Decision-making models are frameworks or approaches that help individuals and organizations make decisions in a structured and systematic manner.
These models are designed to support individuals and organizations in weighing the trade-offs associated with different options, and in choosing the best course of action based on their goals, values, and constraints.
In this blog I have analyzed 4 models. At the end, I will give you three awesome steps for the experienced decision maker.
What is a decision-making model?
First, let’s define decision-making models and look at some characteristics.
A decision-making model is a framework or approach that helps individuals and organizations make decisions in a structured and systematic manner.
All decision-making models aim to provide individuals and organizations with a structured and systematic approach to making informed and effective decisions.
It provides a step-by-step process for evaluating options, considering the trade-offs associated with different choices, and choosing the best course of action based on specific goals, values, and constraints.
Characteristics are:
Systematic Approach: Decision-making models provide a structured and systematic approach to decision-making, helping individuals and organizations to evaluate options and choose the best course of action.
Trade-off Analysis: Decision-making models typically involve evaluating trade-offs between different options, such as costs, benefits, risks, and other factors, in order to make an informed decision.
Multiple Criteria Consideration: Many decision-making models take into account multiple criteria, including financial, social, environmental, and other factors, in order to ensure that decisions are well-rounded and take into account a variety of factors that may impact the outcome.
Goal-Oriented: Decision-making models are designed to help individuals and organizations achieve specific goals or objectives, such as maximizing profits, minimizing risks, or improving social outcomes.
Evidence-Based: Decision-making models typically involve the use of data, information, and other forms of evidence to inform the decision-making process and to ensure that decisions are based on accurate and relevant information.
4 decisionmaking models
First, I should mention there are many more models. I just picked the four I like to use when making important decisions in my job.
I picked these models:
- Rational Decision-Making Model
- Bounded Rationality Model
- Intuitive Decision-Making Model.
- Multiple-criteria decision analysis (MCDA)
A table of the models with their strengths and weaknesses:
| Decision-Making Model | Description | Strengths | Weaknesses |
| Rational Decision-Making Model | A model that assumes that individuals make decisions based on a systematic and logical analysis of all available information | – Provides a structured and systematic approach to decision-making. – Ensures that decisions are based on accurate and relevant information. – Can help to reduce the influence of biases and emotions. | – Assumes that individuals have complete information and unlimited resources. – May be time-consuming and resource-intensive. – Can lead to suboptimal solutions if the assumptions are not met. |
| Bounded Rationality Model | A model that recognizes that individuals have limited cognitive resources and make decisions based on limited information and simplifying heuristics. | – Recognizes the limitations of human decision making and the role of biases and emotions. – Can provide a more realistic representation of human decision-making. – Can lead to faster and more efficient decision-making. | – Can result in sub-optimal or inconsistent decisions. – May not be suitable for complex decision-making situations. – May lead to the influence of biases and emotions. |
| Intuitive Decision Making Model | A model that assumes that individuals make decisions based on their experience and gut instincts rather than a systematic analysis of information. | – Can lead to faster decision making. – Can be useful in situations where time is limited and complete information is not available. – Can be influenced by experience and expertise. | – May not be based on accurate and relevant information. – Can lead to inconsistent or suboptimal decisions. – May not be suitable for complex decision-making situations. |
| Multiple-criteria decision analysis (MCDA) | A model that involves evaluating multiple, often conflicting, criteria in order to make a decision. | – Provides a systematic and structured approach to decision-making. – Takes into account multiple, often conflicting, criteria to ensure that decisions are well-rounded and take into account a variety of factors. – Can help to reduce the influence of biases and emotions. | – Can be time-consuming and resource-intensive. – The weighting and evaluation of criteria can be subjective and influenced by biases and emotions. – May be complex and challenging to implement in certain decision-making situations. |
The rational Decision-making Model
The Rational Decision Making Model is a widely used method for problem solving and decision-making in various fields such as business, economics, psychology, and management. It is based on the assumption that individuals and organizations make decisions based on logical and systematic analysis of data, and that they choose the best possible solution among the alternatives available.
The model consists of several steps that are followed in a systematic and structured manner. The first step is to identify the problem and clearly define the objectives. Next, all the relevant information and data are collected and analyzed. Then, all possible alternatives are generated and evaluated based on the criteria and constraints established in the first step. Finally, the best alternative is selected based on the analysis and the decision is implemented.
The rational decision-making model consists of the following steps:
Define the problem: The first step in the rational decision-making model is to clearly define the problem or decision that needs to be made. This requires a thorough understanding of the situation and the goals that need to be achieved.
Identify the decision criteria: The next step is to identify the criteria or factors that will be used to evaluate different options. This could include factors such as cost, quality, and risk, among others.
