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Taherdoost, H. Decision Making: Models, Processes, Techniques. Encyclopedia. Available online: https://encyclopedia.pub/entry/53905 (accessed on 22 June 2024).
Taherdoost H. Decision Making: Models, Processes, Techniques. Encyclopedia. Available at: https://encyclopedia.pub/entry/53905. Accessed June 22, 2024.
Taherdoost, Hamed. "Decision Making: Models, Processes, Techniques" Encyclopedia, https://encyclopedia.pub/entry/53905 (accessed June 22, 2024).
Taherdoost, H. (2024, January 16). Decision Making: Models, Processes, Techniques. In Encyclopedia. https://encyclopedia.pub/entry/53905
Taherdoost, Hamed. "Decision Making: Models, Processes, Techniques." Encyclopedia. Web. 16 January, 2024.
Decision Making: Models, Processes, Techniques
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Decision-making is one of the steps in problem-solving that can be applied in manifold areas from personal situations to the management of organizations. There are functions and processes to lead to making a decision; however, it may sound complicated to select between decision-making models and approaches as different factors and different outcomes get involved in the decision-making process. 

decision making models decision making types and concept decision making techniques steps, decision making problems

1. Introduction

Every day, individuals face many challenging and tough situations to make decisions. In the management decision-making process, conscious and reasoned as opposed to random decisions are made. Before making decisions, it is necessary to make the appropriate option. This choice is based on pertinent data and produces the desired outcomes. The choice is a process, not an instantaneous thing. The choice itself is significant, but most individuals recall the decision’s outcome. Each option may have some benefits and drawbacks that are crucial to be considered before making the choice. Thus, it is critical to gather data and weigh the benefits and drawbacks of each choice. Generally, an appropriate decision can help to overcome the gaps between reality and ideals, and it helps us to identify the way from initiation to both implementation and termination in a design process. It also helps to consider necessary limitations, and the preferable situations in case people face a situation in different aspects of their lives. As the situations get more complicated and many side effects get involved, making an appropriate decision gets more challenging. However, the outcomes of making mistakes in decision-making in real life may be irreparable considering time, money, and reputation loss. On the other hand, it is not realistic to make error-free decisions in real life as every decision comes with a range of side effects. However, considering various determining factors and the benefits and drawbacks of each option increases the likelihood of making appropriate decisions to a great extent.

2. Decision-Making Models

It is commonly complicated to make good decisions as the number of alternatives gets increased since every decision comes with several benefits and drawbacks. Considering the complexity of making appropriate decisions and encountering various outcomes, decision-making models facilitate the process of choosing between different available options. Decision-making models provide frameworks and guidelines to make the best choice and better manage the decision-making process. They are tools to be employed and make effective decisions in cases where decision-making may get complicated. Different decision-making models provide a framework to analyze the situation, regard likely solutions, and eventually lead to an informed decision. They also suggest a range of approaches to making effective decisions based on the context of the decision and alternatives that influence it. Relying on decision-making models to make structured decisions facilitates making appropriate decisions to a great extent and may decrease the probability of failure. Getting to know different decision-making models helps decision-makers to get equipped in making appropriate decisions when there is a range of different options. The concept of decision-making models is divided into several types in different ways. Here, two main ways of dividing decision-making models are discussed .Firstly, the decision-making process can be divided into two different district models including normative (perspective), and descriptive (naturalistic) are described in the following.

2.1 Normative Models

The normative decision frameworks are theories that assist managers in making choices by examining the level of team participation. These theories include the decisions made by rational decision-makers considering the maximum utility to gain the optimum option in any uncertain circumstance that may detour decision-making. Thus, it is based on considering the goals of the decision-maker and its likely outcomes to make the best possible decision out of available choices. The process of decision-making, therefore, is based on standards and norms and guides people with specific rules and directions in making the best possible decision. In other words, the normative models of decision-making simply refer to the fact that the best choice is the one that leads to the best result. These models usually use assigned numerical values to the options to make the process of decision-making rational[1].

2.2 Descriptive Models

The study of naturalistic decision-making is descriptive rather than prescriptive, and it examines how individuals utilize their experience to make choices in real-world situations. The focus is on three elements that impact decision-making: characteristics related to the decision-maker, including knowledge and experience, factors linked with the job, such as its degree of complexity, and environmental factors. These models are based on examining the ways individuals make their decisions in an actual situation. Individuals rarely can follow a rational process (as normative ones), usually, the decision-making is unconscious and based on prior experiences. Therefore, instead of adopting numerical values, the decision-making process is based on explaining stories about the possible consequences. The decision-making is impacted by personal identities and their related social expectations. Here, between the different stories about future events, the most coherent scenario affects the final choice. On the other hand, some literature also divides the decision-making models into rational and bounded rationality models which are discussed following as well.

2.2.1 Rational Models

As discussed in normative models, during this process, decisions are made with certainty. That is to say, the alternatives, the decision criteria, and their outcomes are known to the decision-makers, and they can make the optimum choice and finally implement that choice. All these steps are necessary when the process is rational. The rational model is based on a sequence of steps that are logically set to lead to a decision. Thus, the problem is first identified and possible solutions are analyzed and brainstormed then. This model is effective in cases where there is a great understanding of the problem and enough time to discuss and brainstorm and eventually decrease the level of risk. However, it cannot be effective in cases where there is limited time or understanding of the problem.

2.2.2 Bounded Rational Models

In many decision-making processes, all the above steps cannot be approved completely due to the limits in time, information, cost, etc. Therefore, decision-making is based on an incomplete list of solutions, limited rationality, and considering intuition, experiences, and advice. Decisions will always be made based on a partial and, to some extent, insufficient understanding of the full nature of the situation being confronted. In these models, it is not feasible to consider all choices, conduct a comprehensive review, provide an accurate forecast, or guarantee the optimal decision. As discussed above, the majority of decisions are made unconsciously. However, in other situations, a decision-making process could be also based on weighing the merits and consequences of the options in a controlled environment. Overall, the decision-making process involves different factors which overshadow the results. These factors could be rational, cultural, psychological, and social factors. Rational factors are the main factors in many decision-making problems and they are quantitative ones such as time and price. People prefer to focus on quantitative elements and neglect qualitative ones. The experiences, capabilities, and personalities of the decision-makers are some of the psychological factors. The common values and trends accepted in a specific environment and culture are known as cultural factors. Finally, social factors are other agreements that can impact the decision of the decision-maker. Thus, in the bounded rational models, the focus is on addressing the problem rather than searching for the most ideal situation. Therefore, this model can be a working solution to make immediate decisions for teams with limited time to discuss and brainstorm the situation.

References

  1. Hamed Taherdoost, Mitra Madanchian. Decision Making: Models, Processes, Techniques. Cloud Computing and Data Science. 2024, 5, 1-14.
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