Decision-Making Model

Decision-Making Model

1. Decision: rational selection amongst alternatives

   • Goal - clearly defined objectives
   • Alternatives - complete set of possible options
   • Criteria - clear conditions for evaluating alternatives against objectives
   • Choice - apply criteria on alternatives, choose "best" alternative

2. Simon's Paradigm

   • Intelligence - collect data, monitor processes
   • Design - alternative courses of action
   • Choice - select best alternative
   • Implementation - provide solutn to biz prob
   • Learning - backtracking

3. Uncertainty - state of limited knowledge, impossible to describe existing/future outcomes

   • Environmental/Primary/ Natural - uncontrollable
   • Behavioral - opportunistic nature of decision-makers
   • Increases risk of making wrong decisions
   • Without uncertainty, can make optimal decisions

4. Bounded Rationality - inability of humans to acquire/process all infor needed to come to rational decision

   • Primary/behavioral uncertainty
   • Infor overload
   • Infor assymmetry
   • lack of time/other resources
   • Task complexity