The rational decision making process


The optimizing decision maker is rational. That is, he or she makes consistent, value-maximizing choices within specified constraints. These choices are made following a six-step rational decision-making model. Moreover, specific assumptions underlie this model.

The Rational Model
The model begins by defining the problem. A problem exists when there is a discrepancy between an existing and a desired state of affairs. If you calculate your monthly expenses and find you’re spending more than you allocated in your budget, you have defined a problem. Many poor decisions can be traced to the decision maker overlooking a problem or defining the wrong problem.

Once a decision maker has defined the problem, he or she needs to identify the decision criteria that will be important in solving the problem. In this step, the decision maker determines what is relevant in making the decision. This step brings the decision maker’s interests, values, and similar personal preferences into the process. Identifying criteria is important because what one person thinks is relevant another person may not. Also keep in mind that any factors not identified in this step are considered irrelevant to the decision maker.

The criteria identified are rarely all equal in importance. So the third step requires the decision maker to weight the previously identified criteria in order to give them the correct priority in the decision.

The fourth step requires the decision maker to generate possible alternatives that could succeed in resolving the problem. No attempt is made in this step to appraise these alternatives, only to list them.

Once the alternatives have been generated, the decision maker must critically analyze and evaluated each one. This is done by rating each alternative on each criterion. The strengths and weakness of each alternative become evident as they are compared with the criteria and weights established in the second and third steps.

The final step in this model requires selecting the best alternatives by computing the optimal decision. This is done by evaluating each alternative against the weighted criteria and selecting the alternatives with the highest total score.

Assumptions of the Model
The rational decision-making model contains a number of assumptions. Let’s briefly outline those assumptions.

1. Problem clarity.
The problem is clear and unambiguous. The decision maker is assumed to have complete information regarding the decision situation.

2. Known options
It is assumed the decision maker can identify all the relevant criteria and can list all the viable alternatives. Furthermore, the decision maker is aware of all the possible consequences of each alternative.

3. Clear preference
Rationality assumes that the criteria and alternatives can be ranked and weighted to reflect their importance.

4. Constant preferences.
It’s assumed that the specific decision criteria are constant and that the weights assigned to them are stable over time.

5. No time or cost constraints.
The rational decision maker can obtain full information about criteria and alternatives because it’s assumed that there are no time or cost constraints

6. Maximum payoff.
The rational decision maker will choose the alternative that yields the highest perceived value.

Improving Creativity in Decision Making

The rational decision maker needs creativity, that is, the ability to produce novel and useful ideas. These are ideas that are different from what’s been done before but that are also appropriate to the problem or opportunity presented. Why is creativity important to decision making? It allows the decision maker to more fully appraise and understand the problem, including seeing problem others can’t see. However, creativity’s most obvious value is in helping the decision maker identify all viable alternatives.

Creative Potential
Most people have creative potential that they can use when confronted with a decision-making problem. But to unleash that potential, they have to get out of the psychological ruts many of us get into and learn how to think about a problem in divergent ways.

We can start with the obvious. People differ in their inherent creativity. Einstein, Edison, Picasso and Mozart were individuals of exceptional creativity. Not surprisingly, exceptional creativity is scare. A study of the lifetime creativity of 461 men and women found that less than 1% were exceptionally creative. But 10% were highly creative and about 60% were some what creative. This suggests that most of us have creative potential; we just need to learn to unleash it.

Three-Component Model of Creativity
Given that most people have the capacity to be at least moderately creative, what can individuals and organizations do to stimulate employee creativity? The best answer to this question lies in the three-component model of creativity. Based on an extensive body of research, this model proposes that individual creativity essentially requires expertise, creative-thinking skills, and intrinsic task motivation. Studies confirm that the higher the level of each of these three components, the higher the creativity.

Expertise is the foundation for all creative work. Picasso’s understanding of art and Einstein’s knowledge of physics were necessary conditions for them to be able to make creative contributions to their fields. The potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise in their field of endeavor.

The second component is creative-thinking skills. This encompasses personality characteristics associated with creativity, the ability to use analogies, as well as the talent to see the familiar in a different light. For instance, the following individual traits have been found to be associated with the development of creative ideas: intelligence, independence, self-confidence, risk-taking, an internal locus of control, tolerance for ambiguity, and perseverance in the face of frustration.

One of the most famous examples in which analogy resulted in a creative breakthrough was Alexander Graham Bell’s observation that it might be possible to take concepts that operate in the ear and apply them to his “talking box.� He noticed that the bones in the ear are operated by a delicate, thin membrane. He wondered why, then, a thicker and strong piece of membrane shouldn’t be able to move a piece of steel. Out of that analogy, the telephone was conceived. For instance, most of us think of hens laying eggs. But how many of us have considered that a hen is only an egg’s way of a making another egg?

The final component in our model is intrinsic task motivation. This is the desire to work on something because it’s interesting, involving, exciting, satisfying, or personally challenging. This motivational component is what turns creativity potential into actual creative ideas. It determines the extent to which individuals fully engage their expertise and creative skills.

Importantly, an individual’s work environment can have a significant effect on intrinsic motivation. Work-environment stimulants that have been found to foster creativity include a culture that encourages the flow of ideas, makes fair and constructive judgments of ideas, and rewards and recognizes creative work; sufficient financial, material, and information resources; freedom to decide what work is to be done and how to do it; a supervisor who communicates effectively, shows confidence in others, and supports the work group; and work-group members who support and trust each other.

  • dattatray shivrekar

    i want to know about rational decision making models use in a business organisation with some practical examples