Type of Decision Making Enviroment

.:VirtualSalt Introduction to Decision Making, Part 1 Robert Harris Version Date: June 9, 2012 Previous versions: December 2, 2009, October 17, 2008; July 2, 1998 We all make decisions of varying importance every day, so the idea that decision making can be a rather sophisticated art may at first seem strange. However, studies have shown that most people are much poorer at decision making than they think. An understanding of what decision making involves, together with a few effective techniques, will help you make better decisions. What is Decision Making? Some DefinitionsA good place to start is with some standard definitions of decision making. 1. Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Making a decision implies that there are alternative choices to be considered, and in such a case we want not only to identify as many of these alternatives as possible but to choose the one that (1) has the hi ghest probability of success or effectiveness and (2) best fits with our goals, desires, lifestyle, values, and so on. The two important ideas here are that first, there must be some genuine alternatives to choose from among.Note that â€Å"Do it† or â€Å"Don't do it† does not qualify as a set of alternatives. Only â€Å"Do this† or â€Å"Do something else† really qualfies. Second, every decision must be made in the light of some standard of judgment. This standard usually gets expressed in the form of criteria, which reflect the values and preferences of the decision maker. These values and preferences are often influenced by corporate rules or culture, law, best practices, and so forth. 2. Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them.This definition stresses the information-gathering function of decision making. It should be noted here that uncer tainty is reduced rather than eliminated. Very few decisions are made with absolute certainty because complete knowledge about all the alternatives is seldom possible. Thus, every decision involves a certain amount of risk. If there is no uncertainty, you do not have a decision; you have an algorithm–a set of steps or a recipe that is followed to bring about a fixed result. Kinds of Decisions There are several basic kinds of decisions. 1. Decisions whether.This is the yes/no, either/or decision that must be made before we proceed with the selection of an alternative. Should I buy a new TV? Should I travel this summer? Decisions whether are made by weighing reasons pro and con. A simple worksheet with two columns (one for Pro–reasons for, and one with Con–reasons against) can be useful for this kind of decision. It is important to be aware of having made a decision whether, since too often we assume that decision making begins with the identification of alternati ves, assuming that the decision to choose one has already been made. . Decisions which. These decisions involve a choice of one or more alternatives from among a set of possibilities, the choice being based on how well each alternative measures up to a set of predefined criteria. 3. Contingent decisions. These are decisions that have been made but put on hold until some condition is met. For example, I have decided to buy that car if I can get it for the right price; I have decided to write that article if I can work the necessary time for it into my schedule.OR even, We'll take the route through the valley if we can control the ridge and if we detect no enemy activity to the north. Most people carry around a set of already made, contingent decisions, just waiting for the right conditions or opportunity to arise. Time, energy, price, availability, opportunity, encouragement–all these factors can figure into the necessary conditions that need to be met before we can act on our decision. Some contingent decisions are unstated or even exist below the awareness of the decision maker. These are the type that occur when we seize opportunity.We don't walk around thinking, â€Å"If I see a new laser printer for $38, I'll buy it,† but if we happen upon a deal like that and we have been contemplating getting a new printer, the decision is made quickly. Decisions made in sports and warfare are like this. The best contingent and opportunistic decisions are made by the prepared mind–one that has thought about criteria and alternatives in the past. 4 . Contingent alternatives. Similar to contingent decisions, contingent alternatives involve two or more choices of action, one of which will be taken when the appropriate trigger occurs.Often this trigger is an event or more information. For example, If tomorrow is cloudy or rainy, we will mount a ground attack through the pass, but if the day is clear, we will launch an air strike to the north. OR, if, aft er this patch attempt, the leak is under 50 gallons per minute, we will sail to the home port for a repair. But if the leak is over 50 gpm, we will stay here and order a replacement pump. Decision Making is a Recursive Process A critical factor that decision theorists sometimes neglect to emphasize is that in spite of the way the process is presented on paper, decision making is a nonlinear, recursive process.That is, most decisions are made by moving back and forth between the choice of criteria (the characteristics we want our choice to meet) and the identification of alternatives (the possibilities we can choose from among). The alternatives available influence the criteria we apply to them, and similarly the criteria we establish influence the alternatives we will consider. Let's look at an example to