A Primer On Decision Making

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A Primer On Decision Making

• By James March
• Reviewed by Kathy Yu

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Introduction

• Book is based on his lecture notes from a course
  he taught at Stanford
• Gives an overview of ideas for how decisions
  happen rather than how they should happen
• Ideas of decision making from all disciplines of
  social science

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Consequential/Preference Based or Rule-Following

• Decision makers
• Pursue a logic of consequence, make choices among
  alternatives by evaluating their consequences in
  terms of preferences?
• OR
• Pursue a logic of appropriateness, fulfilling
  identities and roles by their situation and
  following rules that match appropriate behavior
  of the situation?

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Rational Theories

• Pure rational choice theory
• Assume that decision makers have perfect
  knowledge about all alternatives and consequences
  of those alternatives.
• Modifications made to improve the pure version
  of rational choice theory.
• Limited (Bounded) Rationality
• Not all alternatives are known, Not all
  consequences are considered, Not all preferences
  are evoked at the same time.

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Satisficing vs. Maximizing

• Satisficing
• Choose an alternative that is good enough
• Maximizing
• Choose the best alternative

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Coalitions

• Coalitions are important to policy formation
• Join coalitions for various reasons
• - join coalitions that hold the same identities
• and preferences
• - they want to belong to a winning coalition
• - join large enough, but not too large to
  maximize
• individual payoff or to gain control of the
  system
• 2 types of coalitions
• 1) congruence among all members, all
  coalition
• members want the same policy
• 2) a coalition of two indifferent members or
  groups
• Logroll important in policies where
  size makes a
• difference

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• Consistency Inconsistency
• In Partnerships, Teams Groups

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Partnerships and Teams

• Consistency and Teams
• A team is one with individuals involved
• having consistent preferences or identities
• Very rare to find teams that meet this strict
  definition of internal consistency
• Interests and identities are inconsistent
• -Different people want different things
• -Different people want to fulfill different
• identities
• -Not everyone can have everything desired

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• To Cope with Inconsistencies
• - Inconsistencies are removed by aligning
  incentives for
• both partners through bargaining, side
  payments, and
• agreements
• Exchange Models of Power Participants
  exchange their
• resources such as money, property, knowledge,
  
• competence, access, authorities,
• and information
• - Formation of partnership
• a potential partner may conceal unattractive
  properties,
• or intentionally hide information at time of
  agreement
• - Decentralization/Organizational subunits-
  departments
• build barriers to friendship, loyalty to
  other
• departments, define their group in opposition
  to
• other groups, other departments (highlight
  inconsistencies AMONG groups, while
  inconsistencies WITHIN groups are ignored)

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Theories of Attention

• Attention is a scarce resource
• - information overload
• Rational decision makers invest their time to
  information/problems only to the point where
  marginal costs equal marginal expected return.
• -Decision makers look for ways to reduce
• time/costs of attention, they buy time.
• -such as hiring a manager, or delegate
• someone to represent them.

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Decision Makers Face Limitations

• Limitations to Attention, Comprehension, Memory
• Strategies to cope with these limitations
• -Abstract central parts of a problem
• -Look for consistent information, ignore
• inconsistent ones
• -Attend to problems that are close in
• proximity rather than problems that are
• distant

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Garbage Can Process

• Decision process involves a collection of
  individuals/groups who are simultaneously
  involved in other things.
• Time brings order to complex interactions among
  actors, solutions, problems and choice
  opportunities.
• Activities can be ordered in time and connected
  by their temporal relations events that occur
  at the same time are associated with each other.
• Decision processes build on these temporal
  categories by combining people, problems,
  solutions in terms of their simultaneity.
• Any particular decision is a combination of
  different moments of different lives.

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Loose Coupling

• Talk and action are loosely coupled, the talk of
  decision making is not always closely connected
  to the action of decisions.
• Decisions and Implementations
• -logrolls, makes implementation difficult
• because members of the coalition are
• likely to be elsewhere or uninterested in
• the implementation of the decision.
• -symbolic commitments, the act of supporting a
  
• policy has more symbolic meaning than its
• adoption, and its adoption can be more
• important than its implementation.

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Intelligent Decision

• Decision Engineering
• a process dedicated to producing decisions
  that are intelligent
• Action is intelligent if all the results has
  satisfied the wishes of all relevant parties
• Intelligence of an action/decision is based on
  its outcomes
• Whether a decision is intelligent or not is
  highly subjective
• Decision outcomes unfold over time, decisions
  that may seem good in a short run may have
  deleterious effects in a long run
• Bias towards effects that are clear and close -
  leads to decision making procedures to be
  inattentive to important concerns that are fuzzy
  and distant

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Symbolic Significance of Decision Making

• Decision making tells us more than just the
  decision rendered
• It tells us
• - who is the decision maker, how he
• thinks, talks, acts
• - who is smart, who is powerful
• - who is virtuous
• - what is morally important, what is proper
• behavior

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Conclusion

• Decision making is a very complicated process
• Hard to be confident that any decision process
  will yield an intelligent decision
• Pessimistic?
• the elegance and beauty of human life is
  augmented within a vision of decision making, and
  the human spirit is elevated. The idea of
  decision making gives meaning to purpose, to
  self, to complexities of social life.

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• Questions?