rational problem solving model

Rational Decision Making: The 7-Step Process for Making Logical Decisions

Published: October 17, 2023

Psychology tells us that emotions drive our behavior, while logic only justifies our actions after the fact . Marketing confirms this theory. Humans associate the same personality traits with brands as they do with people  — choosing your favorite brand is like choosing your best friend or significant other. We go with the option that makes us feel something.

But emotions can cloud your reasoning, especially when you need to do something that could cause internal pain, like giving constructive criticism, or moving on from something you’re attached to, like scrapping a favorite topic from your team's content calendar.

There’s a way to suppress this emotional bias, though. It’s a thought process that’s completely objective and data-driven. It's called the rational decision making model, and it will help you make logically sound decisions even in situations with major ramifications , like pivoting your entire blogging strategy.

But before we learn each step of this powerful process, let’s go over what exactly rational decision making is and why it’s important.

What is Rational Decision Making?

Rational decision making is a problem-solving methodology that factors in objectivity and logic instead of subjectivity and intuition to achieve a goal. The goal of rational decision making is to identify a problem, pick a solution between multiple alternatives, and find an answer.

Rational decision making is an important skill to possess, especially in the digital marketing industry. Humans are inherently emotional, so our biases and beliefs can blur our perception of reality. Fortunately, data sharpens our view. By showing us how our audience actually interacts with our brand, data liberates us from relying on our assumptions to determine what our audience likes about us.

Rational Decision Making Model: 7 Easy Steps(+ Examples)

1. Verify and define your problem.

To prove that you actually have a problem, you need evidence for it. Most marketers think data is the silver bullet that can diagnose any issue in our strategy, but you actually need to extract insights from your data to prove anything. If you don’t, you’re just looking at a bunch of numbers packed into a spreadsheet.

To pinpoint your specific problem, collect as much data from your area of need and analyze it to find any alarming patterns or trends.

“After analyzing our blog traffic report, we now know why our traffic has plateaued for the past year — our organic traffic increases slightly month over month but our email and social traffic decrease.”

2. Research and brainstorm possible solutions for your problem.

Expanding your pool of potential solutions boosts your chances of solving your problem. To find as many potential solutions as possible, you should gather plenty of information about your problem from your own knowledge and the internet. You can also brainstorm with others to uncover more possible solutions.

Potential Solution 1: “We could focus on growing organic, email, and social traffic all at the same time."

Potential Solution 2: “We could focus on growing email and social traffic at the same time — organic traffic already increases month over month while traffic from email and social decrease.”

Potential Solution 3: "We could solely focus on growing social traffic — growing social traffic is easier than growing email and organic traffic at the same time. We also have 2 million followers on Facebook, so we could push our posts to a ton of readers."

Potential Solution 4: "We could solely focus on growing email traffic — growing email traffic is easier than growing social and organic traffic at the same time. We also have 250,000 blog subscribers, so we could push our posts to a ton of readers."

Potential Solution 5: "We could solely focus on growing organic traffic — growing organic traffic is easier than growing social and email traffic at the same time. We also just implemented a pillar-cluster model to boost our domain’s authority, so we could attract a ton of readers from Google."

3. Set standards of success and failure for your potential solutions.

Setting a threshold to measure your solutions' success and failure lets you determine which ones can actually solve your problem. Your standard of success shouldn’t be too high, though. You’d never be able to find a solution. But if your standards are realistic, quantifiable, and focused, you’ll be able to find one.

“If one of our solutions increases our total traffic by 10%, we should consider it a practical way to overcome our traffic plateau.”

4. Flesh out the potential results of each solution.

Next, you should determine each of your solutions’ consequences. To do so, create a strength and weaknesses table for each alternative and compare them to each other. You should also prioritize your solutions in a list from best chance to solve the problem to worst chance.

Potential Result 1: ‘Growing organic, email, and social traffic at the same time could pay a lot of dividends, but our team doesn’t have enough time or resources to optimize all three channels.”

Potential Result 2: “Growing email and social traffic at the same time would marginally increase overall traffic — both channels only account for 20% of our total traffic."

Potential Result 3: “Growing social traffic by posting a blog post everyday on Facebook is challenging because the platform doesn’t elevate links in the news feed and the channel only accounts for 5% of our blog traffic. Focusing solely on social would produce minimal results.”

Potential Result 4: “Growing email traffic by sending two emails per day to our blog subscribers is challenging because we already send one email to subscribers everyday and the channel only accounts for 15% of our blog traffic. Focusing on email would produce minimal results.”

