Chapter 1: Introduction to Quality Decision Making

Normative vs. Descriptive

Normative

  • Describe reality and actions as they are


  • Normative decision theory models the most ideal decision for a given situation. In normative theory, an actor is assumed to be fully rational. Normative decisions always try to find the highest expected value outcome

Descriptive

  • Identify how they should be
  • Descriptive decision theory is more about what will occur in a situation, not what should. Descriptive decision theory takes into consideration outside factors that influence an actor’s decisions toward less optimal, less rational ends.

Deliberative – Affective Decision Systems

Declaring a decision

Deliberative Decision System

  • the realm of reason, is the “cool cognitive system.”
  • Should be developed and increase its role in decision making

Affective Decision System

  • the “hot emotional system.”
    was
  • motivated by sex, fear, and hunger stimuli that were directly related to survival.
  • Making decision by 'gut feel'
  • The result of decision making might go wrong

Thought vs. Action

Decisions are declared by human beings. Sometimes they arise when we have what philosophers call a break in our existence - some change in our circumstances- that impels us to declare a decision

Declaring decision reactively ( *change in circumstances)

  • Can consider these decisions as reactive to the change.
    (Whether experience a change for the worse, or the change for the better)
  • For example: losing a job, inheriting money

Declaring decision proactively (*no change in circumstances)

  • Declare decisions proactively, without any external stimulus.
  • For example: quitting a job or taking up a skydiving just because you want to

Once decision is declared, less effort or extensive analysis required

Decision Analysis of Work

  1. Simple Decision
  • Use common sense or some rules of thumb.
  1. Complicated Decision
  • Use a simple check-list to remind us things to consider & helps to identify common decision making errors
  1. Rigorous Decision
  • Involve elements of complexity, dynamics, and far-reaching consequences.

Decision vs. Outcome

REGION 1: THOUGHT WITHOUT ACTION

  • Includes more feelings towards someone or something
  • Eg: “What a beautiful cloud!"

REGION 2: ACTION WITHOUT THOUGHT

  • Reflex response to stimulus
  • Take appropriate action in new situations, without thought, by acting on your inner knowledge
  • Learn to ride a bicycle automatically without thinking, so a manual like this would be of little use.

REGION 3: NO THOUGHT-NO ACTION

  • Eg: Being in coma, the state of unconsciousness produced by proper meditation

REGION 4: THOUGHT AND ACTION—“ACTIONAL THOUGHT”

  • Decision analysis
  • When we think about a decision, we are
    practicing actional thought.

What is a good decision?

Decision - A decision is a choice between two or more alternatives that involves an irrevocable allocation of resources.


Decide - is to cut off, thinking about the decision does not indicate you are cutting off except the time spent for thinking


Stakeholder- Someone who can affect or affected by the decision


Decision making with uncertainty - because of fear of a bad outcome, or fear of regret, or even
fear of blame.
Solution : choose the best alternative at the moment of time by own preferences with considering uncertainty


Decision vs. outcome
Eventualities :

  • Making a good decision with good outcome
  • Making a good decision with bad outcome
  • Making a bad decision with good outcome
  • Making a bad decision with bad outcome

** The quality of decision won't affect the quality of result.

End

“A good decision is one that produces a desired outcome.”


“A good decision is one that has the lowest chance of getting the worst outcome.”

The Six Elements of Decision Quality

  1. The decision- maker
  • The person who will act
  • Commitment to actional thought (thinking while deciding at the same time)

2.A frame

  • A way of viewing the decision


  1. Alternatives from which to choose
  • Available courses of action that the person believes would lead to different future
  1. Preferences
  • which arise from different alternatives
  • describe what the person wants.
  • A high quality decision will have clear, carefully specified preferences
  1. Information
  • It costs resources
  • A high quality decision process ensures that
    information acquisition is neither overdone nor underdone
  1. The logic by which the decision is made.
  • use some process to derive the action we should take
  • use the best rules we know for this reasoning

The decision basis

  1. What you can do : Your alternatives
  2. What you know : Your knowledge related to the alternatives about the future consequences
  3. What you want : Your preferences on consequences

Decision quality chain
Elements of a good decision consists of :

  1. Right Frame
  2. Right alternatives
  3. Right Values
  4. Right Information
  5. Right Reasoning
  6. Decision Maker