Prescriptive and Descriptive Approaches to Decision Making - Essay Example

Prescriptive and Descriptive Approaches to Decision Making Name: Course: Tutor: Introduction There are numerous standpoints about why and how individuals make decisions. It is inarguable that decisions determine the success or failure of any mission that is to be achieved by individuals or organizations. It is definitely difficult to surmise why people choose a particular brand of commodity from a supermarket shelf having a wide variety of items. It is equally not understood why for instance, people select a particular route to work or why they vote for certain candidates during a poll. Most of the decisions are usually made based on personal judgments but others are influenced by prevailing environments. In organizations for instance, a decision to give a particular name to a given product is influenced by the customer base as well as the names of substitute commodities already in the market. Watson (1992) notes that how humanity makes decisions has been a topic of discussion for a long time, and even though the normative framework of procedural decision making was widely accepted by many individuals some decades ago, more recent research has revealed that there are more challenges in conforming to the status quo (p. 7). As a result of this, a difference has been made between the normative methods, that is those that people would conventionally like to follow, and the prescriptive methods, i.e. the ways that describe the manner in which decision makers should behave in reality (Watson 1992, p. 7). Addressing the concept of decision making, Kunreuther et al (2002) note that the decisions that matter most in life are those that are made when people are least prepared to make them (p. 260). The authors note further that life gives people scarce opportunities to rehearse for the process of making decisions, and as a result when the corollary of a wrong choice is adverse, once made it is difficult to reverse (Kunreuther et al 2002, p. 260). As such, it is imperative that decision making be a well thought process in spite of the fact that there is usually not much time to make detailed choice decisions. Along this line, Beach and Connolly (2005) note that decision making within organizations can be relatively easy if the application of a given policy gives rise to one outstanding alternative. On the contrary, decision making fails when there is a high level of uncertainty on what option to pick or when one fails to determine what he or she really wants (Beach and Connolly, 2005, p. 48). In view of the above mentioned standpoints, it is important to have an understanding of the relationship between prescriptive and descriptive approaches with respect to analyzing and understanding the process of decision making. With a clear understanding of the aforementioned concepts, it becomes easy for one to conceptualize and explain the nature of various decisions and why such decisions are made. Most importantly, by understanding the various issues related to decision making, one is able to adopt a particular view on why decisions are made as they are. This paper will therefore address both prescriptive and descriptive approaches to decision making by analyzing how the concept affects people’s levels of making choice based on reviews of literature from a multiplicity of authors. Secondly, the papers will present an understanding of the approaches that will be discussed and the views that arise as a result of analyzing the points discussed. Overview of decision making and decision analysis There are many styles that can be applied to decision making and these depend on the kind of problem be solved by the decision. Thus many authors agree that there is no single approach to decision making. Nevertheless, many authors have commonly stated seven or eight steps that be used in decision making as a means of solving a problem. Keeney (2004) states eight important steps in decision making as discussed in the following decision (p. 197). The first step is defining the problem for which a decision has to be made (Keeney, 2004, p. 197). This is a very important step since a concrete decision about any particular situation can only be made when the problem to be solved is well known and clearly defined. Proper stating and definition of the problem increases the horizons over which thinking about a given problem can be done in order to reach a reliable decision (Beach & Connolly 2005, p. 49). The second step is setting the objectives that the decision to be made has to fulfil (Keeney, 2004, p. 197). Under this, many authors agree that the objectives to be achieved have to be stated precisely in order to ensure that any decision made is in accordance with the aims set. The objectives that are set also help decision makers to distinguish things that are achievable and those which are not as well as how the decision can affect other aims (Beach & Connolly 2005, p. 49). The third step is setting of alternatives to the decision (Keeney, 2004, p. 197). Under this, describing alternatives increases the reliability of the decision to be made. It is inarguable that when there are many alternatives to a particular decision, there is more room for adjustment as apposed to a situation that has limited choices. Along this line, the fourth point is to identify the consequence of the decision to be made as well as the consequences of each of the alternatives (Keeney, 2004, p. 197; Beach & Connolly 2005, p. 49). This is also important in determining how each of the alternatives available meets the set objectives and therefore helps one to identify the targets that may not be easily achieved. The fifth point is to specify the tradeoffs, that is a balanced scorecard of the merits and demerits of each of the different alternatives set (Keeney, 2004, p. 197). Along this line, it is important to note that while a decision made can solve a particular problem from one dimension, the same decision may be creating a problem from another perspective. Thus, this has to be keenly evaluated in order to ensure that the decision made or the alternative taken imposes the least level of risk. The tradeoffs have to be supported by a clear statement of the level of uncertainty with regard to making a