Decision-Making Models/Approaches

Decision-Making Models

These are specific tools that are used to make more effective decisions. The models suggest different approaches to decision-making, depending on the context and the nature of the decision that needs to be made. Familiarizing oneself with different decision-making models equips them with more options to draw from when there is need to make a choice.

1. The Rational/Classical Model:

The rational model is the first attempt to know the decision-making-process. It is considered by some as the classical approach to understand the decision-making process. The classical model gave various steps in decision-making process which have been discussed earlier.

Features of Classical Model:

  1. Problems are clear.
  2. Objectives are clear.
  3. People agree on criteria and weights.
  4. All alternatives are known.
  5. All consequences can be anticipated.
  6. Decisions made are rational.
    • i. They are not biased in recognizing problems.
    • ii. They are capable of processing ail relevant information
    • iii. They anticipate present and future consequences of decisions.
    • iv. They search for all alternatives that maximizes the desired results.

2. Bounded Rationality Model or Administrative Man Model:

Bounded Rationality model is based on the concept developed by Herbert Simon. This model does not assume individual rationality in the decision process. Instead, it assumes that people, while they may seek the best solution, normally settle for much less, because the decisions they confront typically demand greater information, time, processing capabilities than they possess. They settle for “bounded rationality or limited rationality in decisions. This model is based on certain basic concepts.

  1. Sequential Attention to alternative solution: Normally it is the tendency for people to examine possible solution one at a time instead of identifying all possible solutions and stop searching once an acceptable (though not necessarily the best) solution is found.
  2. Heuristic: These are the assumptions that guide the search for alternatives into areas that have a high probability for yielding success.
  3. Satisficing: Herbert Simon called this “satisficing” that is picking a course of action that is satisfactory or “good enough” under the circumstances. It is the tendency for decision makers to accept the first alternative that meets their minimally acceptable requirements rather than pushing them further for an alternative that produces the best results. Satisficing is preferred for decisions of small significance when time is the major constraint or where most of the alternatives are essentially similar.

3. Retrospective decision model (implicit favourite model):

This decision making model focuses on how decision-makers attempt to rationalise their choices after they have been made and try to justify their decisions. This model has been developed by Per Soelberg. He made an observation regarding the job choice processes of graduating business students and noted that, in many cases, the students identified implicit favorites (i.e. the alternative they wanted) very early in the recruiting and choice process. However, students continued their search for additional alternatives and quickly selected the best alternative.

The total process is designed to justify, through the guise of scientific rigor, a decision that has already been made intuitively. By this means, the individual becomes convinced that he or she is acting rationally and taking a logical, reasoned decision on an important topic.

4. Vroom-Yetton Decision-Making Model

There’s no one ideal process for making decisions. Instead, the best process to use will change based on your situation. That’s the idea behind the Vroom-Yetton decision model (sometimes known as Vroom-Yetton-Jago). The first part of this model uses seven yes-or-no questions.

For example: “Is team commitment to the decision important?”

Your answers to the questions then guide you toward one of five decision-making processes to use. Options range from making the decision based on what you know now without consulting your team to reaching a group consensus with your team.
The flexibility of the Vroom-Yetton model is one of its strengths. Anyone at any level can use it, and it can work even if you’re in an unfamiliar situation. However, it doesn’t consider personal factors for the decision-maker, the questions may not be precise enough for some situations and it may not work as well for larger groups.

5. Intuitive decision-making model

Intuitive decisions can happen almost instantly. But that doesn’t mean they just pop into the head. The brain is actually doing lightning-fast pattern recognition. It quickly reviews everything that has been learnt from similar past situations to help one make a decision in the current situation.

Researchers have found that an intuitive decision-making model yields good results when dealing with areas where one has a lot of expertise or experience. But going with gut is less effective and efficient when in an unfamiliar circumstance, like a new job. This is because one doesn’t have enough experience to quickly recognize patterns yet.

