The Rational Decision-Making Process

The Rational Decision Process

Four stages:1. Problem Identification2. Criteria Definition3. Alternative Generation and

Evaluation4. Implementation

The Rational Decision Process

This model assumes that the optimizing decision maker is rational. That is, an individual who makes consistent, value-maximizing choices within specific constraints.When we look at this model keep in mind that the final (decision-making step before implementation) requires computing the optimal decision based on an evaluation of the alternatives.

The Rational Decision Process

Also referred to as The Methodical Approach

Or

Traditional Problem Solving Model

The ModelFormulating the problem (which involves its detection, identification and definitionInterpreting the problemConstructing course of actionDecision-makingImplementation

Expansion of the Model

1. Formulating the problem - the way a problem is identified and defined will determine the actions that we decide to take to solve a problem

Expansion of the Model

2. Interpreting the problem - the opportunity to find an effective solution to a problem is highest when we develop a thorough understanding of the problem.

Expansion of the Model

2. Interpreting the problem -

a). Understand the facts and place the facts into proper relationship with each other.

b). A great deal of analytical thinking may be required to identify the essential facts and analyze the relationship between them.

Expansion of the Model

2. Interpreting the problem -

Therefore, this stage is referred to as “interpretation” because the problem solver has to go through a process of explaining and interpreting the available information about the problem situation before gaining a complete understanding.

Expansion of the Model

3. Constructing courses of action - is a creative process which includes collecting ideas, generating ideas.

Expansion of the Model

Constructing courses of action -

This stage is one that problem solvers tend to jump into right away. Because of this they often fail to solve the problem because they have not taken proper care to define or diagnose the problem.

Expansion of the Model

4. Decision-making - entails evaluating the proposed courses of action against the relevant criteria.

Expansion of the Model

Decision-making – - Involves some risk taking because of

the uncertainty of the outcome of events based on one’s judgment to implement.

- Part of decision-making is coming to terms with the fact that we have to act on our judgments.

Expansion of the Model

5. Implementation – making a decision to act is not Implementation. Implementation requires a plan of action based on our cumulative work of the earlier stages.

Expansion of the Model

Implementation – Implementation of a plan must be

carefully executed especially when the implementation affects other individuals.

If others are involved, some care may be required to help them adjust to the changes that will take place.

Assumptions The Rational Decision-Making Model contains a number of assumptions.

1. Problem clarity – the problem is clear and unambiguous. The decision maker is assumed to have complete information regarding the decision situation.

Assumptions

2. Known options – it is assumed that the decision maker can identify all the relevant criteria and can list all the viable alternatives. Further, the decision maker is aware of all the possible consequences of each alternative.

Assumptions

3. Clear preferences – Rationality assumes that the criteria and alternatives can be ranked and weighted to reflect their importance.

Assumptions

4. Constant preferences – It is assumed that the specific decision criteria are constant and that the weights assigned to them are stable over time.

Assumptions

5. No time or cost constraints – The rational decision maker can obtain full information about criteria and alternatives because it is assumed that there are no time or cost constraints.

Assumptions

6. Maximum payoff – The rational decision maker will choose the alternative that yields the highest perceived value.

Creativity The rational decision maker needs creativity to produce novel and useful ideas.