its limitations; it is conservative and aimless. Mixed scanning is a synthesis of satisficing and muddling; it combines the rationalism of satisficing with the flexibility of muddling; it is “muddling with direction.” Mixed scanning is guided by policy and mission. Only alternatives consistent with policy or mission are pursued. Small, incremental changes are made in directions consistent with the mission or policy. Use focused trial and error. Be tentative and cautious. If uncertain, procrastinate. Stagger your decisions. If uncertain, fractionalize decisions. Hedge your bets. Be prepared to reverse your decision Muddling should be relegated to a temporary way of proceeding until policy guidelines become clear. Muddling is wedded to luck: don’t count on luck. Mixed scanning is appropriate when events are complex, time is constraint, and information is limited.
  • Recognition-primed decision (RPD) is a model of how people make quick, effective decisions when faced with complex situations. In this model, the decision maker is assumed to generate a possible course of action, compare it to the constraints imposed by the situation, and select the first course of action that is not rejected. RPD has been described in diverse groups including ICU nurses, fireground commanders, chess players, and stock market traders. It functions well in conditions of time pressure, and in which information is partial and goals poorly defined. The limitations of RPD include the need for extensive experience among decision-makers (in order to correctly recognize the salient features of a problem and model solutions) and the problem of the failure of recognition and modeling in unusual or misidentified circumstances. It appears to be a valid model for how human decision-makers make decisions. The recognition primed decision model There are three variations in RPD strategy. In variation 1, decision makers recognize the situation as typical, so they know what course of action they will do. They immediately know the goals, priorities and the steps of the course of action in the given situation. Variation 1 is basically an “If… then,” reaction. One situation can lead to the immediate course of action due to its typicality. Variation 2 occurs when the decision maker diagnoses the situation to develop a course of action. Variation 2 takes the form of “If (???)… Then,” In order to prevent complications and misinformation the decision maker is more concerned about the situation rather than the course of action or the goal. In Variation 3, the decision maker is knowledgeable of the situation but unaware of the proper course of action. Implementing a mental simulated trial and error to develop the most effective course of action. The mental simulation helps in finding out the consequences of the different types of course of action. Cycling through different courses of actions to take, if one does not work, they will proceed to the next course of action until they come up with the first effective course of action. Variation 3 takes the form of “if… then (???)” where in the decision maker considers other outcomes of a reaction. However, the relevance of inexperience lies here. Inexperienced decision makers are more likely to develop different types of course of action before he chooses the most proficient course of action.
  • The Answer : It depends Information Time Importance Is there sufficient information? Is there sufficient time? How important is the decision?
  • Transcript

    • 1. The Basic Decision Making Models Administrative Process John Pisapia www.TheStrategicL;eader.org John Pisapia Administrative Processes
    • 2. Why?
      • The work of managers, of scientists, of engineers, of lawyers--the work that steers the course of society and its economic and governmental organizations--is largely work of making decisions and solving problems. It is work of choosing issues that require attention, setting goals, finding or designing suitable courses of action, and evaluating and choosing among alternative actions.
      • The first three of these activities--fixing agendas, setting goals, and designing actions--are usually called problem solving ; the last, evaluating and choosing, is usually called decision making .
      • Herbert Simon, Nobel Laureate 1988
      • We all face decision making situations Life of leaders – decisions, decisions, decisions, …
      • DecisionMaking Problem Solving
      www.TheStrategicLeader.org
    • 3. Key concepts: BARRIERS TO EFFECTIVE DECDISIONMAKING
      • Factors that influence decisions
        • Choice shift – group discussion, exaggeration, extremes
        • Groupthink – cohesive group seeks consensus, clouds objectivity
        • Escalation of commitment – continued commitment of resources to a failing course of action
      • Common decision biases
        • Anchoring and adjusting
        • Representativeness
        • Availability
        • Overconfidence
        • Bounded awareness
        • Emotional involvement
        • Self-serving reasoning
      www.thestrategicleader.org
    • 4. Activity #1 Match the quote with the concept
      • Anchoring and adjusting
      • Choice shift
        • Groupthink
      • Escalation of commitment
      • Representativeness
      • Availability
      • Overconfidence –
      • Bounded awareness
      • Emotional involvement
      • Self-serving reasoning
      • The first answer is the only answer and there is no other!”