clarify this. Suppose someone wants to decide, Should I get married? Notice that this is a decision whether.A linear approach to decision making would be to decide this question by weighing the reasons pro and con (what are the benefits and drawbacks of getting married) and then to move to the next part of the process, the identification of criteria (supportive, easy going, competent, affectionate, etc. ). Next, we would identify alternatives likely to have these criteria (Kathy, Jennifer, Michelle, Julie, etc. ). Finally we would evaluate each alternative according to the criteria and choose the one that best meets the criteria. We would thus have a scheme like this: decision whether †¦ select criteria †¦ identify alternatives †¦ atch criteria to alternatives †¦ make choice However, the fact is that our decision whether to get married may really be a contingent decision. â€Å"I'll get married if I can find the right person. † It will thus be influenced by the identification of alternatives, which we usually think of as a later step in the process. Similarly, suppose we have arrived at the â€Å"identify alternatives† stage of the process when we discover that Jennifer (one of the girls identified as an alternative) has a wonderful personality characteristic that we had not even thought of before, but that we now really want to have in a wife.We immediately add that characteristic to our criteria. Thus, the decision making process continues to move back and forth, around and around as it progresses in what will eventually be a linear direction but which in its actual workings is highly recursive. Key point, then, is that the characteristics of the alternatives we discover will often revise the criteria we have previously identified. The Components of Decision Making The Decision Environment Every decision is made within a decision environment, which is defined as the collection of information, alternatives, values, and preferences available at the time of the decision.An ideal decision environment would include all possible information, all of it accurate, and every possible alternative. However, both information and alternatives are constrained because the time and effort to gain information or identify alternatives are limited. The time constraint simply means that a decision must be made by a certain time. The effort constraint reflects the limits of manpower, money, and priorities. (You wouldn't want to spend three hours and half a tank of gas trying to find the very best parking place at the mall. Since decisions must be made within this constrained environment, we can say that the major challenge of decision making is uncertainty, and a major goal of decision analysis is to reduce uncertainty. We can almost never have all information needed to make a decision with certainty, so most decisions involve an undeniable amount of risk. The fact that decisions must be made within a limiting decision environment suggests two things. First, it explains why hindsight is so much more accurate and better at making decisions that foresight.As time passes, the decision environment contin ues to grow and expand. New information and new alternatives appear–even after the decision must be made. Armed with new information after the fact, the hindsighters can many times look back and make a much better decision than the original maker, because the decision environment has continued to expand. The second thing suggested by the decision-within-an-environment idea follows from the above point. Since the decision environment continues to expand as time passes, it is often advisable to put off making a decision until close to the deadline.Information and alternatives continue to grow as time passes, so to have access to the most information and to the best alternatives, do not make the decision too soon. Now, since we are dealing with real life, it is obvious that some alternatives might no longer be available if too much time passes; that is a tension we have to work with, a tension that helps to shape the cutoff date for the decision. Delaying a decision as long as r easonably possible, then, provides three benefits: 1. The decision environment will be larger, providing more information.There is also time for more thoughtful and extended analysis. 2. New alternatives might be recognized or created. Version 2. 0 might be released. 3. The decision maker's preferences might change. With further thought, wisdom, and maturity, you may decide not to buy car X and instead to buy car Y. And delaying a decision involves several risks: 1. As the decision environment continues to grow, the decision maker might become overwhelmed with too much information and either make a poorer decision or else face decision paralysis. 