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Decision making - Essay Example

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­­­­­From the classical point of view, human decisions are viewed as being highly rational and self-centred with regards to mathematics and economics. Economically, humans rational economic beings…
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Decision Making and al Affiliation Department How Rational Can a Human Decision Maker be?
In human beings, decision-making is an inevitable and a fundamental activity. ­­­­­From the classical point of view, human decisions are viewed as being highly rational and self-centred with regards to mathematics and economics. Economically, humans rational economic beings while mathematically, humans have to conceptualize each decision making process as involving two or more options separated by time and space. However, this classical view is limited by numerous factors that eventually result in biasness in human decisions, paving way for hopeless and relentless irrational decision-makers. Consequently, modern day decision makers are biased, especially given the deeply-rooted perceptions of success and failure that have been inherited from ancestors.
According to Cialdini (2013), bias in human decisions is not just a cause of deficiencies that results in poor decisions. On the contrary, bias is associated design features and not flaws, and this is crucial in understanding consumer behaviours as a result of their decisions. The three major decision making models are rational decision making, descriptive, and natural settings decision models. Each set of models explain the extent of human decision subject to different conditions. For instance, rational decision models such as multivariate utility theory and Bayesian inference models involved breaking down problems into small elements such that uncertainties, choices, and consequences were explicitly provided. In descriptive models, humans are perceived as incapable of making rational decisions due to deviations in terms of heuristics and biases. The explanation of irrationality in descriptive models is elaborated by bounded rationality. Today, decision making within everyday settings focuses on serving the attainment of a goal and not learning the choice.­­ Decision making in natural settings focuses on perceiving aspects within the environment restricted by space and time; understanding the meaning of such elements; and forecasting their future status (Polic, 2009, p. 79). This means that at any given time, decision makers are neither fully aware of all possible alternatives for their decision nor the possible outcomes tied to each option, and are never infinitely sensitive to unique distinctions that distinguish one option from the other or the extent of rationality each decision carries.
Merits and Demerits of Conventional Rational Model
Conventional originates from traditions and customs. A rational decision-making process involves making decisions that result in optimal benefits and operate under the assumption that all humans participate in rational behaviour (Carrey, 2006). In addition, since rational decision making is founded on data obtained scientifically, the resulting decisions are informed thereby reducing errors, deviations, assumptions, distortions, guesswork, and subjectivity. This way, the decision maker attains consistency and decisions of premium quality that guarantee low incidents of risks or uncertainties. Rational decision making is also advantageous when dealing with complex issues since they are broken down into smaller manageable units. However, since rational decision making requires much time to deliberate on data, thus unsuitable for quick decisions. In addition, rational decision makers are mostly associated with insensitive autocracy since they make structured and informed decision that ignore human relations despite emphasizing the bottom-line (Carrey, 2006).
Conventional Holistic Model
Another conventional model used in decision making is holistic decision making. Based on the definition by Carey (2006), the holistic approach involves developing the value of a firm from socially multifaceted relationships and resources, and this goes beyond looking at the bottom line. In other words, this approach creates visionary managers who look at the bigger picture through consideration of both assets and relationships.
Bibliography
Carrey, W. P., 2006. Rational versus holistic: Two very different approaches to executive decision making. [Online]
Available at: http://research.wpcarey.asu.edu/management-entrepreneurship/rational-versus-holistic-two-very-different-approaches-to-executive-decision-making/
[Accessed 7 January 2015].
Cialdini, R., 2013. Are Human Decisions Eminently Rational, Hopelessly Irrational, or Neither?. [Online]
Available at: http://www.influenceatwork.com/are-human-decisions-eminently-rational-hopelessly-irrational-or-neither/
[Accessed 6 January 2015].
Polic, M., 2009. Decision Making: Between Rationality and Reality. Interdisciplinary description of complex systems, 7(2), pp. 78-89. Read More
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