Potential Result 5: “Growing organic traffic by targeting high search volume keywords for all of our new posts is the easiest way to grow our blog’s overall traffic. We have a high domain authority, Google refers 80% of our total traffic, and we just implemented a pillar-cluster model. Focusing on organic would produce the most results.”

5. Choose the best solution and test it.

Based on the evaluation of your potential solutions, choose the best one and test it. You can start monitoring your preliminary results during this stage too.

“Focusing on organic traffic seems to be the most effective and realistic play for us. Let’s test an organic-only strategy where we only create new content that has current or potential search volume and fits into our pillar cluster model.”

6. Track and analyze the results of your test.

Track and analyze your results to see if your solution actually solved your problem.

“After a month of testing, our blog traffic has increased by 14% and our organic traffic has increased by 21%.”

7. Implement the solution or test a new one.

If your potential solution passed your test and solved your problem, then it’s the most rational decision you can make. You should implement it to completely solve your current problem or any other related problems in the future. If the solution didn’t solve your problem, then test another potential solution that you came up with.

“The results from solely focusing on organic surpassed our threshold of success. From now on, we’re pivoting to an organic-only strategy, where we’ll only create new blog content that has current or future search volume and fits into our pillar cluster model.”

Avoid Bias With A Rational Decision Making Process

As humans, it’s natural for our emotions to take over your decision making process. And that’s okay. Sometimes, emotional decisions are better than logical ones. But when you really need to prioritize logic over emotion, arming your mind with the rational decision making model can help you suppress your emotion bias and be as objective as possible.

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Rational Decision Making Model

A rational decision making model provides a structured and sequenced approach to decision making.

Using such an approach can help to ensure discipline and consistency is built into your decision making process. As the word rational suggests, this approach brings logic and order to decision making. Our rational decision making model consists of a series of steps, beginning with problem/opportunity identification, and ending with actions to be taken on decisions made.

There seems to be a problem with decision making. According to Ohio State University management professor, Paul C. Nutt , we only get about 50% of our decisions in the workplace right! Half the time they are wrong, so there is clearly plenty of scope to improve on our decision making processes. Based on his research into over 300 decisions, made in a range of organizations, he discovered that

Some tactics with a good track record are commonly known, but uncommonly practiced.

Why? Well one reason that emerged from his research is that:

Too often, managers make bad tactical selections ….. because they believe that following recommended decision-making practices would take too much time and demand excessive cash outlays.

Nutt argues that using good decision making practices actually costs very little. (Even less in this case because our rational decision making model is a free tool to help improve the way you make decisions!).

This article is part of our series on decision making. Our first article, types of decision making outlines a range of decision making approaches. Rational decision making forms part of what we have termed types of decision, categorized by process. In this category we have put two contrasting approaches, that of rational decision making and that of judgement or intuitive decision making .

A General Rational Decision Making Model

Rational decision making processes consist of a sequence of steps designed to rationally develop a desired solution. Typically these steps involve:

1: Identifying a problem or opportunity

The first step is to recognise a problem or to see opportunities that may be worthwhile. A rational decision making model is best employed where relatively complex decisions have to be made.

(So the first decision making lesson should be to ask yourself if you really have a problem to solve or a decision to make. Then read this article for more specific advice: Problem Solving Skill: Finding the Right Problem to Solve ).

2: Gathering information

What is relevant and what is not relevant to the decision? What do you need to know before you can make a decision, or that will help you make the right one?

3: Analyzing the situation

What alternative courses of action may be available to you? What different interpretations of the data may be possible? Our Problem Solving Activity uses a set of structured questions to encourage both broad and deep analysis of your situation or problem.

4: Developing options

Generate several possible options. Be creative and positive. Read The Power of Positive Thinking for our five questions that create possibilities.

5: Evaluating alternatives

What criteria should you use to evaluate? Evaluate for feasibility, acceptability and desirability. Which alternative will best achieve your objectives?

6: Selecting a preferred alternative

Explore the provisional preferred alternative for future possible adverse consequences. What problems might it create? What are the risks of making this decision?

7: Acting on the decision

Put a plan in place to implement the decision. Have you allocated resources to implement? Is the decision accepted and supported by colleagues? Are they committed to to making the decision work?

Strengths and Weaknesses of the Rational Decision Making Model

However, we should always remember that whilst the model indicates what needs to be done, it’s often how things are done that characterises effective decision making.

