LO1 - Rational Choice Decision Making

• decision making 


  The conscious process of making choices among alternatives with the intention of moving toward

  some desired state of affairs.
• rational choice decision making 


  The process of using pure logic and all available information about all alternatives to choose the alternative

  with the highest value.
• Rational Choice Decision Making​


  Historically viewed as the ideal state of decision making.
• Rational choice decisions


  • Use logic, all information to choose highest value alternative.​
  • Historically viewed as the ideal state of decision making.
• Two key elements of Rational choice decisions


  1. Rational choice formula calculating the best choice (positive valence).​
  2. Rational choice systematic decision process.
• Rational Choice Formula for Best Choice Calculation​


  (a) the probability that each outcome will occur

  (b) the valence or expected satisfaction of each outcome.
• Rational Choice Decision Process​


  1. Identify problem/opportunity
  2. Choose the best decision process
  3. Discover or develop possible choices
  4. Select the choice with the highest value
  5. Implement the selected choice
  6. Evaluate the selected choice
• problem 


  is a deviation between the current and the desired situation—the gap between “what is” and

  “what ought to be.”
• opportunity 


  is a deviation between current expectations and a potentially better situation that was not previously

  expected.
• nonprogrammed decisions


  new or unique problems