Decision making-IV( RATIONAL INDIVIDUAL MODELS OF DECISION MAKING )

RATIONAL INDIVIDUAL MODELS OF DECISION MAKING

Because organisations are made up of individuals, it makes sense to build information systems that facilitate individual decision making, wherever possible. Different assumptions have been made while proposing some model or the other.

1. Rational Model

Some economists, mathematicians and management experts believe that the decisions are always made rationally because the decision maker:

* knows his or her objectives and ranks them in order of importance;

*knows all possible alternative solutions to the decision problem;

*I knows the relative pros and cons of each alternative; and

*chooses the alternative that maximises attainment of the objective.

Such idealistic assumptions have their share of criticism. Decision makers are not so well informed as to consider all the alternatives or to know all consequences.  Moreover, it is not just a singular objective that is pursued in real life situations. Still, 

despite these criticisms, the rational model remains a powerful and attractive model of human decision making.

2. Bounded Rationality and Satisficing

Instead of searching for all of the alternatives and consequences (unlimited rationality) as in the preceding model, people limit the search process to sequentially ordered alternatives (alternatives that are not radically different from the current policy. Wherever possible they avoid new, uncertain alternatives and rely instead on tried-and-true rules, standard operating procedures) and programmes. Individuals and/or organisations have multiple goals, some in conflict with each other also. Even goals are prioritised or placed in a hierarchy. In this way rationality is bounded. Simon proposes the ‘satisficing’ approach rather than the ‘optimising approach’.

3. Muddling through Model

In 1959, Lindblom proposed the most radical departure from the rational model in his article on the “science of muddling through”. He described this method of decision making, as one of “successive limited comparisons”. Here values are chosen at the same time as policies, and no easy means-end analysis is possible. For instance labour and management can rarely agree on values, but they can agree on specific policies. Because of the limits on human rationality, Lindblom proposes, ‘incremental decision making’, or choosing policies most like the previous policy. Non-incremental policies are a political (not likely to bring agreement among important groups) and dangerous as nobody knows what they will lead to. Lastly, it is argued that choices are not “made”. Instead decision making involves a continuous process in which final. decisions are always being modified to accommodate changing objectives,  environments, value preferences and policy alternatives provided by decision makers.

4. Psychological Types and Frames of Reference

The psychologists have given an additional perception to the rationality concept. They say that humans differ in how they maximise their values as well as in using the frame of reference for interpreting information and making choices. Here we hear about the ‘cognitive style’ that refers to underlying personality dispositions in the treatment of information, the selection of alternatives and the evaluation of consequences. Systematic thinkers impose order on production and evaluation; intuitive thinkers are more open to unexpected iniormation and use multiple models and perspectives when evaluating information. Neither is more rational than the other. 

                    Some studies have found that humans have a deep seated tendency to avoid risks. when seeking gains but to accept risks in order to avoid losses. In other words, people are more sensitive to negative outcomes than to positive ones.

5. Implications of the Models for Information Systems

Decision making is not a simple process and hence some guidelines need be kept in mind when designing information systems. The following characteristics of Information systems could be encouraged :

---they are flexible and provide many options for handling data and evaluating information. .

---they are capable of supporting a variety of styles, skills and knowledge.

---they are capable of changing as humans learn and clarify their values:

---they are powerful in the sense of having multiple analytical and intuitive models for the evaluation of data and the ability to keep track of many alternatives and 

consequences.