1 Introduction to decision making
1.1 Approaches to decision making
Think about some of the decision-making processes in which you have been involved. Do you recognise any of the following four approaches to decision making?
(i) Rational choice
There are many variations on this theme. The aim is to identify and choose the best option in a particular set of circumstances by systematically going through a series of steps such as:
- Consider the situation as a whole.
- Identify the decision(s) that need(s) to be made.
- Collect data on the range of alternatives.
- Develop criteria for assessment of the alternatives.
- Assess the alternatives against the criteria.
- Choose one alternative.
- Monitor the outcome of the decision.
In practice, you will rarely be making a decision in a static situation and may need several iterations of this type of process before you reach a decision. This is mainly because new alternatives or criteria emerge at a later stage. One example might be in deciding which computer to purchase to serve a group of people. Sudden availability of a cheaper or more powerful alternative, or changes in the composition of the group it has to serve, are examples of the sorts of change that can occur that will affect the outcome of the decision.
(ii) ‘Rational up-to-a-point’ decision making
In situations where there is more uncertainty and limited data available it might only be possible or desirable to approach certain stages of the decision-making process rationally. Say, for example, you are allocating some small grants for local community improvements. You assess the proposals systematically and still end up with six very worthy projects from which you can choose only one. Some people would claim that you could continue to apply rational choice by going through further iterations of developing criteria and collecting data, but there will probably be diminishing returns from the additional effort. Another approach would be to select one of the final six quite randomly. Any of them would satisfice (represent an adequate or ‘good enough’ decision), at least from the perspective of those disbursing the grants. The term satisfice describes a course of action that satisfies the minimum requirements to meet a goal rather than trying to achieve the maximum (biggest) or optimal (best) outcome. It was first coined by a key contributor to decision-making literature, Herbert A. Simon, in his Models of Man 1957.
(iii) Decision making in disorder – the ‘garbage-can’ decision process
James March has written several critiques of ideas on rationality in decision making. The following quote and the idea of ‘garbage-can decision making’ comes from his 1982 article ‘Theories of choice and making decisions’.
Theories of choice underestimate the confusion and complexity surrounding actual decision making. Many things are happening at once; technologies are changing and poorly understood; alliances, preferences and perceptions are changing; problems, solutions, opportunities, ideas, people and outcomes are mixed together in a way that makes interpretation uncertain and their connections unclear.
The garbage-can metaphor describes the messy, complex and disordered way in which, at a particular moment in time, all decision makers are simultaneously involved in a range of activities and not just in a single decision-making process. These concurrent activities are all thrown together in the minds of decision makers, like in the jumble of a garbage can. March suggests that in such messy situations particular ‘problems’ and ‘solutions’ often become attached to each other because of their spatial and/or temporal proximity to each other, not because of rational choice.
This implies that understanding why decisions are made in one area frequently requires an understanding of what is going on elsewhere at the same time. The original work of March and his colleagues was done in the context of some university organisations. They described a situation where:
Recent studies of universities, a familiar form of organised hierarchy, suggest that organisations can be viewed for some purposes as collections of choices looking for problems, issues and feelings looking for decision situations in which they might be aired, solutions looking for issues to which they might be an answer, and decision makers looking for work.
It is not difficult to identify similar contexts today, with an environmental dimension, though not necessarily at the level of a single organisation, for instance when considering our use of technology in the context of climate change.
(iv) Personal beliefs approaches to decision making
There are many other personal theories and beliefs around decision making, based on an individual’s experiences of decisions. Here are just a few:
- ‘... toss a coin to make the decision, if you then want to make it the best of three you know which decision you want to make’
- ‘... always dismiss the first and choose the next option that is better’
- ‘... better to make any decision than no decision at all’
- ‘... you never need to actually make any decisions if you just keep on endlessly collecting views and feeding them back to people until the decision is made’
- ‘... you can tell whether it’s the “right” decision by how you feel about it’.
Activity 1 Consider your own decision-making experience
Consider your own experience of making decisions, or perhaps in actively refraining from making decisions. Note down examples where the (a) rational, (b) rational up-to-a-point, (c) garbage-can and (d) personal beliefs approaches to decision making seemed to apply (one for each).
- (a) I used rational choice to help in deciding which applicant to appoint to the post of ‘field assistant’ on a project I was managing. Detailed criteria were developed for both person and post and all applicants were assessed against those criteria.
- (b) Rational up-to-a-point decision making helped me decide which plants to grow in my garden this summer. Several plant varieties met all my criteria. There was uncertainty about weather conditions and my time and inclination for weeding; clarifying these uncertainties would have helped me further with rational choice but I did not bother to follow these up, so in the end my final selection was partly arbitrary.
- (c) The decision for the complete removal of an old hedgerow on farmland opposite my house this spring as the birds were nesting seemed to me to be an example garbage-can decision making. The hedge certainly needed attention at some stage as part of it was dead. However, uprooting the whole hedge rather than removing the dead sections, possibly at another time of year when it might have had a less damaging effect on birds, was due to the availability of a contractor’s time and equipment, as a job elsewhere on the farm had been finished early. This factor was combined with the absence that afternoon of others both on and off the farm who would have made a different decision. (My ‘conservation of birds’ values are showing here. Someone more concerned with other aspects of the impact of the decision, such as the costs of equipment hire, would perhaps judge it differently!) The action of pulling up the hedge at that time resulted from the combined set of circumstances, not a ‘hedge-centred’ decision-making process!
- (d) I subscribe to the view that ‘You can tell whether it’s the “right” decision by how you feel about it’. I decided recently that I could not go to a conference I was invited to attend – lack of both time and money meant that I felt the only rational decision was to decline the offer. I then realised I was disappointed about the decision and that it did not seem the ‘right’ decision for me at that time, and that if I thought about it differently and considered it as an opportunity to progress several things I was working on, I could probably find away to go. I eventually reversed my decision. This could be thought of as a second iteration in rational decision making, in that what I had done was to assess the decision against new criteria that had emerged, but in practice I reversed the decision because of how I felt about it, not because of rationality!
In practice, most decision making involves a combination of approaches. So, why are people not completely rational in their decision making? James March in another paper, ‘Limited rationality’ (1994), claims that although decision makers try to be rational, in a particular context, they are constrained by limited cognitive capabilities and incomplete information, so although they often intend to be rational, their actions are often less than rational. Not being entirely rational is just part of being human! In this paper, March does not discuss the role of emotions in affecting rationality in decision making but he has written on this topic elsewhere (March 1978). There is a lot of literature on emotion and decision making related to understanding human cognition (the mental process of knowing and developing knowledge) and what motivates human behaviour, particularly in the areas of medical decision making and psychology (e.g. Schwarz (2000) and Ubel (2005)).
Activity 2 Information constraints
Read the extract below from March (1994) and complete the following activity. What are the four main information constraints that March believes face decision makers in organisations? In your experience, are these constraints also relevant in non-organisational settings?
- (a) problems of attention;
- (b) problems of memory;
- (c) problems of comprehension;
- (d) problems of communication
Organisations impinge on so many aspects of our lives it is sometimes difficult to tell when we are outside an organisational setting! But if, for example, I consider a decision at home where there are many options, such as ‘How will I reduce my use of energy (electricity and gas)?’, I seem to run into all four of the information constraints March refers to, just because I make a wide range of choices in this area. I have many electrical appliances (fridge, cooker, television, etc.), and both electric and gas heating, so deciding what and how to change, to reduce my overall use of energy, is a fairly complex task.