Modeles in Decision-Making
There are two basic models in decision-making −
- Rational models
- Normative model
The rational models are based on cognitive judgments and help in selecting the most logical and sensible alternative. Examples of such models include - decision matrix analysis, Pugh matrix, SWOT analysis, Pareto analysis and decision trees, selection matrix, etc.
A rational decision making model takes the following steps −
- Identifying the problem,
- Identifying the important criteria for the process and the result,
- Considering all possible solutions,
- Calculating the consequences of all solutions and comparing the probability of satisfying the criteria,
- Selecting the best option.
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The normative model of decision-making considers constraints that may arise in making decisions, such as time, complexity, uncertainty, and inadequacy of resources.
According to this model, decision-making is characterized by −
- Limited information processing - A person can manage only a limited amount of information.
- Judgmental heuristics - A person may use shortcuts to simplify the decision making process.
- Satisfying - A person may choose a solution that is just "good enough".
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