      • “ I’m sticking to my idea!”
      • “ Go with the flow.”
      • “ It won’t fail this time if we try harder.”
      • “ If it looks like this, then it will happen like this!”
      • “ This is more important because I remember it!”
      • “ I’m always right!”
      • “ That’s not relevant to me, so forget it!”
      • “ My friends always have great ideas!”“My enemies always have terrible ideas!”
      • “ If it was a good idea, then it was my idea!”“If it was a bad idea, then it wasn’t my fault!”
      www.TheStrategicLeader.org
    • 5.
      • Rational Decision Process
      • Satisficing
      • Muddling Through
      • Recognition Primed Decision (RPD)
      • Garbage Can
      • Leader Participation
      What? Theory - The Basic Models:
    • 6. The Rational Model
    • 7. Satisficing Model
        • Theory - People are restricted in the information needed to make a decision. Bounded rationality is present therefore select the first alternative that is minimally acceptable.
        • Assumptions -people:
          • Definition of situation and available - information is incomplete and inadequate
          • Have limited information needed for decision
          • Engage in limited search for solutions
          • Settle for less optimal solutions
        • Actions : Managers
          • are comfortable in making decision without first examining all alternatives
          • accept a “good enough” decision because cost are too great otherwise – bounded discretion
          • use management shortcuts in making decisions
      www.TheStrategicLeader.org
    • 8. © Hoy, 2003 Muddling Through Model
        • Theory - Muddling is a method of successive limited comparisons; a strategy of evolution.
        • Assumptions
        • 2 types - Objectives are not necessary; objectives are necessary
        • Trial and error--small incremental changes--until noise subsides.
        • Make changes, compare to existing state, then decide next move .
        • Actions –
        • Small, limited set of alternatives is considered: all options are similar to the existing situation.
        • The decision maker decides on an option, considers the consequences, and if reasonable, then moves down that path.
        • If the difficulties subside, continue on that path
        • If the difficulties persist, then a different option is pursued and the direction changed.
    • 9. Recognition Primed Decision Model (RPD) )
      • Theory – Future oriented decision making model Quick decisions in Complex situations- Based on pattern recognition cues
        • Assumptions – able to:
        • Recognize salient features of problem
        • Generate possible course –
        • Compare to constraints of situation
        • Select first course of action that is not rejected.
        • Actions
        • If Then - - Recognize situation as typical – and know course of action - effective with experienced users
        • IF??? . .Then - more concerned with situation rather than CA - sees patterns that are not relevant
        • IF - Then ??? - more concerned with action and reaction
        • the user’s experience is too focused in one area or has been distorted by uncommon results
        • IF??? – Then??? - the user lacks experience in general
    • 10. What decision -making model should I use? Adapted from Hoy, 2003 Decision Opportunity No No No No No No No Yes Yes Yes Yes Yes Yes Yes Sufficient Information? Important? Sufficient Time? Important? Important? Important? RPD Muddling Satisficing RPD Muddling Sufficient Time? Muddling Satisficing Rational How?
    • 11. Personal Take-Aways
      • Every decision has a price (a.k.a. consequences)
      • In many cases price is obscure
      • Do it if you are willing to pay the price
      • Process is Important
      How? www.thestrategicleader.org
    • 12. Take-Aways
      • Interpersonal Take-Aways
      • When decisions affect others – impossible to please all
        • Whatever decision you make – some people will be happy and some will not
        • Build and maintain a trusting decision making environment – will keep the zone of acceptance broad
        • Better to make a decision that is informed and satisfies your conscience
      • Organizational Take-Aways
      • Different approaches for different situations
      www.TheStrategicLeader.org
    • 13. References
      • Osland, J., Kolb, D., Rubin, I., Turner, M. (2007). Organizational Behavior: An Experiential Approach (8th ed) pp. 468-488. Upper Saddle River, NJ: Pearson Education Inc.
      • Pisapia, J. (1998). Decision Making and Problem Solving . Working paper.
      • Trout, J. (1999). The Power of Simplicity. New York: McGraw Hill, Inc.
      www.TheStrategicLeader.org
    • 14. Pisapia & Glick-Cuenot (2010)

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