decision, and this is the sixth step (Keeney, 2004, p. 197). The seventh point is stating the level of risk tolerance (Keeney, 2004, p. 197). In view of the decision making, decision makers must state their willingness to accept the risks associated with the decision (Watson, 1992, p. 7).Without acceptance of risk the decision may not be worthwhile as it will only culminate in creation of more unmanageable problems or occurrence of challenges which can not be reversed (Watson, 1992, p. 7). This has to be supported by linked decisions, which requires effective planning by coordinating the current and future decisions towards a common goal (Keeney, 2004, p. 197; Watson, 1992, p. 7). As discussed above about the steps of decision making, the concept is a long process that would require much time for reliable results. However, as mentioned earlier there is usually not much time and important decisions have to be made at a time when they are least expected. In view of this, Watson (1992), Keeney (2004) and Brown and Vari note that decision making and analysis is done based on different approaches by human beings. According to the authors, there are three models which form the basis of decision making namely descriptive, prescriptive and normative (Watson, 1992, p. 8; Keeney, 2004, p. 199; Brown and Vari, 1992, p. 35). The normative model of decision making is based on the assumption that decision making is usually a rational process. Various models of decision making are generally theoretical given that they are based on what people should do (Keeney, 2004, p. 199; Brown and Vari, 1992, p. 35). Some of the normative theories have thus been modified in order to better describe the process of decision making. Such theories include the Prospect Theory; the Subjective Expected Utility theory as well as the Advantage Model (Keeney, 2004, p. 199). As illustrated by the title of this paper, the main focus will be on the more “practical” aspects of decision making- that is descriptive and prescriptive decision making as discussed in the following section. Relationship between descriptive and prescriptive decision making Descriptive decision making Descriptive decision making is a concept that refers to what people actually do, or have done, to solve a particular problem or problems (Bouyssou 2000, p. 29). Hence, descriptive decision making refers to the approaches used by real decision makers in solving problems and making decisions. One of the most commonly used models with regard to decision making is the Simon’s Model of the Decision Process. In the model, Simon used three key attributes to describe how decision maker at decisions: through intelligence, design and choice as illustrated below Figure 1: Illustration of the Simon’s Model of the Decision Process Source: Created from description of Bouyssou (2000, p. 28-30). Simon’s Model of the Decision Process employs a relationship of the three terms used in the model to explain how real decision makers actually arrive at the decisions they make. The first attribute in the model, that is intelligence, encompasses identification of the need to make a decision. As Simon described it, intelligence involves searching the environment. Once the process of searching the environment is completed, that is having identified the need for a decision the design phase is initiated (Keeney, 2004, p. 199-200; Dillon, undated). A key characteristic of decision makers therefore is that they need to be intelligent in order to make rational decisions about various circumstances or in choosing from a wide variety of alternatives. The next phase, that is the design phase, involves investigating and formulating the problem domain as well as alternatives (Dillon, undated; Keeney, 2004, p. 199-200). Thus, this basically entails understanding the problem area and weighing out the probable decisions that can be made as well as the likely consequences of settling on particular alternatives. The final phase of Simon’s Model of the Decision Process, that is choice, describes the action of choosing the most relevant course from a multiplicity of alternatives previously developed (Dillon, undated). The above description of the Simon’s Model of the Decision Process implies that decision making is actually a complex process. This is because each of the three stages identified by Simon is likely to take time and needs assiduous attention. In addition, each phase looked at from an individual perspective comprises a complex decision making stage. For instance, the design phase may require further intelligence if the magnitude of the problem at hand is overwhelming. In the same extent there is a possibility of each of the three phases generating its own problems that too have the intelligence, as well as choice phases. A basic tenet applied in the descriptive decision making process is the concept of bounded rationality. Along this line, bounded rationality implies that all manner of intended rational behaviour exists within certain limits, including some cognitive limits (Bouyssou 2000, p. 28). The concept of rational behaviour is embodied by any decision maker who exhibits a well organized and steady system of predilections as well as skills in calculation that enables him to make reliable choices from a series of choices or options that are available, and which will enable him or her to reach the highest achievable point on the scale of preference (Bouyssou 2000, p. 29). Descriptive decision making is therefore about making rational decisions that can be considered to be the best from amongst a group of choices. A key distinction among the different decision making strategies that is both theories and models is the degree to which they create trade-offs among various attributes (Dillon, undated; Keeney, 2004, p. 199-200). Thus, any particular model is considered to be non-compensatory in case the surpluses on succeeding perspectives cannot sufficiently recompense for the deficits uncovered during the early stages of the evaluation (intelligence and design) process, as the alternative will already have been discarded. Most descriptive decision making models are non-compensatory as opposed to most of the prescriptive and normative models that are typically regarded as compensatory (Bouyssou, p. 29; Keeney, 2004, p. 