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​ON Rational decision making and G.O.D. 

Rational decision making

While the concept of rational decision making (RDM) remains the most popular, receiving the largest amount of attention in terms of research and funding, it is also the most problematic. It has evolved from the idea of the rational, self-interested individual  "economic man" or "homo economicus" in the late 19th century, to humans as inherently flawed, prone to "irrational" decision errors and cognitive bias. Over more than a century, philosophers and researchers have continued to defend the notion that a rational decision maker is the ideal decision maker. At the same time, with each passing decade, homo economicus comes closer to extinction.  

This is not to say research on rational decision making has not been profitable. Quite the opposite. Researchers have discovered useful ways to manipulate decision makers, labeling it a "nudge" to achieve outcomes desired by policy makers or organizations. Experts in behavioral economics or social engineering modify natural conditions to this end. To the extent these manipulations are ethical is a point of discussion not addressed here.  

The influence of RDM in the development of goal-oriented decision making, has been to acknowledge the more useful aspects while at the same time exploring research from other approaches or fields of study. This includes naturalistic, organizational, team, and shared decision making. 

Primary sources

Herbert Simon
Both "bounded rationality" and the concept of "satisficing" put forward by Simon in the 1950's contributed to the development of goal-oriented decision making.

Bounded rationality placed constraints on the idea of purely rational decision maker, noting that decisions will always be bound certain conditions. In addition, optimal decisions are often unnecessary. Instead, a decision that is workable or "good enough" will often suffice, hence the term "satisficing".
​ 
Bounded rationality and goal oriented decision making
Irving Janis & Leon Mann
​Published in 1977, the by Janis and Mann, the book "Decision Making: A Psychological Analysis of Conflict,"outlined a method to use descriptive, normative, and prescriptive standards for determining a "correct" decision. In addition, they presented decision making as a linear, step by step process. 

While logical and pragmatic, the works of Janis and Mann reinforced how people do not make decisions. 

Rational and goal oriented decision making
Daniel Kahneman & Amos Tversky
A valuable contribution, Kahneman and Tversky introduced Prospect Theory in the early 1970's. Out of this theory came concepts such as cognitive bias and the use of heuristics. Based in behavioral economics, humans are seen as biased decision makers, deviating from what is rational, i.e., deviating from the "correct" decision.

It is this work that has become popular, leading to the development of "behavioral nudge units" and training programs offering to help "debias" students.  
Cognitive bias and goal oriented decision making

John Kay and Mervyn King
Released in 2020, the authors are economists who challenge the fundamental assumptions of rational decision making and behavioral economics. They describe how decisions are not mathematical calculations, but constructed via reference narratives and asking "What is going on here?".

Throughout the book the authors take on their own field, poking holes in many of the claims made by their colleagues. They discuss various misunderstandings with models and methods used by economists and also provide practical advice for navigating decisions in a world of uncertainty. 
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  • Home
  • Videos
    • SMART Goals 2.0
    • Goal-Oriented Decision Making - The APE Model
    • Generative AI and Decision Making
    • The OODA Loop
    • The RPD Model
    • Reducing the Dunning-Kruger Effect
    • Using a Premortem
    • The Planning Fallacy
    • Accelerated Expertise
    • Conduct a SWOT Analysis
    • 4D's on a To-Do-List
    • The Trolley Problem
    • Wicked Problems
    • Reciprocity Bias
    • Motivated Change
    • Correlation vs. Causation
    • Maslow's Hierarchy and Innovation
    • Understanding Psychological Anchors
    • IDEA 4-Step Problem Solving
    • Using SMART Goals
    • How to Gain Insights
    • The Eisenhower Matrix
    • SMART Goals - 60 Seconds
    • Tactical Decision Games
  • Articles