Fundamentals of Decision Making

1
Chapter 8

• Fundamentals of Decision Making

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Conditions Under Which Decisions Are Made
8.2
Certainty
Uncertainty
Risk
Objective probabilities
Subjective probabilities
Adapted from Figure 8.1
3
Framework for Decision Making
8.3
Unusual and ambiguous
Innovative decisions
Uncertainty
Adaptive decisions
Conditions under which decisions are made
Risk
Routine decisions
Types of Problems
Certainty
Known and well defined
Types of Solutions
Untried andambiguous
Adapted from Figure 8.2
4
Models of Decision Making
8.4
Rational Model Bounded Rationality
Model Political Model
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8.5
Rational Decision Making Model
Phase 3 Search for alternative solutions
Phase 4 Compare and evaluate alternative
solutions
Phase 2 Set goals
Phase 1 Define and diagnose the problem
External and internal environmental factors and
stakeholders
Phase 5 Choose among alternative solutions
Phase 6 Implement the solution selected
Phase 7 Follow up and control
Adapted from Figure 8.3
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Bounded Rationality Model
8.6
Information Processing Biases
Limited search
Perceived problem
Satisfying decision
Triggers
Leads to
Limited information
Adapted from Figure 8.4
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Political Model of Decision Making
8.7
Divergence In Problem Definition
Divergence in goals
Political Decision Making
Multiple Stakeholders with Power
Leads to
Triggers
Divergence in Solutions
Adapted from Figure 8.5