199-200). Another attribute that is central to analyzing descriptive decision making theories and models is determination of whether they apply holistic or non-holistic evaluative mechanisms (Howard 2002). Holistic means that a particular subject about which a decision is to be made is looked at in its entirety as opposed to analyzing it as a sum of its components (Howard 2002). Nevertheless, the holistic approach may be more intricate as a matter of obtaining some general value or measure. In a nutshell, a holistic descriptive decision making model is one that evaluates or assesses an alternative or condition as one item and then appraises each of the alternatives in a non-sequential method. Some descriptive decision making models There are many descriptive models such as the satisficing model that is base on the concept of bounded rationality. The theory suggests that decision makers often select an alternative that exceeds some measure or standard. With this in mind, Simon postulated that it is commonplace for organizations to make decisions that usually fall short of maximizing with respect to economic theory; instead, they make decisions that make them adapted well enough to satisfice- they rarely reach their optimal positions (Bearden & Connolly, undated). What this means is that decision makers- whether individuals or organizations, do not and can not attain the optimum of what they want in most situations. This stance is a reminder of the point mentioned earlier that some of the most important decisions are made at a time when they are least anticipated, meaning that there is usually less time to make incisive thinking, hence the inability of any decision made to totally suffice the prevailing needs. Satisficing, as opposed to maximizing, may not help a decision maker to attain the intended goal with respect to a given decision. Nevertheless, as a component of descriptive decision making, if done optimally, satisficing can produce results comparable to those obtained by maximizing (Bearden & Connolly, undated). A good exemplar is a circumstance where an organization is searching for a building to use as a display room. The organization may want a building that is close to a reliable customer base, well furnished and relatively cheap. If the organization looks at all these factors as a block (maximizing), it may not get such a building. But if it satisfices, that is by taking various alternatives instead of sticking to the ideal condition, the organization will easily find an appropriate showroom. Another descriptive model is Garbage Can model that was developed by Cohen et al (Dillon, undated). The model was developed with orientation to what the developers termed as organized anarchies. Organized anarchies, or decision situations, are featured by three attributes namely problematic preferences, fluid participation and unclear technology. In view of an organized anarchy, it is difficult to dole out preferences to a particular decision problem (Dillon, undated; Bouyssou 2000, p. 31). This is partly because the organization is usually made of loose and not clearly defined ideas instead of a lucid set of preferences. The organized anarchy is thus characterized by ambiguous operating mechanisms that leave decision makers with no choice but to develop an attitude of “learning from our mistakes” (Dillon, undated). Prescriptive decision making and analysis Prescriptive decision making refers to the things that one can do and which should be utilised by a real decision makers in deciding about particular problems. Prescriptive decision making is tuned to both the particular situation about which a decision has to be made as well as the needs of the decision maker. Prescriptive models of decision making have a basis on the strong background of normative theory with a combination of some observations made within the descriptive theory of decision making. Prescriptive decision making relates to making an imposing order on the normative models of the prescriptive theory. The prescriptive theory’s roots are embedded in a reasonable assumption that decision makers usually strive to do what they think is best for themselves or for the organizations for which they are making decisions (Bearden & Connolly, undated). Thus, “doing best” is usually interpreted to mean choosing the option that offers the most enviable payoff that is of maximum benefit or minimal loss (Beach & Connolly 2005, p. 49). It is inarguable that such a stance requires at least two guesses: one about the type of payoffs (that is the results or consequences) that will arise if the alternative in question is chosen, and two, a guess about how precious the payoff will actually be in the context of the decision maker. In an ideal world, the decision maker would always anticipate the payoffs as well as their future values; common sense would therefore dictate that the decision maker select the alternatives that offer the payoffs that would be most appealing when he or she gets them. But as earlier mentioned that would be in an ideal world, which does not exist in real practice. Furthermore, some decisions have to be made abruptly without much consideration for having a perfect outcome. Along this line, Beach and Connolly (2005) note that decision makers can seldom be certain of the corollary of their decisions. And even if decision makers were certain of their decisions, they would not necessarily be aware of the magnitude of how positive or negative the consequences would be (p. 49). Prescriptive decision making and analysis is meant to provide an insight into what the best decision is and why it is so in any given situation. The axioms of prescriptive decision analysis generally indicate how to evaluate the decision problem but not where the information relevant for the analysis comes from (Keeney 2004, p. 199). Thus, irrespective of whether a decision problem is one that is faced by a group or an individual, the constituents of the decision are alike. For this reason, descriptive decision making has the potential of lending insight into either an individual’s or group’s decision problems (Keeney 2004, p. 199; Bouyssou 2000, p. 45). Decision making in the context of descriptive and prescriptive approaches Descriptive and prescriptive approaches in decision making