The Decision-Making Process

The Decision Making Process Step Six Evaluate the results Step Five Decide and Act Step Four Identify your values Step Three Consider the consequences Step Two Explore the alternatives Step One Define the Problem

Step One Define the Problem

Step One—Define the problem a situation that raises a question in one’s mind or causes a person to be uncertain Problems often demand decision or action taking You MUST define the problem in order to make a decision that will lead to its solution

Step One—Define the problem Scarcity Condition of not being able to have everything we want Results when our wants exceed our ability to satisfy them Unlimited wants; limited resources Examples: Natural resources Time Skill Knowledge Tools Materials, etc.

Explore the alternatives Step Two Explore the alternatives

Step Two—Explore the alternatives Choice A decision, the act of deciding Could be many choices or only two or three Alternative One of two or more options that can be selected Important: consider ALL the alternatives in making a decision

Consider the Consequences Step Three Consider the Consequences

Step Three— Consider the Consequences Incentive Something that encourages or persuades a person to act Also called advantage or “pros” Example: high pay is usually a job incentive Disincentive Something that discourages or dissuades a person from acting Also called disadvantage or “cons” Example: midnight to 7 a.m. shift Suggestion If possible, write down choices and list advantages and disadvantages Be sure of your choices before the next step

Step Four Identify your Values

Step Four—identify your values Difficult step Select from your choices—the one YOU believe will be the best for you and your interests at this particular time Value Something a person considers important which is supported by a set of beliefs Noneconomic (doesn’t involve money) Values and beliefs influence our decisions

Step Four—identify your values All choices we make result in benefits and costs Benefits/Cost Analysis Rational comparison of the value gained (benefit) and the value of what must be given up (cost) when a choice is made Opportunity Cost The highest valued alternative that must be given up when another option is chosen Two alternatives; choose one, opportunity cost is the one given up (not sum of ALL other alternatives)

Decide & Act on Your Choice Step Five Decide & Act on Your Choice

Step Five—Act on Your Choice Take action step Enjoy your choice!

Step Six Evaluate the results

Step Six Was your decision a good one? Did your decision give you satisfaction? What was right about it? What was wrong about it? Did you evaluate your choices thoroughly? If you had to do it over again, would you make the same choice? Did you miss a choice that might have been a better alternative? Learn from your decisions!

Summary

Summary Situations occur in life that require decision making Often, those decision are related to SCARCITY Usually, there is more than one ALTERNATIVE to choose from There is usually more than one VALUE to guide your decision

Summary You have the power to make choices in scarcity situations our values influence our choices Each of us has different INCENTIVES and DISINCENTIVES that influence our actions