Generate alternatives: After the criteria have been identified, the next step is to generate a list of potential alternatives or solutions to the problem. This should include a range of options that can be evaluated against the decision criteria.
Evaluate alternatives: The next step is to evaluate each of the alternatives against the decision criteria. This requires gathering information, analyzing data, and determining the trade-offs associated with each option.
Select the best alternative: Based on the evaluation of the alternatives, the final step is to choose the best option that meets the goals and objectives defined in the first step.
Implement the decision: After the best option has been selected, the final step is to implement the decision and monitor its effectiveness. This may involve taking action, communicating the decision to stakeholders, and adjusting the solution as needed based on new information or changing circumstances.
One of the strengths of the Rational Decision Making Model is that it provides a systematic and structured approach to problem solving and decision making, which helps individuals and organizations avoid biases and emotional reactions. This can lead to more objective and effective decisions. Additionally, the model takes into account all relevant information, which can increase the accuracy of the decision and reduce the risk of making incorrect decisions.
However, the Rational Decision Making Model has some limitations. It assumes that all relevant information is available, which is not always the case. In real-life situations, individuals and organizations often face incomplete or uncertain information, which can limit the accuracy of the decision. Additionally, the model can be time-consuming and complex, and requires a significant amount of resources and expertise.
In conclusion, the Rational Decision Making Model is a widely used method for problem solving and decision making. Although it has some limitations, it provides a systematic and structured approach that can lead to more objective and effective decisions. By following the steps of the model, individuals and organizations can increase their chances of making the best possible decision.
Bounded Rationality Model
The Bounded Rationality Model is a decision-making model that acknowledges the limitations and constraints that individuals and organizations face when making decisions. Unlike the Rational Decision Making Model, which assumes that individuals make decisions based on a systematic and logical analysis of all relevant information, the Bounded Rationality Model recognizes that individuals often make decisions based on limited information and under time and resource constraints.
The model is based on the idea that individuals and organizations make decisions by satisfying, rather than optimizing, their goals. This means that they choose the best solution among the alternatives that are feasible given their limited information and resources. The goal is not to find the absolute best solution, but to find a satisfactory solution that meets the decision criteria.
The steps of the bounded rationality model are similar to those of the rational decision-making model, but take into account the limitations of human decision making and the role of heuristics, biases, and emotions.
Define the problem: The first step is to clearly define the problem or decision that needs to be made. This requires a thorough understanding of the situation and the goals that need to be achieved.
Identify the decision criteria: The next step is to identify the criteria or factors that will be used to evaluate different options. This could include factors such as cost, quality, and risk, among others.
Generate alternatives: After the criteria have been identified, the next step is to generate a list of potential alternatives or solutions to the problem. This should include a range of options that can be evaluated against the decision criteria.
Simplify the evaluation process: Unlike the rational decision-making model, the bounded rationality model recognizes that individuals have limited cognitive resources and may not be able to evaluate all alternatives in detail. As a result, individuals may use simplifying heuristics or rules of thumb to reduce the complexity of the decision-making process.
Select the best alternative: Based on the evaluation of the alternatives and the use of simplifying heuristics, the final step is to choose the best option that meets the goals and objectives defined in the first step.
Implement the decision: After the best option has been selected, the final step is to implement the decision and monitor its effectiveness. This may involve taking action, communicating the decision to stakeholders, and adjusting the solution as needed based on new information or changing circumstances.
One of the Bounded Rationality Model’s advantages is that it is more realistic and practical than the Rational Decision Making Model. It considers the limitations and constraints that individuals and organizations face in real-life situations, which can improve the efficiency and effectiveness of decision-making. Furthermore, the model recognizes that individuals and organizations may make decisions using heuristics, or simple rules of thumb, which can save time and reduce complexity.
The Bounded Rationality Model, however, has some limitations. It is possible to arrive at suboptimal solutions by satisfying rather than optimizing the decision criteria. Furthermore, the use of heuristics can introduce bias and result in incorrect decisions.
Finally, the Bounded Rationality Model is a decision-making model that acknowledges the constraints and limitations that individuals and organizations face when making decisions. Recognizing these limitations allows the model to provide a more practical and realistic approach to decision making, which can lead to more efficient and effective decisions. When using the model to make decisions, it is important to consider the model’s potential limitations, such as suboptimal solutions and the introduction of biases.
Intuitive Decision Making Model
The Intuitive Decision Making Model is an approach to decision making that emphasizes the use of intuition and experience. It is predicated on the notion that individuals and organizations can make decisions quickly and effectively without necessarily adhering to a structured and methodical procedure. Rather, decisions are made based on unconscious, automatic mental processes that are influenced by past experiences and knowledge.
