Decision Making and Problem Solving
by Herbert A. Simon and Associates
Associates: George B. Dantzig, Robin Hogarth, Charles R. Piott, Howard Raiffa, Thomas C. Schelling, Kennth A. Shepsle, Richard Thaier, Amos Tversky, and Sidney Winter. Simon was educated in political science at the University of Chicago (B.A., 1936, Ph.D., 1943). He has held research and faculty positions at the University of California (Berkeley), Illinois Institute of Technology and since 1949, Carnegie Mellon University, where he is the Richard King Mellon University Professor of Computer Science and Psychology. In 1978, he received the Alfred Nobel Memorial Prize in Economic Sciences and in 1986 the National Medal of Science. Reprinted with permission from Research Briefings 1986: Report of the Research Briefing Panel on Decision Making and Problem Solving © 1986 by the National Academy of Sciences. Published by National Academy Press, Washington, DC.
The work of managers, of scientists, of engineers, of lawyers--the work that steers the course of society and its economic and governmental organizations--is largely work of making decisions and solving problems. It is work of choosing issues that require attention, setting goals, finding or designing suitable courses of action, and evaluating and choosing among alternative actions. The first three of these activities--fixing agendas, setting goals, and designing actions--are usually called problem solving; the last, evaluating and choosing, is usually called decision making. Nothing is more important for the well-being of society than that this work be performed effectively, that we address successfully the many problems requiring attention at the national level (the budget and trade deficits, AIDS, national security, the mitigation of earthquake damage), at the level of business organizations (product improvement, efficiency of production, choice of investments), and at the level of our individual lives (choosing a career or a school, buying a house). The abilities and skills that determine the quality of our decisions and problem solutions are stored not only in more than 200 million human heads, but also in tools and machines, and especially today in those machines we call computers. This fund of brains and its attendant machines form the basis of our American ingenuity, an ingenuity that has permitted U.S. society to reach remarkable levels of economic productivity. There are no more promising or important targets for basic scientific research than understanding how human minds, with and without the help of computers, solve problems and make decisions effectively, and improving our problem-solving and decision-making capabilities. In psychology, economics, mathematical statistics, operations research, political science, artificial intelligence, and cognitive science, major research gains have been made during the past half century in understanding problem solving and decision making. The progress already achieved holds forth the promise of exciting new advances that will contribute substantially to our nation's capacity for dealing intelligently with the range of issues, large and small, that confront us. Much of our existing knowledge about decision making and problem solving, derived from this research, has already been put to use in a wide variety of applications, including procedures used to assess drug safety, inventory control methods for industry, the new expert systems that embody artificial intelligence techniques, procedures for modeling energy and environmental systems, and analyses of the stabilizing or destabilizing effects of alternative defense strategies. (Application of the new inventory control techniques, for example, has enabled American corporations to reduce their inventories by hundreds of millions of dollars since World War II without increasing the incidence of stockouts.) Some of the knowledge gained...