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Decision Making Models: De nition, Development & Types

In this lesson, you'll gain an understanding of when decisions need to be made and discover how to use di erent
decision-making models and types. Both rational and intuitive decision-making models are discussed.

When Do We Have to Make Decisions?

How many times have you wished for more than 24 hours in a day? Those 24 hours are what is
known as a constraint, or a limitation. Speci cally, it's a time constraint. No matter how much you
might want more time, you can't get more than 24 hours in a single day. Scarcity, which is a type of
constraint in which something you need is in short supply, forces you to gure out what your
options really are and what decision will give you the best outcome.

Using a time constraint as our example, let's say you have 20 hours of work to do by Friday
afternoon and it's now Thursday night. You will employ some sort of decision-making process,
formal or informal, to gure out how to do your work in the scarcity of hours in the given time
frame.

How Do We Make Decisions?

Some of the decisions we make, like what to eat for lunch, are simple. For our time-crunch
problem, well, you'll need to use some kind of process to decide what to do and how to get 20
hours of work done with only 10 hours of time available.

Rational decision-making models tend to be based heavily on analysis. Pareto charts, decision
trees, and critical path analysis are only a few examples of such models. They all use step-by-step
processes to determine viable alternatives. Then, participants evaluate the alternatives based on
the advantages and disadvantages of each option, with the goal in mind to determine the best
decision.

Examples of Rational Models

Business and project teams normally use these models to make the optimal decision. A Pareto
chart uses the 80/20 rule. This method assumes that 20% of your e orts will produce 80% of the
bene t. Will all the tasks associated with the 20 hours of e ort create an equally bene cial
outcome, or can you choose certain activities and get most of your bene t? By using the Pareto
rule, you can prioritize the tasks into those that will make the most impact to those that will make
the least. Generally, the top 20% of your ideas will give you 80% of the bene ts you're looking for.

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5/26/2021 Decision Making Models: Definition, Development & Types - Video & Lesson Transcript | Study.com

A decision tree is built from decisions, uncertainties, and payo s. You use software to build the
tree with its various decision options and outcomes, and it tells you the optimal decision based on
your inputs. For our example of 20 hours of tasks, you'd list them and their payo s and the tree
would tell you the optimal tasks to do that will generate the best outcome.

Used more for project timelines, a critical path analysis tool helps you and your team identify
how long a project will take by creating a visual map of project tasks along a timeline. It will show
you which ones can be done at the same time, and which ones rely on another task having been
completed. When you've nished, you will see a path that clearly tells you which tasks will
determine how long your project needs to be. Once you know that, you can make decisions on how
to shorten that path, maybe by adding resources to get something done more quickly.

Intuitive Decisions
Intuitive decision-making models rely more on experience, gut feelings, and pattern recognition.
Someone making an intuitive decision thinks: I've seen this work before in similar situations, so it's
logical that it would work in this one. The military might use rational decision-making models to
plan their moves, but in the heat of a battle, they expect their generals to make intuitive decisions
based on their experience and knowledge of warfare.

Developing Your Model

Regardless of which decision method you use, all decision-making should include these steps:

1. Gather the inputs and generate alternatives

2. Analyze the information

3. Evaluate the potential outcomes

4. Decide on a course of action

5. Act: make your decision.

Nearly half of all projects that don't meet their goals employed poor decision-making. Learning
how to use decision-making methods will give your projects a better chance of success.

Lesson Summary
Decision-making is required when you have constraints you need to overcome, such as time
constraints. When you make a decision, you should use a process to do so, to ensure you've
considered all outcomes and made the best decision available to you.

Formal decision-making models are generally called rational decision-making models. There are
dozens of them, like the Pareto charts, critical path analysis, decision trees and many more.
You can develop your own decision-making process, as long as your method contains inputs,
analysis, evaluation of outcomes, and an action step when your decision is made.

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5/26/2021 Decision Making Models: Definition, Development & Types - Video & Lesson Transcript | Study.com

Intuitive decision-making is more common, but may not be as e ective with complex decisions.
Someone using intuitive decision-making bases their decision on their own experiences and
knowledge; in other words, their gut. Either way, one key thing to remember is that human
involvement in decision-making is a critical component and generally multiple people with varied
backgrounds and skill sets produce better decisions.

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