The Six-Step Rational Decision-Making Model 1. Define the problem. 2. Identify decision criteria 3. Weight the criteria 4. Generate alternatives 5. Rate each alternative on each criterion 6. Compute the optimal decision
Identify decision criteria • Once a decision maker has defined the problem, he needs to identify the decision criteria that will be important in solving the problem. In this step, the decision maker is determining what’s relevant in making the decision. • This step brings the decision maker’s interests, values, and personal preferences into the process. • Identifying criteria is important because what one person thinks is relevant, another may not.
Weight the criteria • The decision-maker weights the previously identified criteria in order to give them correct priority in the decision.
Generate alternatives • The decision maker generates possible alternatives that could succeed in resolving the problem.
Rate each alternative on each criterion • The decision maker must critically analyze and evaluate each one. The strengths and weakness of each alternative.
Compute the optimal decision
Evaluating each alternative against the weighted criteria and selecting the alternative with the highest total score.
Bounded Rationality when a staff considered which college to attend, they will not look every viable alternative nor identify all the criteria that were important in decision.
Instead of optimizing, staff probably “satisfied”.
When faced with a complex problem, most people respond by reducing the problem to a level at which it can readily understand. The limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize. So people satisfied; that is, they seek solutions that are satisfactory and sufficient.