Decision Making Part 2 MBA 572 Craig K. Tyran Fall 2002

A. Game Plan Are decisions always “rational”? Decision making styles and psychological type

B. Are Decisions Always Rational? A “rational” decision is viewed as the “classic” way that managers make decisions Obtain all facts, weigh alternatives, choose alternative that is “best” Types of rationality to consider Economic How to maximize profits? Technical What type of fuel will result in the best auto performance? Social How to spend tax revenue to best help the needy?

B. Are Decisions Always Rational? (Cont) Are decision makers always rational? Simon says …. “No!” There are practical constraints/barriers to “rational” decision making … Constraints/Barriers May not be practical (or cost effective) to: gather all data investigate all alternatives Individual cognitive limitations e.g. The “7 plus or minus 2 rule”

B. Are Decisions Always Rational? (Cont) 4. Constraints/Barriers (cont.) Decision maker may have preconceived notions of solution before the decision process even begins Also … “Political” considerations also need to be considered Different people/groups may have different interests and goals How might this factor be a constraint on decision making? So what happens with respect to decision making??  Decision makers often “satisfice” Find a solution that is “good enough” vs. the “ideal” solution “Rational” decisions are bounded by limitations “Bounded rationality”

B. Are Decisions Always Rational? (Cont) Implications for DSS DSS need to be designed with these constraints/barriers in mind Example design considerations Identify information for decision making that is cost/time effective to attain Provide output in a form that will reduce cognitive load Do not overwhelm decision maker with too much output Prepare output in easy to understand graphics or tables Consider GDSS (group DSS) to address political issues

C. Decision Making Styles Are all decision makers alike? If no … then how are they different? And what are the implications for IS design? One factors to consider: Psychological type Personality traits tend to be acquired early and stick with a person through lifetime E.g., Jung’s concepts, Myers-Briggs test Traits can provide insights into issues that affect a person’s decision making Examples Value facts (vs. hunches and “pie in the sky” dreams) Value feelings of others (vs. the “logical answer”) Value structure (vs. ambiguity) Value individual reflection (vs. group interaction)

C. Decision Making Styles (cont.) 3. It can be useful to learn about the decision style of people using DSS  Decision style models have been developed We’ll take a look at one model

D. Rowe’s Decision Style Model Decision style instrument is based on a model used to help ascertain a person’s decision style Rowe (1985) Model has two dimensions Cognitive complexity Value orientation See figure

Decision Style Model Value Orientation Logical Relationship High Tolerance for Ambiguity Analytical Enjoys problem solving, Wants best answer, Uses lots of data, Does lots of analysis Conceptual Generally broad outlook, Creative, Humanistic/artistic, Initiates new ideas, Futuristic (long-term thinker) Cognitive Complexity Directive Expects results, Tends to re- act quickly, Relies heavily on rules, Often do not use large amounts of data or consider multiple alternatives, Intuitive, Verbal communicator Behavioral Empathetic, Very persuasive, Good communicator, Generally prefers meetings, Likes to get consensus of others, Relies on limited data for analysis Low Need for Structure Task/ Technical People/Social

D. Decision Style Model (cont.) Caveat: People are complex … best to use model to get a feel for a person’s general decision making patterns Not the final answer! 3. Nonetheless … Rowe’s model can help DSS designers

D. Decision Style Model (cont.) 4. Which type of decision maker might prefer a DSS that provides: access to multiple data sources and modeling techniques a way to help groups of people reach consensus a structured and efficient interface and a more limited set of decision tools provides tools that might help with exploration of new business opportunities 5. Is it possible that a given type of decision maker would not prefer one or more of these types of DSS?

D. Decision Style Model (cont.) 6. Try to design a system that complements a user’s decision style Failing to do so may inhibit decision making quality/success Knowledge of decision styles can help