The steps of the intuitive decision-making model are as follows:
Gather information: The first step in the intuitive decision-making model is to gather information about the situation or problem at hand. This may involve conducting research, consulting with experts, or seeking input from stakeholders.
Develop a feel for the problem: The next step is to develop a gut feeling or intuition about the problem. This involves using past experiences, emotions, and other non-conscious processes to form an initial understanding of the situation.
Reflect on the intuition: After developing an intuition about the problem, the next step is to reflect on the decision and consider whether it is aligned with the goals and objectives defined in the first step.
Test the intuition: If the intuition seems valid, the next step is to test it through further analysis, research, or experimentation. This can help to validate or refine the intuition and improve the accuracy of the decision.
Make a decision: Based on the intuition and any additional information or analysis, the final step is to make a decision. This may involve taking action, communicating the decision to stakeholders, and adjusting the solution as needed based on new information or changing circumstances.
One of the strengths of the Intuitive Decision Making Model is that it can lead to quick and effective decisions, particularly when time is limited or when a decision must be made quickly. In addition, intuition and experience can provide information and insights that may not be easily gleaned from a systematic and structured analysis.
Nevertheless, the Intuitive Decision Making Model has a few limitations. It is susceptible to biases, emotions, and past experiences, which can result in suboptimal or incorrect decisions. In complex or unfamiliar situations, where a more systematic and structured approach may be required, intuition and experience may also be insufficient.
In conclusion, the Intuitive Decision Making Model is an approach to decision-making that emphasizes the utilization of intuition and experience. It can result in quick and effective decisions, but it is important to be aware of its limitations, such as the influence of biases and the possibility of making suboptimal choices. The Intuitive Decision Making Model should be combined with other decision-making models to ensure that decisions are based on both intuition and structured analysis.
Multiple-criteria decision analysis
Multiple-criteria decision analysis (MCDA) is a decision-making approach that involves evaluating multiple, often conflicting, criteria in order to make a decision. MCDA is used in a variety of settings, including business, public policy, and engineering, where decisions need to be made based on multiple, often complex, factors.
MCDA typically involves the following steps:
- Identifying and defining the decision problem and criteria.
- Weighting the criteria to determine their relative importance.
- Evaluating the alternatives in terms of the criteria.
- Aggregating the criteria scores to determine the overall performance of each alternative.
- Selecting the best alternative based on the results of the MCDA.
One of MCDA’s strengths is that it enables individuals and organizations to make informed decisions based on multiple, frequently conflicting criteria. MCDA can help to ensure that decisions are well-rounded and take into account a variety of factors that may impact the decision’s outcome by considering multiple criteria. Furthermore, MCDA can provide a systematic and structured approach to decision-making, reducing the influence of biases and emotions.
MCDA, on the other hand, has some limitations. Criteria weighting and evaluation can be subjective and influenced by biases and emotions. Furthermore, MCDA can be time-consuming and resource-intensive, particularly if there are numerous criteria and alternatives to consider.
Finally, multiple-criteria decision analysis is a decision-making approach that entails weighing multiple, often conflicting, criteria in order to reach a decision. MCDA can help to ensure that decisions are well-rounded and take into account multiple factors by providing a systematic and structured approach to decision-making. However, there are some limitations to MCDA, such as the potential for subjective weighting and evaluation, as well as the time and resources required to implement the approach.
Decision making for experts
Good decision-makers use these three steps before making a decision (source)
1. Challenge the Constraints
This involves questioning the existing constraints, such as time frames, budget, and available resources, to determine if they can be modified or altered in a way that will allow for better decision-making. By challenging the constraints, one can open up new possibilities and perspectives, leading to more creative and effective solutions. The idea is to be open-minded and to not blindly accept the limitations as given, but rather to examine them critically and see if they can be adjusted to facilitate better decision-making.
2. Embrace a premortem
A “premortem” is a decision-making tool that involves imagining that a project or decision has failed, and then working backward to identify the reasons why. The idea is to anticipate potential problems and failures in advance, so that you can take proactive steps to avoid them.
By taking a proactive approach to identifying potential problems and pitfalls, you can make better decisions, and increase the chances of success. A premortem can help you be more strategic and proactive, rather than reactive, in your decision-making, which can lead to better outcomes.
3. Checking the basics
By checking the basics, you can avoid making decisions based on incomplete or inaccurate information, and ensure that your decision is grounded in a solid understanding of the problem and the available options. This can help you avoid making decisions that are poorly thought-out or that may have unintended consequences.
For more information, check the video below.