Paul C. Nutt’s research illustrates that bad decisions were usually bad because two things were missing:

• Adequate participation of stakeholders in the decision making process
• Sufficient time spent generating a range of possible solutions

Too often those who should have been involved weren’t, and solutions were proposed and acted upon too quickly. Often with disastrous effects!

A second weakness arises if we attempt to use the model in isolation. This is particularly important where complex or important decisions are involved.

The principle assumption of the rational decision making process is that human beings make rational decisions. However, there are numerous factors which determine our decisions, many of which are not rational. In many situations decisions have to be made with incomplete and insufficient information.

Putting the Rational Decision Making Model to work

Regardless of any perceived weaknesses these models are essential tools.

You’ll find more on these and other practical techniques in our related e-guides (below) or in Making Better Decisions.

Use the tools in this guide to help your decision making:

Tool 1: Do you need to make a decision? Tool 2: The POCA decision making model Tool 3: Decision levels Tool 4: 7 step decision making process Tool 5: Team decision making Tool 6: Evaluating alternatives

See for yourself that a rational decision making model can help us to make better decisions – and thus help us to be better managers.

Further Reading

Definition of decision making Intuition and decision making

>>> Return to the Decision Making Knowledge Hub

Looking for more decision making resources.

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These are fantastic little e-books, very thorough, easy to follow.

We’ve used [ the guides ] as support tools for learners on our talent management programmes which has saved me a lot of time and a lot of money. I’d definitely recommend them.

Kieleigh - United Kingdom

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The Ultimate Guide to Rational Decision-Making (With Steps)

Making decisions is an integral part of our lives. However, how many times do we really stop to think whether our choices are rational or not?

This article dives deep into the concept of rational decision-making, its importance, real-life examples, steps involved, factors influencing it, ways to enhance your skills, potential challenges, and how cognitive biases impact it. Let’s dive in.

What is Rational Decision-Making?

Rational decision-making, at its core, is a multi-step process used to make choices that are logical, informed, and objective. It involves identifying a decision problem, gathering information, evaluating alternatives, and selecting the most rational choice. This is a stark contrast to decisions based on subjectivity or intuition, which may often rely on feelings, emotions, or personal biases.

The goal of rational decision-making is to reach decisions that support your objectives in the most optimal way. The basis of this process is rationality—a concept that propels us to make decisions that provide the maximum benefit or, in other words, the best possible outcome. Rationality encourages us to follow a path that aligns with our goals and values while making decisions. It’s an antidote to impulsive choices or decisions clouded by bias and personal emotions.

While intuitive decisions can sometimes lead to effective outcomes, especially in situations demanding quick responses, rational decision-making allows us to consider all available options, analyze their potential consequences, and make an informed choice. This often leads to decisions that are more aligned with our long-term goals and less likely to result in unintended consequences.

Why is Rational Decision-Making Important?

Rational decision-making is the cornerstone of effective problem-solving and critical thinking. It helps us to make informed choices that are not only beneficial but also ethical, a crucial aspect in both personal and professional life.

In business, rational decision-making can lead to strategies that maximize profit, minimize risk, and promote organizational growth. It ensures resource optimization by aligning decisions with business objectives. Rationality ensures that every decision is data-driven, increasing the likelihood of successful outcomes.

On a personal level, rational decision-making can help us make better choices about our health, finances, relationships, and more. It enables us to make choices that align with our values and life goals, improving our overall quality of life.

Examples of Using Rational Decision-Making

Let’s see how rational decision-making manifests in various spheres.

Business: A company looking to launch a new product will employ rational decision-making. They’ll conduct market research, analyze competitor products, evaluate their resources, and predict potential profits before making a decision. This ensures the decision is based on facts and not just intuition.

Leadership: Leaders use rational decision-making while shaping policies or resolving conflicts. A school principal, for instance, may have to decide whether to enforce a strict no-mobile policy.

They’ll consider the pros and cons, consult with teachers, parents, and students, and make a decision that is most beneficial for the school’s academic environment.

Personal Finance: An individual considering their retirement savings plan would utilize rational decision-making. They might begin by understanding the importance of saving for retirement and gathering information about various options like 401(k)s, IRAs, or traditional savings accounts.

They would evaluate these alternatives, considering factors like potential growth, risk level, and tax benefits. The decision would be based on their financial situation, retirement goals, and risk tolerance, ensuring their choice is not impulsive but grounded in careful consideration and analysis.

