MODELS OF DECISION MAKING

In previous article (Decision making process) you have learnt what the different phases of a decision making process are, what types of decisions you are likely to make in an organisation and under what states of nature these decisions are made. Now, we are going to examine three suggested models of the decision making process which will help you to understand how decisions are made and should be made. These three models are:

(1) The econologic model, or the economic man,

(2) The bounded rationality model or the administrative man; and

(3) The implicit favorite model or the game man.

You will notice that each model differs on the assumptions it makes about the person or persons making the decision.

1) Econologic Model or Economic Man Model

The econologic model represents the earliest attempt to model decision process. Briefly, this model rests on two assumptions: (1) It assumes people are economically rational; and (2) that people attempt to maximise outcomes in an orderly and sequential process. Economic rationality, a, basic concept in many models of decision making, exists when people attempt to maximise objectively measured advantage, such as money or units of goods produced. That is, it is assumed that people will select the decision or course of action that has the greatest advantage or payoff from among the many alternatives. It is also assumed that they go about this search in a planned, orderly, and logical fashion.

READ MORE >>

READ MORE...