affect the decision chain in an organization by creating a distinction between strategic, tactical and technical levels (Elbanna 2002, p.3). Strategic decisions are those that are mainly unstructured. Their main feature is a great level of uncertainty and they are non-routine in nature. Strategic decisions are mainly future oriented since their information needs are mainly from outside an organization (Elbanna 2002, p.3). Such decisions therefore affect the general orientation of the organization and include dealing with a variety of issues such as diversification, divestiture and product or market development. In this context, decision makers make real decisions and anticipate that their implementation will produce positive results, hence the application of both descriptive and prescriptive approaches. In the same breath, tactical decisions involve both descriptive and prescriptive approaches since they are concerned with the execution of the strategic decisions as discussed above. Tactical decisions are oriented towards operation since they deal with many issues within a considerably shorter duration of time. They involve both planning and control activities that are vital at this level. Most of the informational needs for tactical decision making are descriptive; hence they are characteristically internal in nature. Tactical decisions do not need many prescriptive approaches because they do not have a consistent structure in the real problem situation (Elbanna 2002, p.3). The last category of organizational decisions is technical decisions. Such decisions are of a routine nature and are related to the control of specific tasks. The details needed to perform technical decisions are mainly descriptive or historical in nature and mostly internal. Thus, little, if any, external information may be required in order for one to make decisions at the technical level. Most of such decisions are programmable and are mostly amenable to mathematical standardization and modelling. They include payroll, quality control, transportation, scheduling, credit acceptance, and so on (Mancuso 2007, p 26). The prescriptive nature of technical decision making is that the decisions are made with anticipation that they bear good results to a particular organization. There are no clear cut differences between different levels of decision making, so the classification only serves to point out the important dissimilarities in the kind of informational needs that arise within an organizational setting. It is important to understand these differences as well as the descriptive and prescriptive approaches to decision making in order to estimate the quality of any decisions to be made. Most importantly, the availability of informational needs as well as knowledge of approaches to decision making is important for determining how decisions of more effective consequence can be made. Significance of the relationship between descriptive and prescriptive approaches in decision making It cannot be contested that decision making is an important aspect of every occurrence in life. According to Hardy-Vallee (2007), some decisions require basic thinking (such as telling someone to turn right or turn right or turn left ) while others need more crucial thinking that needs making judgmental decisions on whether to be or not to be. Hardy-Vallee (2007) further notes that even abstaining from making a choice is a decision on its own (p. 939). Perhaps that is why some people abstain from voting and even members of parliament abstain from voting for very important pieces of legislation. This point is also a reminder that no decision can be considered to be perfect over others as long as it is made by a person who thinks rationally. Decision making is central to life but as seen from the discussion, it is characterized by many uncertainties as well as need for preparedness at all times since as discussed, there may be no time to think about some decisions, yet such decisions may be of vital importance in particular settings. A good understanding of the descriptive and prescriptive models of decision making is important since it helps one to be ware of the fact that some decisions may not be helpful, but they just have to be made anyway. For instance, in instances where an organization has to downsize its staff, it is usually difficult to choose between losing the resources spent on training the staff or retaining the staff (so as to be proud of the resources spent on training them) and continue making losses as a result of having “excess” staff. Either way, ultimately a decision has to be made. Descriptive approaches of decision making help decision makers to make compromise where it deems necessary to do so. As noted from the discussion, some choices may not be about deriving the maximum benefit or opportunity from a particular scenario but may be about getting the best that can be achieved from the setting- what was referred to as satisficing. Descriptive decision making therefore helps decision makers to be more rational in their making of choices in varying situations. In the same magnitude, prescriptive approaches of decision making help decision makers to make decisions that have significant payoffs, but with the knowledge that not all outcomes of decisions come out as anticipated. Conclusion Prescriptive and descriptive approaches in decision making help decision makers to make the right decisions by evaluating various situations and making choices accordingly. In both settings it is common to surmise that decision makers are rational and have the knowledge to make decisions that suit particular problems. Nevertheless, even as decision makers strive to be rational, it has been discussed that some of the decisions they make may not actually meet the intended objectives. Thus, most decisions are made to suit the prevailing conditions and not necessarily to maximize the intended objectives. This means that decision makers have to be open-minded whenever they make decisions in spite of having the opinion that their decisions are beneficial, since there is a chance of an unexpected result occurring. References Beach, L R & Connolly, T 2005, The psychology of decision making: people in organizations, SAGE, London. 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