Four Models of Decision Making

The four main types of personal decision making are rational (gathering facts), bounded reality (relying on “good enough”), intuitive (relying more on past experience), and creative (when previous experience provides no answer).

Rational Decision Making

For rational decision making, you first verify that you actually have a problem, then establish your criteria for decision making (including how you will identify a successful decision), evaluate different paths against those criteria, select the alternative that matches your highest-ranking criteria, and test the solution. That’s the theory. In practice, many personal factors influence rational decision making, many of which we aren’t aware of.

The following models of decision making help to tilt your decisions to the rational side:

• The OODA loop emphasizes (1) observing, (2) orienting, (3) deciding, and (4) acting. When you observe, you gather information, look at outcomes from previous decisions, and consider where you made mistakes the first time. When you orient, you try to remove your bias toward a particular decision and rely on evidence alone. You decide based on the facts you have today while keeping an open mind about new facts in the future; and you act, in part, by making sure everyone affected by your decision is supportive of it.

When you use the OODA loop, you are also looking for gaps in the standard way of approaching a problem and making a decision. You understand the basic principles involved. For example, if you have a disgruntled employee, you know the principles of hiring, firing, and performance management. But if you try the OODA loop, you may find that your disgruntled employee has a strength that has been underutilized and perhaps not even recognized as something that the company needs.

• Weighted criteria and cost tables place a mathematical value on alternatives. For example, you are trying to decide whether to quit your current job and take a new one. You set up a table of criteria where salary, stress, and investment of time are rated as a percentage and quitting, transferring, getting training, and staying put are rated by cost:

The table shows that quitting your job is the best choice, even with the added investment (new clothes, transportation, revised resume) and the stress of finding a new job. However, getting training is a close alternative. You may want to weigh them against each other or use additional criteria, using the methods of bounded reality.

TIP: With high levels of unpredictability and uncertainty, a computer algorithm is as good as or better than a human being in coming up with a rational decision—it can handle more variables.

Bounded Reality

The advantage of bounded reality is that it takes into account factors other than the purely rational. Two models of decision making that embody bounded rationality are “Structural Equation”, where the decision is influenced by variables that you haven’t considered in your rational analysis (for example, the job market or your family’s attitude toward quitting), and “Paired Comparison Analysis”, where options are compared directly against each other.

Let’s say that you use the Structural Equation to address whether quitting your job or getting training is your best decision. If the job market demands more skill, then training is clearly called for, regardless of whether training solves your current problem at work or prepares you to quit.

In paired comparison analysis, you use one simple search rule for making your decision. For example, you ask, “What will make me happy?” and base your decision on that. If your rule is, “What will make my family happy?”, you might come up with a different decision entirely. You aren’t examining alternatives or any information outside of that one criterion. The validity of the decision rests on the validity of the rule. Suppose you stay in your current job to make your family happy. How much longer will they stay happy if you are stressed and unhappy in your job?

Intuition

Short cuts (heuristics) enable you to make decisions quickly and favor intuition over rationality. If you have received good advice from someone in the past, you tend to seek and follow their advice in the future. If you bought a brand of car that was reliable for a long time, you expect to get the same reliability if you buy that brand again. This method makes the most of past experience.

To sharpen your intuition, use the SMaRT strategies of mindfulness and stress reduction—decision making is inherently stressful and your body gives you powerful clues on whether your decision is right (comfortable) or wrong (uncomfortable or painful). Priorities and choices that you dismissed during your waking hours will often emerge during dreams. Some people find that playing with tarot cards, I Ching, and astrological signs free up their intuitive insights and guide them toward the decisions they truly prefer, rather than those that are mandated by rational thought or other people.

TIP: Researchers have found that the same person will often make a different decision if faced with the exact same parameters twice because their mood, attention span, and experience has changed even if their model of decision making hasn’t.

Creative

An important step in creative problem solving is to vary your experience and your sources of information, letting in new perspectives and finding new connections. The same techniques work with the creative model of decision making. When you broaden your contacts and your knowledge, you expand the possibilities that open up for each decision.

These additional techniques may also help:

• Think about opposites. What if you didn’t want to quit your job but wanted to make your current job as palatable as possible? What would have to change?
• Imagine yourself in a different place or role. What if you were your immediate superior at work? What would you do then if you had a disgruntled employee who was ready to quit?
• Increase your creative outlets, whether listening to music, playing an instrument, walking through a museum, painting pictures, crafting, or playing games with your children.
• Clarify your objective. There are many ways to get from Point A to Point B, but first you need to know why you want to get to Point B.