Decision making
Decision Making is the process of concluding or making a judgment about some issue or matter – making a choice between two or more alternatives (in management terms)– or part of the transformation process of inputs to outputs (in systems theory terms).

Life is full of decisions, some requiring little effort (i.e., chocolate or vanilla?), and some that should require enormous effort (i.e., have a baby or take a math class, marry Jocko or go to graduate school, buy a house or invest in mutual funds).
More important (salient) decisions arise from many situations where we want or need something we don't have.
Decisions are our attempt to "bridge the gap" between where we are, and where we want or need to be. Such decisions are essential to maintaining and improving the conditions of our lives and are guided by our values and our goals, since decisions have positive or negative consequences.

Sociologist Robert K. Merton referred situations where decisive actions were called "functions", which could be Positive or Negative, and Manifest (Intended) or Latent (Unintended). Thus, we have the table:

II. Decision Making as part of Management
Decisions vary in intensity and importance - obviously not every decision will change the course of a life, and often decisions appear to be more immediately necessary than they might over time.  In the case of True Love (a timeless movie plot), the passion part of true love is more important if the characters are younger, while the abiding, companionate part of love is more important in the long run of a life-time commitment (not that older people lack passion!!). People are motivated to maximize positive outcomes and minimize mistakes, thus using planning, implementing and cost-benefit analyses in decision-making.

We make a decision, after which we have to deal with the unknown, unintended "functions" of our choice. Remember, though, that decisions present both problems and opportunities. By constructing issues as ‘opportunities’ in organizations, Jane Dutton (2001) suggested that organization-wide change could take place.

Because of the strong influence our values have in this process, Decision Making is highly personal. Our personality, and the personalities of others involved in our decisions must be figured into the discussion of the process. We can often eliminate options that go against our values, and thus save time, an important resource.
Each person’s personality and usual modes of thinking and acting influence the characteristic way s/he makes decisions ('decision making style’, affected by values, knowledge, ability, motivation, type of decision being made, speed of decision making, amount of available information).

Quick decisions, decisions impulsively made, or those made without investigation and deliberation are inferior (though sometimes quite necessary) to more thoughtful, informed, reflective decisions. Of course, people cannot always take the time and put out the effort to be deliberate. Additionally, some people tend toward quick, impulsive decisions, while others are more reflective and thoughtful - almost painfully slow to decide - part of this is situational (there are different time constraints for different decisions) - and part is personality.

Sometimes, when quick decisions are called for (and other times, when we are lazy, or what psychologists like to call ‘cognitive misers’ – we don’t want to think!), we make use of mental shortcuts called ‘heuristics’ which often lead to the right decision, but sometimes lead to mistakes. For instance, given a description of Jack as being intelligent, good in math, very sloppily dressed, precise and logical, and given the fact that 30% of the population consists of engineers, what is the probability that Jack is an engineer? 70%? 30%? 90%? Did you (like many others) pick 90%? In that case, you succumbed to an error called the ‘representativeness’ heuristic – you made a judgment based on the description of Jack as it matched the stereotype of an engineer, without taking into account ‘base rate’ or probability of Jack being an engineer.
 

Decision Making Steps
The Decision Plan is used when the process is long and complicated. Final strategy selected depends on the decision involved, the task, and personal decision-making style. The acronym ‘DECIDE’ is a framework for many plans (Malhotra, 1991).

• Define the Decision – What is the core of the situation? Why is a decision needed? What relevant background information is available?
• Estimate the Resources Needed - time, energy, money, information – What's needed to assist this decision and later planning and action?
• Consider Alternative Courses of Action - Is the cost of this decision worth the outcome, or can we do something else?
• Consider all options before narrowing them down.
• Imagine the Consequences of Decision and Alternative Courses of Action - What is likely to happen? What is the worst-case scenario? The concept of Prepurchase Expectations (beliefs about the anticipated performance of a product or service) is an example of this step in consumer decision-making.
• Develop an Action Plan and Implement It - once a decision is made, a course of action must be constructed. Step-by-step courses of action along a timeline might be best used.  Once outlined in relative detail, the idea is to Implement the Course of Action, sticking to it as closely as possible.
• Evaluation Along the Way - like any good plan, there should be built-in opportunities to evaluate progress toward the main goal. Keeping notes, files, tracking spending, and other strategies to see how things are working is a good idea.