2.Some alternatives might become unavailable because of events occurring during the delay. In a few cases, where the decision was between two alternatives (attack the pass or circle around behind the large rock), both alternatives might become unavailable, leaving the decision maker with nothing. And we have all had the experience of seeing some amazing bargain only to hesitate and find that when we go back to buy the item, it is sold out. 3. In a competitive environment, a faster rival might make the decision and gain advantage.Another manufacturer might bring a similar product to market before you (because that company didn't delay the decision) or the opposing army might have seized the pass while the other army was â€Å"letting the decision environment grow. † The Effects of Quantity on Decision Making Many decision makers have a tendency to seek more information than required to make a good decision. When too much information is sought and obtained, one or more of several problems can arise. (1) A delay in the decision occurs because of the time required to obtain and process the extra information.This delay could impair the effectiveness of the decision or solution. (2) Information overload will occur. In this state, so much information is available that decision-making ability actually declines because the information in its entirety can no longer be managed or assessed appropriately. A major problem caused by information overload is forgetfulness. When too much information is taken into memory, especially in a short period of time, some of the information (often that received early on) will be pushed out.The example is sometimes given of the man who spent the day at an information-heavy seminar. At the end of the day, he was not only unable to remember the first half of the seminar but he had also forgotten where he parked his car that morning. (3) Selective use of the information will occur. That is, the decision maker will choose from among all the information available only those facts which support a preconceived solution or position. (4) Mental fatigue occurs, which results in slower work or poor quality work. (5) Decision fatigue occurs where the decision maker tires of making decisions.Often the result is fast, careless decisions or even decision paralysis–no decisi ons are made at all. The quantity of information that can be processed by the human mind is limited. Unless information is consciously selected, processing will be biased toward the first part of the information received. After that, the mind tires and begins to ignore subsequent information or forget earlier information. (Have you ever gone shopping for something where you looked at many alternatives–cars, knives, phones, TVs–only to decide that you liked the first one best? Decision Streams A common misconception about decision making is that decisions are made in isolation from each other: you gather information, explore alternatives, and make a choice, without regard to anything that has gone before. The fact is, decisions are made in a context of other decisions. The typical metaphor used to explain this is that of a stream. There is a stream of decisions surrounding a given decision, many decisions made earlier have led up to this decision and made it both possib le and limited. Many other decisions will follow from it.Another way to describe this situation is to say that most decisions involve a choice from a group of preselected alternatives, made available to us from the universe of alternatives by the previous decisions we have made. Previous decisions have â€Å"activated† or â€Å"made operable† certain alternatives and â€Å"deactivated† or â€Å"made inoperable† others. For example, when you decide to go to the park, your decision has been enabled by many previous decisions. You had to decide to live near the park; you had to decide to buy a car or learn about bus routes, and so on.And your previous decisions have constrained your subsequent ones: you can't decide to go to a park this afternoon if it is three states away. By deciding to live where you do, you have both enabled and disabled a whole series of other decisions. As another example, when you enter a store to buy a DVD player or TV, you are faced with the preselected alternatives stocked by the store. There may be 200 models available in the universe of models, but you will be choosing from, say, only a dozen. In this case, your decision has been constrained by the decisions made by others about which models to carry.We might say, then, that every decision (1) follows from previous decisions, (2) enables many future decisions, and (3) prevents other future decisions. People who have trouble making decisions are sometimes trapped by the constraining nature of decision making. Every decision you make precludes other decisions, and therefore might be said to cause a loss of freedom. If you decide to marry Terry, you no longer can decide to marry Shawn. However, just as making a decision causes a loss of freedom, it also creates new freedom, new choices and new possibilities. So making a decision is liberating as well as constraining.And a decision left unmade will often result in a decision by default or a decision being made for you. It is important to realize that every decision you make affects the decision stream and the collections of alternatives available to you both immediately and in the future. In other words, decisions have far reaching consequences. Go to Introduction to Decision Making, Part 2 Introduction to Decision Making, Part 3 Other Tools for Creative Thinking and Problem Solving Critical Thinking Course Homepage Introduction to Creative Thinking Creative Thinking Techniques Criteria for Evaluating a Creative SolutionIntroduction to Problem Solving Human-Factor Phenomena in Problem Solving Problem Solving Techniques Biases Affecting Information Processing Decision Making Techniques Decision Simplification Techniques Difficulties Created by the Videographic Presentation of Information Why Are We So Busy? Truths of the Information Age VirtualSalt Home Copyright 1998, 2009, 2012 by Robert Harris | How to cite this page w w w . v i r t u a l s a l t . c o m About the author: Robert Harris is a writer and educator with more than 25 years of teaching experience at the college and university level. RHarris at virtualsalt. com