An interesting side note here: Sometimes a decision that we think is rational and logical is actually a lot more intuitive. If you’ve considered additional options only to go back to your initial choice, you may have been following the retrospective decision-making model.

6. Recognition-primed decision-making model

The recognition-primed model has a lot in common with the intuitive model.
The decision-maker recognizes a pattern in available information. They then pick a course of action and run through that “action script” in their mind.

If the action script seems like it will work, the decision-maker moves forward. If it doesn’t seem like it will work, the decision-maker either tweaks the script or ditches it and starts over with a new script.
Like the intuitive model, the recognition-primed model works best in situations where you can draw on deep experience or expertise. In those cases, it’s an especially handy model to use when you’re under time pressure.


Common decision-making biases

There are several common mental biases any time one makes a decision. Even just knowing that they exist and that you are vulnerable to them can help you make better decisions.

Confirmation bias

Confirmation bias means paying attention to evidence that confirms your beliefs – and ignoring anything that doesn’t. Let’s say you’re helping choose someone to fill a new position at your organization. The process is down to the two finalists. Based on their resumes, you prefer Candidate B over Candidate A. But you’re keeping an open mind. During their interviews, confirmation bias could cause you to pay attention to anything that shows Candidate B is an amazing fit for the role, while ignoring possible red flags. Meanwhile, during Candidate A’s interview, you gloss over answers that point to them as the better choice, while seizing on any information that could be a bad sign.

Confirmation bias causes us to seek out information that supports our existing views. But it also encourages us to interpret information in a way that proves we’re right. Because of confirmation bias, two people with different beliefs could draw different conclusions from the same set of statistics.

To outsmart your confirmation bias, seek out people and information sources that challenge your opinions, even if you’re already sure that “all the evidence” supports what you want to do. You might be surprised that things aren’t so cut and dried.

Availability heuristic

The availability heuristic leads us to make decisions based on how easily something comes to mind. For example, if your friend just went through a long flight delay with an airline, the availability heuristic could cause you to avoid that airline for your upcoming business trip – even though it actually has a better on-time record than the carrier you ultimately choose. Because you can quickly recall your friend’s experience, you overestimate how likely future flight delays are with that airline.

The availability heuristic can really trip us up because our thoughts feel like reality. But you will make better decisions when you can pause, second-guess yourself, and see if there really is information that supports your perceptions.

Survivorship bias

The survivorship bias causes us to make decisions based only on examples of success
– all while assuming that we have the full story.
A common example of the survivorship bias is using other organizations’ success stories to decide what your organization should do. Sure, Company A may have succeeded wildly by using a particular strategy, and everyone is singing their praises. But what we hear less about is that Companies B, C and D used the same strategy and now they’re out of business.

To avoid survivorship bias, train yourself to be more skeptical. Before making a decision based on success stories, ask yourself whether those stories are taking only the “survivors” into account.

Anchoring bias

Anchoring bias causes us to use an initial piece of information to make subsequent judgments. For example, the initial price offer sets the course in a negotiation. But even being exposed to an arbitrary and random cognitive anchor can affect your choice. In one study, participants spun a roulette-style wheel and then were asked to guess the percentage of U.N. countries that are in Africa. Those who got a high number on their spin guessed higher percentages.

The anchoring bias is another good reason to slow down your decision-making process when possible. By being aware of how vulnerable humans are to this bias, you have a better chance of recognizing when you need additional information.

Halo Effect

We all know the power of first impressions, but we often overlook just how powerful they can be. We think we’re hiring a contractor because he’s intelligent and organized. However, we might just be assuming all of that because he’s tall or has a firm handshake.

That’s the halo effect in action. It works in reverse, too. If someone spills wine on you at a networking event, you’re probably going to put less stock in the opinions they share later.

Stay vigilant to your brain’s efforts to save labor with the halo effect. When you’re making a decision, ask yourself whether you are basing it on a first impression. What additional evidence do you have for believing or doubting that impression?

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