Rational decision making models

What are rational models?

Rational decision making models involve a cognitive process where each step follows in a logical order from the one before. By cognitive, I mean it is based on thinking through and weighing up the alternatives to come up with the best potential result.

There are different types of rational models and the number of steps involved, and even the steps themselves, will differ in different models.

Some people assume that decision making is equivalent to problem solving. Some decisions however are not problem oriented and I've taken this into consideration when describing the general outline of a rational model below.

Steps in a rational decision making model

Define the situation/decision to be made

Identify the important criteria for the process and the result

Consider all possible solutions

Calculate the consequences of these solutions versus the likelihood of satisfying the criteria

Choose the best option

The comparison is often performed by filling out forms or charts that have many names. Decision matrix, Pugh matrix, decision grid, selection matrix, criteria rating form, amongst others. A relative importance is given to each criterion and the options are scored against each of the criteria and the highest 'wins'.

Try an online decision making model for yourself.

Pros and cons

A rational decision making model presupposes that there is one best outcome. Because of this it is sometimes called an optimizing decision making model. The search for perfection is frequently a factor in actually delaying making a decision.

Such a model also presupposes that it is possible to consider every option and also to know the future consequences of each. While many would like to think they know what will happen, the universe often has other plans!

It is also limited by the cognitive abilities of the person making the decision; how good is their memory? how good is their imagination? The criteria themselves, of course, will be subjective and may be difficult to compare. These models require a great deal of time and a great deal of information. And, of course, a rational decision making model attempts to negate the role of emotions in decision making.

Learn how it's possible to combine a rational decision making model with your own intuition, or read about the different types of decision making models.

Specific types of rational decision making models

Models have been described with six or seven steps, and there is even a 9 step decision model.

Bounded rational decision making models
A decision maker is said to exhibit bounded rationality when they consider fewer options than are actually available, or when they choose an option that is not ?the best overall? but is best within the current circumstances. Eg, someone spills coffee on a shirt in a restaurant, and goes next door and buys a poorly fitting shirt to change into immediately.

Obviously it would be optimal to buy a proper fitting shirt. But if the person is in a hurry and cannot wear a wet, coffee stained shirt, then buying the poorly fitting one is appropriate. This is an example of bounded rationality.

Vroom-Jago decision model

This model originally was created by Vroom and Yetton in 1973 and later modified by Vroom and Jago. Basically there are five situations for making decisions, from a single individual making the decision, to an individual making the decision with varying amounts of input from the rest of the group, to the whole group making the decision.

The Vroom-Jago decision model has a series of seven yes/no questions that elicit the important criteria and indicate which of the five decision-making processes is the most appropriate.