Steps Involved in Rational Decision-Making

The rational decision-making process comprises several key steps. Here’s a rundown:

1. Identify the Decision

The first step in rational decision-making is acknowledging that a decision is required. The decision is usually a problem but can also be an opportunity. This is the foundational stage where the problem or situation is recognized, and the need for a decision becomes apparent.

You can’t make a rational decision unless you know exactly what the problem is and the context of the decision that needs to be made. Ask yourself questions such as:

• Why does a decision need to be made?
• What consequences will unfold if no decision is made?
• What desired outcome are we aiming for?
• What stands in the way of achieving it?

Take, for instance, a business observing declining profits. The company identifies the problem and realizes that strategic decisions need to be made to address this issue.

It might ask: What is the reason behind the decreasing profits? What will happen if the situation is not addressed? What are our financial goals, and what is impeding us from achieving them? This level of detailed understanding and clarity sets the stage for the subsequent steps of the decision-making process.

2. Gather Information

Once the decision has been identified, the next step is to gather relevant information about it. This could include data analysis, research, consultations with experts, surveys, etc.

Using the previous example, the business might look into financial statements, assess market trends, and consider feedback from customers. A thorough and unbiased collection of data is critical as it forms the backbone of a rational decision.

3. Identify Alternatives

The third step involves generating a list of potential alternatives. There is often more than one way to address a problem or situation, so it’s important to consider different approaches and options.

For the business facing decreasing profits, alternatives could include cost-cutting, investing in new marketing strategies, introducing new products, or even merging with another company. Creativity and open-mindedness are key in this stage to ensure a wide range of options.

4. Evaluate Alternatives

After generating alternatives, the next crucial step is to evaluate each one. This stage involves a systematic analysis of the pros and cons, feasibility, potential impact, and other factors pertinent to each option. Here, establishing your decision criteria—such as cost-effectiveness, scalability, risk level, and potential return—is key. Once established, these criteria need to be weighed based on their importance to solving the problem at hand.

For example, a business might establish criteria like cost, projected return, and alignment with company values. These criteria would be applied to evaluate the potential impact of different marketing strategies, the feasibility of cost-cutting measures, or the implications of a merger.

This systematic evaluation process, underpinned by established and weighted decision criteria, enables a business to compare and contrast different options effectively. It assists in determining which alternative aligns best with the defined criteria and thus holds the highest potential for success.

5. Choose an Alternative

This step involves making the actual decision among the evaluated alternatives. Typically, the best alternative is the one with the greatest likelihood of solving the issue, paired with the lowest degree of risk.

It’s where the business might choose the most cost-effective marketing strategy that is expected to reach the widest audience. While this stage concludes with a decision, the rational decision-making process is not yet complete.

6. Take Action

This is where the chosen alternative is implemented. It involves carrying out the decision and monitoring its progress.

For the business, this would mean launching the selected marketing strategy and keeping a close eye on metrics such as customer engagement, sales, and profit margins. It’s important to remember that this stage might involve overcoming obstacles and making adjustments as necessary.

7. Review the Decision

The final step of the process is to review and evaluate the results of the decision. This includes analyzing whether the decision has resolved the problem or situation and, if not, considering what adjustments need to be made.

In our business example, this could mean assessing whether the new marketing strategy has indeed increased profits. If it hasn’t, the business might need to revisit previous steps of the process to identify and implement a new decision.

These steps make up the backbone of the rational decision-making process, enabling us to systematically approach our choices, ensuring they are backed by logic and evidence.

Assumptions for Using a Rational Decision-Making Model

To effectively utilize the rational decision-making process, it’s necessary to make several key assumptions. These assumptions create a baseline for the decision-making process and help ensure its effective implementation:

• Complete Information: One must assume that all the information needed to make the decision is available and accessible. This includes details about the problem, potential solutions, and their outcomes.
• Decision-Maker Rationality: The person making the decision is assumed to be rational, meaning they are objective, logical, and aim to make the best choice based on the information available.
• Clear Objectives: The decision-maker is assumed to have clear and consistent objectives or goals that guide the decision-making process.
• Time and Resources: It’s assumed that the decision-maker has adequate time and resources to gather information, evaluate alternatives, and make a decision.
• Decision-Maker Independence: The decision-maker is assumed to have the freedom and authority to make the decision without undue influence or restrictions.
• Stable Environment: The environment in which the decision is being made is assumed to be stable, allowing for reliable predictions about the consequences of each alternative.
• Logical Evaluation: It’s assumed that the decision-maker can logically evaluate the pros and cons of each alternative, weigh them against each other, and make a rational choice.

