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Eclectic Approaches To Decision Making

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113 views11 pages

Eclectic Approaches To Decision Making

Uploaded by

ramesh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 2

Eclectic Approaches
to Decision Making

Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-1


OVERVIEW…

 Descriptive: What people actually do, or have


done.
 Prescriptive: What people should and can do.
 Normative: What people should do (in theory).

Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-2


Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-3
Decision-Making Models

 Rational model
 Organizational model
 Political model
 Process model

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Table 5.1 A Typology of Decision-Making Models
Primary
Decision-Making
Model Criterion Key Ingredients Key Assumptions

Rational Maximized Objectives; specific states of nature; subjective Fixed objectives; unlimited information; no cog-
(classical) outcome probabilities; quantified utilities (payoffs); nitive limitations; no time and cost constraints;
exhaustive alternatives; disregard of environment; quantifiable and transitive alternatives; controlled
computational decision-making strategy; short- variables; closed system; quantitatively limited
term horizon; highly structured process outcomes
Organizational Satisficing Objectives; general states of nature; limited Attainable objectives; limited information; cogni-
(neoclassical) outcome subjective probabilities; partially quantified tive limitations; time and cost constraints; par-
utilities (payoffs); nonexhaustive alternatives; tially quantifiable and intransitive alternatives;
sensitive environment; judgmental decision- open system; qualitatively -- and quantitatively --
making strategy; short-term horizon; moderately limited outcomes
structured process
Political Acceptable Objectives; general states of nature; no prob- Limited objectives; unlimited information; no cog-
(adaptive) outcome abilities; unquantifiable utilities (payoffs); nitive limitations; no time and cost constraints;
nonexhaustive alternatives; dominant environ- nonquantifiable and generally transitive alterna-
ment; compromise or bargaining decision-making tives; open system; environmentally limited
strategy; restricted number of outcomes; short- outcomes; no "right" decision
term horizon; incremental steps; loosely structured
process
Process Objectives- Objectives; general states of nature; generally Highly dynamic objectives; limited information;
(managerial) oriented subjective probabilities; objectives-oriented utilities cognitive limitations; time and cost constraints;
outcome (payoffs); exhaustive alternatives; sensitive to generally nonquantifiable and intransitive
environmental constraints; judgmental decision- alternatives; open system; sequential decision-
making strategy with selective use of computation making functions; objectives-oriented outcomes
and compromise; long-term horizon; limited
number of outcomes; highly structured process

Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-5


The Rational Model
 Founded on quantitative disciplines
 Maximized outcome
 Computational decision-making
strategy
 Closed decision-making process
 Fixed objectives
 No bounded rationality
Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-6
The Organizational Model
 Attainable objectives
 Bounded rationality
 Short-term horizon
 Qualitative orientation
 Judgmental decision-making strategy
 Open decision-making process
 Satisficing outcome
Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-7
The Political Model
 Acceptable outcomes
 Compromise decision-making strategy
 No bounded rationality
 Ambiguous or nonexistent objectives
 Incremental or marginal choices
 Short-term horizon

Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-8


The Process Model
 Dynamic objectives
 Objectives-oriented outcomes
 Long-term horizon
 Accommodates innovation
 Bounded rationality
 Judgmental decision-making strategy
 Open decision-making process
Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5-9
Interdisciplinary Framework
of Decision Making
 Behavioral disciplines
 Quantitative disciplines
 Behavioral/quantitative fusion

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Figure 5.1 The Interdisciplinary Framework of Decision Making

• Economics
• Philosophy • Statistics
Values
and Utility and
ethics probability

Individual The decision- • Sociology


• Psychology Group • Social
behavior making
behavior psychology
process

Models and
Environment
simulation
• Law
• Mathematics • Anthropology
• Political science
Copyright © 1999 Houghton Mifflin Company. All rights reserved. 5 - 11

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