Decision making model analysis and applications

¶ … decision making model, called as rational decision making model from the Internet sources. I am describing this model in detail and also giving an example that I followed in making my decision of buying a car (reference from commed.atu.edu/EAM3003/READING4.pdf).

The Rational decision making model assumes that decision makers follow a systematic, step-by-step process. This model further assumes these decisions are objective and can be justified on the basis of cost and benefit.

The rational-based decision making model assumes that the decision maker can identify the problem, objectives are clear and ranked in accord with their importance, alternative ways of addressing the problem are obvious, that the cost and benefits of each alternative are investigated, that alternatives and their consequences can be compared with other alternatives, and that the decision maker will choose the alternative that maximizes the attainment of his or her goals, values, and objectives (Huber, 1991).

In order to use rational models, the problems have to be formulated in a way which enables people to make decisions about them. Decision makers must have vast amounts of information in order to make the use of the rational decision-making technique. Then there is the need for predicting the future consequences of decisions made. Also, this model does not assume that the decision makers evaluate all of the possible consequences of the alternatives. It rather assumes that decision makers make a reasonable number of comparisons on alternative course of actions.

The rational decision making can be categorized into programmed decision and none programmed decision making models. Programmed decisions are repetitive, well defined, and procedures exist to find a solution; on the other hand, non-programmed decisions are novel, poorly defined, and no procedure exists for finding a solution.

The bounded rationality perspective on decision making recognizes that the rational approach is often inapplicable, because of bounded rationality (limited time & mental capacity, limited information, & limited resources), as well as personal & social constraints on the individual; bounded rationality constraints are especially important for non-programmed decisions. Therefore, decision makers evaluate only a reasonable number of alternatives and choose the best one from their comparisons (Kantrow, 1987).