Other Rational Decision-Making Models

While the steps above cover the basics of rational decision-making, there are several rational decision-making models that have been developed by scholars and researchers over the years.

These models provide structured approaches to making decisions based on logical reasoning and analysis. Here are a few examples:

• The Rational Economic Model: This model assumes that individuals make decisions by maximizing their utility or satisfaction, considering all available information, and weighing the costs and benefits of different alternatives.
• The Bounded Rationality Model: Proposed by Herbert Simon, this model recognizes that humans have limitations in processing information and making fully rational decisions. It suggests that individuals make decisions that are “good enough” rather than optimal, taking into account their cognitive constraints and the available information.
• The Normative Decision Model: This model focuses on the ideal decision-making process, providing a step-by-step framework for making rational decisions. It emphasizes gathering complete information, considering all alternatives, and evaluating the potential outcomes before selecting the best option.
• The Garbage Can Model: This model views decision-making as a chaotic process that occurs in organizations. It suggests that decisions often result from a combination of problems, solutions, participants, and circumstances coming together in a “garbage can” and being resolved opportunistically.
• The Prospect Theory: Proposed by Daniel Kahneman and Amos Tversky, this model challenges the assumptions of rational decision-making by considering how individuals assess and weigh potential gains and losses. It suggests that people tend to be risk-averse when it comes to gains but risk-seeking when it comes to losses.

These are just a few examples of rational decision-making models. Each model offers a unique perspective and set of principles for approaching decision-making tasks. The choice of model depends on the context, problem complexity, available information, and the decision-makers preferences and constraints.

Factors Influencing Rational Decision-Making

While the idea of making a completely rational decision sounds perfect, in reality, our decisions are often influenced by various factors.

• Information Availability: The amount and quality of information at our disposal can greatly influence our decisions. With limited or incorrect information, we may end up making less-than-optimal decisions.
• Time Constraints: Often, we are pressed for time while making decisions. Under such constraints, we might not go through the full rational decision-making process.
• Cognitive Limitations: Our cognitive capacity to process information and make decisions is limited. We can be overwhelmed with too many alternatives or complex decision scenarios.
• Emotions: Our emotions often play a part in our decisions. We might make irrational choices under emotional distress.

Impact of Cognitive Biases on Rational Decision-Making

Cognitive biases can seriously impact our rational decision-making abilities. These mental shortcuts or “biases” can lead us to make decisions that are not in our best interest.

For instance, confirmation bias can make us pay more attention to information that confirms our pre-existing beliefs and ignore contradicting evidence. Similarly, the anchoring bias can cause us to rely heavily on the first piece of information we receive when making decisions.

Cognitive biases often lead to irrational choices. Being aware of these biases is the first step towards mitigating their impact on our decision-making process.

Potential Challenges in Rational Decision-Making

Rational decision-making, despite its merits, isn’t without its challenges. Some of these include:

• Information Overload: In an age of data deluge, filtering through massive amounts of information to make decisions can be overwhelming.
• Analysis Paralysis: Overanalyzing or overthinking can lead to indecision or delays in decision-making.
• Unpredictable Outcomes: Even with a thorough analysis, outcomes can be unpredictable due to the dynamic nature of our environment.

Developing Rational Decision-Making Skills

Wondering how to become better at making rational decisions? Here are some tips to get you going:

• Improve Critical Thinking: Critical thinking allows us to objectively analyze information and logically derive conclusions. By developing your critical thinking skills, you can better evaluate decision alternatives.
• Practice Mindfulness: Being aware of your thoughts and emotions can help you identify when they are clouding your decision-making process.
• Use Decision-Making Models: Decision-making models can provide a structured approach to rational decision-making. They can help guide you through complex decision scenarios.

Remember, developing rational decision-making skills takes time and practice. Stay patient and keep practicing.

Frequently Asked Questions

Rational decision-making is a structured, logical process that uses evidence and analysis. Intuitive decision-making relies on instinct and gut feelings.

Yes, rational decision-making can be applied in personal situations like choosing a career, managing finances, or making health-related decisions.

Yes, decision-making models like SWOT analysis, decision trees, or cost-benefit analysis can provide structured approaches to enhance rationality.