Models, Rules, Utility
Models - Changes in behavior or habit are very difficult for people, even though the change is good, and right and necessary. When faced with uncertainty, most people adhere to maintaining the status quo, sticking to pre-established plans, strategies and tactics, according to Silver and Mitchell (1990). Some people are more easily adaptable than others - some require less order or are more at home in semi-chaos. For those who need help changing, decision models can be used, which assume that rational decision makers will evaluate alternatives and make the best possible choice.

    Central Satellite
In the Central-Satellite Model, a central decision is surrounded by satellite decisions that are off-shoots of the main decision. It is a more likely portrait of reality than the Chain Model, especially for large and complicated situations.
Thus, a decision to go back to college might require many offshoot decisions involving child care, alternative delivery of affection, a need for extra money for tuition and books, time off work to attend classes, replacing daily activities with study time, new or different transportation and nutrition needs.

    Chain Model
In this, each decision builds on previous ones, forming a sequence of steps(B. Paolucci, et al., 1977). The Chain Model doesn't actually work, by the way, because of its linear nature and inability to consider more than a narrow focus of events. It is useful, however, for small systematic decisions. One can imagine using both, the central satellite and the chain models for long-term and short-term plans respectively.

    Decision Tree
In this model (often used in business strategy planning), people select alternatives based on goals, perceived availability of resources and most importantly, values.

Decision Rules are logical rules, which guide decision making.

- Decision makers will seek the best outcomes (known to them).
- Individuals will try to use their time to best advantage
- Goals will be kept in mind throughout decision-making

Utility - Additional Decision Rule is to optimize Utility (usefulness of decisions). Rational decision makers are assumed to seek the maximum utility from decisions they make. Utility analysis seeks ways to improve the making of choices.

Reference Groups
The people who influence our thought habits, who provide guidance or advice to influence our behavior are members of our reference group. A thumb rule is this: someone is part of your reference group if the memory of his/her values and attitudes affect someone’s decision making.

Beginning with our parents or caregivers in childhood, we begin accepting influence as a way of processing information and making our way through life. By early childhood, we start to include friendships, and even later, love relationships in our reference groups.  Somewhere along the line, popular music, movies, our culture also informs our reference group as we include fads, fashion, and media personalities into our reference group. Typically, a college student’s reference groups include immediate family, co-workers, employers, hometown friends, college friends, professors and club/sports-team/music group members, and many others, possibly.

There are Primary and Secondary reference groups, depending on frequency of contact.

Personal Decision Making
Since we are, ultimately, responsible for our own decisions, even though many decisions are influenced by others, we should begin to practice making decisions at an early age.  Wise parents know this and begin facilitating decision making skills in their children - from which of "these two cereals" to have for breakfast to making decisions about which sport to play or which activity to take up after school.

Poor decisions can be rationalized as good ones by a person with little decision-making skill. One of the goals of socializing children is to close the gap between Actual and Perceived Quality of Decisions until there is no difference between the two. Though people raise children in the hope of making them competent decision makers, reality falls short of this expectation.
Examples of Poor Decision Making include indecisiveness, decidophobia and the like.

Indecisiveness - Indecision may be caused by:

• fear of the unknown
• procrastination
• fear of making a mistake
• fear of acting on one's own
• lack of, or inexperience with, good judgment
• feeling overwhelmed by situations
• fear of responsibility
• being overly dependent on others opinions

Avoiding Decisions - Passing the decision-making buck is a way to avoid decisions – e.g. “That’s not my job” or “I thought Andy would do this”. Avoidance can be avoided if people are committed to an idea or action, rather than just compliance, wherein people just ‘go along’ for a while, without believing in it.

Decidophobia - This is the fear of making decisions, specifically, the fear of failure. This is learned, a type of dependency on others, and a helplessness, that leads to inability to choose and decide, and a perception of decisions as problems, not opportunities.  To beat decidophobia:

• develop the practice of decision making at an early age in children, in simple ways (e.g. what to wear, eat, etc.)
• break a big decision into components and make those decisions first
• moderate expectations
• use decision making models and DECIDE

Toward the end of life, one who has been alert and watchful of events develops Wisdom, which is the ability to give the right advice and make the right decisions without thinking too much.  Wisdom, and intuition for that matter, are less mystical or metaphysical than the vernacular use of the terms imply.  That is - the popular idea of women's intuition suggests that women, by virtue of their gender, hold a special ability to know things that men do not.  While often less impulsive than men (especially on matters of love and affection), no such ability has ever been borne out in research.

