Classical Model of Decision Making

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International Journal of Business and Management

June, 2008

The Classical Model of Decision Making Has Been Accepted as not providing an Accurate Account of How People Typically Make Decisions Bin Li Foreign Languages Department, Guang Dong University of Finance Guangzhou, 510521, China E-mail: viclee_0221@163.com Abstract

Decision making is an accepted part of everyday human life. People all make varying importance decisions every day, thus the idea that decision making can be a rather difficult action may seem so strange and unbelievable. However, a large number of empirical studies have shown that most people in organizations are much poorer at decision making. Therefore, people began to pay more attention to understand hot to make a suitable decision. Keywords: Decision making, Rational decision-making, Demonstrate classical decision making 1. Introduction

Decision making is one of the most central processes in organizations and a basic task of management at all levels. According to Cole (2004:151), decision making is “a process of identifying a problem, evaluating alternatives, and selecting one alternative.” During the whole process, people are making the best choice from among several option based on the current situation. Additionally, Rollinson (2002) considered that decision making is the process of producing a solution to a recognized problem. There are three basic activities involved in decision making: intelligence activity, design activity and choice activity. Although all the decisions are made based on these three main activities, not all decisions are the same (www.bized.ac.uk). Some are relatively simple and others involve a more complex range of considerations. Consequently, people need an approach to understand decisions making. Good decision making is an essential skill for career success generally, and effective leadership particularly. 2. The classical decision making model

The traditional approach to understanding individual decision making is based upon classical decision making theory or the rational economic model (Huczynski & Buchanan, 2001). The classical view of decision making has always integrated the concept of rationality and rational decisions within the whole process of discussions and prescriptions. Obviously, a rational decision-making process is often suggested as the way in which decisions should be made trough those three activities, and it involves the following strictly defined sequential process shown in Chart 1 (Heracleous, 1994). It begins with seeking to ask the right questions, continues by discovering creative answers and finishes by making sure that the chosen solution is valuable and useful. According to Hucaynski & Buchanan (2002:740), “rationality is equated with scientific reasoning, empiricism and positivism and with the use of decision criteria of evidence, logical argument and reasoning”. And the rational decisions are decisions which are based on the rationality. The advantage of the classical model is to indicate a rational approach that can be applied to the business of reaching decisions in organizations. On the other hand, Lee et, al. (1999:18) considered that “classical decision theory views the decision maker as acting in a world of complete certainty.” It assumes that “decision makers are objective, have complete information and consider all possible alternatives and their consequences before selecting the optimal solution.” (Huczynski 2001:738) Based on the definition above, it is clear that classical decision making theory is derived from several assumptions. However, all those assumptions are not reality within this modern information age. Herbert (1981) agreed that this process is underlain by certain assumptions and characteristics, which are highly unrealistic in practice and are widely argued among managerial field. In the managerial field, how to make a suitable decision is very important. Faulty strategic and operational decisions can...
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