A Discussion of Rational and Psychological Decision-Making Theories and Models: The Search for a Cultural-Ethical Decision-Making Model Decision-Making Theories and Models

Abstract

This paper examines rational and psychological decision-making models. Descriptive and normative methodologies such as attribution theory, schema theory, prospect theory, ambiguity model, game theory, and expected utility theory are discussed. The definition of culture is reviewed, and the relationship between culture and decision making is also highlighted as many organizations use a cultural-ethical decision-making model. The study of decision-making processes is not recent. It has been evolving with contributions from a number of disciplines for over some 300 years. Such contributions have ranged from providing mathematical foundations for economics to routine applications in many areas such as finance, medicine, military, and even cybernetics. As a result, decision theories have embodied several prevalent concepts and models, which exert significant influence over almost all the biological, cognitive, and social sciences (Doyle & Thomason, 1999). New emerging theories of decision-making have been somewhat eclectic, as they demand a multidisciplinary approach to understand them. An example of this comes from Kay (2002) who affirmed that it is essential to comprehend the nature and origins of human intuitions to understand the intricacies of decision making. Decision and behavior may be the core characteristics of decision-making phenomena. They involve the process of human thought and reaction about the external world, which include the past and possible future events and the psychological consequences, to the decision maker, of those events. The essence of decision making seems to integrate both the beliefs about specific events and people’s subjective reactions to those events. For instance, decisions are responses to situations and may include three aspects. First, there may be more than one possible course of action under consideration. Second, decision makers can form expectations concerning future events that are often described in terms of probabilities or degrees of confidence. Finally, consequences associated with possible outcomes can be assessed in terms of reflecting personal values and current goals. However, besides integrating beliefs and expectations, the analysis of the decision processes also entails the breakdown of a choice dilemma into a set of smaller issues, so each problem can be dealt with separately. Thus, the decision analysis provides a formal mechanism for reintegrating the results later, and then a course of action could be provisionally selected. When implementing this model of choice analysis, decision makers must be clear and explicit about their judgments in order to review the analysis process for detecting the reasons why a particular strategy was selected, which Keeney (1982) , for example, called the divide and conquer orientation of decision analysis. The decision-making phenomenon has been a frequently studied topic by several areas of human knowledge. According to Hoch, Kunreuther, and Gunther (2001), although more than three decades of systematic research on decision science have provided insights on a variety of issues, many areas of the decision making field still need to be uncovered. For example, for many organizations the current decision-making models may not be the best fit because they generally omit the element culture from the process. Thus, the purposes of this paper are first to review the literature on normative, rational decision models and descriptive, psychological decision theories, and then to discuss the role of culture in the process of making decisions.

Cite this paper

@inproceedings{Oliveira2006ADO, title={A Discussion of Rational and Psychological Decision-Making Theories and Models: The Search for a Cultural-Ethical Decision-Making Model Decision-Making Theories and Models}, author={Arnaldo Silva Rodrigues de Oliveira}, year={2006} }