However, intuition based on experience is not only a likely outcome of a thoughtful life, it is demonstrated on a daily basis. For example, if you are walking along a street in a new city and look down a dark alley, and the feeling that the alley is an unsafe place overcomes you, chances are you are acting on intuition that comes from your experience, socialization, or other social training. However, the difficult-to-measure construct of intuition may be better understood (perhaps by eastern philosophy) than quantified (by the occidental scientific method).

Family Decision Making
The difference between Personal and Family Decision Making has to do with the complexity of the task (there's more people to consider, with their individual objectives, often conflicting). The management principles involved in leadership, cooperation, coordination of efforts and resources, and negotiation are involved in families as well as properly run businesses. When conflict is more common than harmony, you know there is something lacking in the decision making process in the family.

One aspect has to do with the Division of Labor at home (who does what tasks). Traditional families have traditional divisions of labor - males do work outside the home (yard, fixes, mechanical greasy things, car work), while females do work inside the home (cooking, cleaning, caring for kids, pay bills, decide about furniture, décor, etc.). This outmoded model is very much alive in many part of our society, but families are steadily moving toward more egalitarian (equalitarian) models where the person with the talent for a task gets the responsibility of doing the task.  For distasteful tasks, newer couples tend to split the work up more equally. New studies are finding that activities such as child care and grocery shopping are being shared more and more.

Families, Environment and the Elbing Model
You may forget all about the Ebling Model (also known in this class as the wee-gee board model). In social science we have the idea of PARSIMONY (this will be on the test where Ebling won't). Parsimony states that the best theory describes, explains and predicts behavior in the most straight- forward, simplest terms possible. Ebling clearly doesn't cut it, in my opinion. He tried to describe how people make decisions based on reference groups, alternatives, environmental constraints, using too much complexity!

Decision Making Styles in Families:
There seem to be at least three Family DM Styles - all of which may be present in any one family:

• Accommodation – where the family reaches agreement by accepting the point of view of the dominant person, making power an important feature.
• Consensual agreements are made after debate and compromise between everyone in the family – mutual agreement.
• De Facto decision making occurs when no one really cares enough to make their wishes known about an issue (‘lack of dissent, rather than active assent’)
• Additionally
• syncratic styles - when both partners share equally
• autonomic - when each spouse makes an equal number of decisions and abides by those decisions.

• Who commands more material resources (Blood and Wolfe, 1960) – new research shows that this is much more complex than originally thought.
• Emotional interdependence
• Ability to control each other and affect ultimate consensus
• How close the partners are
• Degree of cooperation and communication
• Level of education
• Children have more influence on decision making in some families

Roles in the family decision making process

• influencers - who provide information to other members about a product or service
• gatekeepers - who control the flow of information
• deciders - who have the power to determine whether or not to purchase
• buyers - who makes actual purchases
• preparers - who transforms the product into a form suitable for consumption
• users - who uses or consumes
• maintainers - who services or repairs products
• disposers - who initiates the disposal or discontinuation of a product.

Problem Definition - Usually, you become aware of a problem when motivated by dissatisfaction with the current state of things. Problem awareness and analysis are influenced by these motivational processes: the problem solver’s needs/motives/goals, perceptions and beliefs, values, resources and learning/background/past experience.

• Definition, Analysis and Plan of Action – problems need to be defined, and this is a creative process requiring one to see common threads, and causal links. Problems may be best defined as questions (David Nylen), and this may be difficult, especially for complex problems which have multiple or hidden causes.
• Problem Analysis – problems can be seen as messes or as experiences requiring logical responding, maybe with decision models.
• Plan of Action – planning involves putting together activities/steps to follow to provide satisfaction to problem solvers. This depends on motivation, which in turn, depends on the discrepancy between the desired and actual state and the importance of the problem.
• Search for information – internal search involves looking within oneself, while external search involves gathering information from family, friends, media and other resources.

Five Main Types of Risk

1. functional/performance
2. financial
3. physical
4. psychological
5. social
6. time

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