Wrapping Up

Rational decision-making is a skill that can transform our personal and professional lives, steering us toward more informed and effective choices. Though challenges exist, with awareness and practice, we can significantly improve our decision-making prowess.

By understanding the nuances of rational decision-making, we not only enhance our decision-making abilities but also become better thinkers, planners, and problem-solvers. Now, isn’t that a step towards a more informed and empowered life?

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Rational Decision-Making Model: Meaning, Importance And Examples

What is the rational decision-making model? Rational decision-making is a method that organizations, businesses and individuals use to make the…

What is the rational decision-making model? Rational decision-making is a method that organizations, businesses and individuals use to make the best decisions. Rational decision-making, one of many decision-making tools, helps users come up with the most suitable course of action. In this blog, we will look at the meaning of rational decision-making, the importance of rational decision-making and study some rational decision-making examples.

Rational decision-making is a process in which decision-makers go through a set of steps and processes and choose the best solution to a problem. These decisions are based on data analysis and logic, eliminating intuition and subjectivity.

Rational decision-making means that every variable factor, every piece of information about all the available options, has been taken into account. 

What Is The Rational Decision-Making Model Used For?

What is the rational decision-making process, non-rational decision making.

The most basic use of the rational decision-making model is to ensure a consistent method of making decisions. This could be used as a standardized decision-making tool across an organization or to ensure that all managers receive the same information to make decisions. The rational decision-making process can be used to maintain a structured, step-by-step approach for every decision.

What Is The Rational Decision-Making Process ?

How the rational decision-making model is implemented can be explained in seven steps:

(There is also an example to help you understand the importance of rational decision-making)

1. Understand and define the scope

Just stating that a problem exists isn’t enough. Solid, accurate data is required to understand and analyze the problem in depth. This lets you know how much attention it requires.

It’s vital to collect as much relevant and accurate data around the problem as possible.

Here’s a rational decision-making example:

Your social media posts aren’t translating to conversions. What could the problem be? Once the analytics reports come in, you realize there isn’t enough engagement. The issue isn’t that your posts are not reaching the right audience, it’s that they don’t engage them. This sets up the next step: figuring out why the problem exists. Why is user engagement low?

2. Research and get feedback

The next step in the rational decision-making process is to delve into the problem. Find out what is causing the problem and how it can be solved. You could start with a brainstorming session and find out what your team thinks.

Rational decision-making example continued:

The budget is good, there are enough views and likes on the posts. So, why is there a lack of engagement? Why aren’t users interacting with the post? Why aren’t they clicking on the CTA?

You might need new types of posts; perhaps the current posts aren’t trendy. Maybe the posts don’t evoke an emotional response from the audience. Or they don’t convey what the product can do for the audience.

Now that you know what the causes could be, you are a step closer. It’s time to collate the data.

The team comes together with their opinions and findings. After a few customer surveys, the major issues are identified as follows:

• Potential consumers don’t know how the product will add value to their lives.
• Potential customers don’t understand the posts’ objectives and aren’t clear on what the product is.

3. List your choices

There are bound to be a host of opinions and innumerable choices about how to address the issue. Consider all of them so that you don’t create more problems later.

This is where you start to use rational decision-making:

Now that the problem has been understood, it’s time to list your options.

You could create a post that showcases what the product does.

You could have an informative GIF that shows that product in action.

You could create additional whitepapers to showcase how the product adds value and thus is beneficial for the customer to buy.

The analytics show that traffic isn’t the issue, so you don’t have to focus on garnering more traffic. Your focus has to be on conversions.

Your color schemes and CTA could be a little more impactful.

Maybe video clips are the way to go?

4. Analyze your options carefully

Now that you have all the options in front of you, cross out the ones that don’t add value or don’t solve the problem. Understand how each of the potential solutions could turn out and what other effects they could have.

Point 6 is about having a back up plan. Once you’ve chosen the plan that is likely to serve you the best, choose the second best option as well. You could use that as your back up, in case things don’t go according to plan.

While it’s great to get a quick solution to a real problem, the solution should be permanent or at least solve the majority of the issue.

The example of the rational decision-making process continued:

This is where you set about deciding the benefits of each of your choices mentioned above.

A video clip post would mean additional costs.

Redesigning the graphics may lead to more views and interaction but dilute your following.

A whitepaper is a good idea, but it doesn’t help with conversions. It’s ideal for customers to click on the CTA.

While GIFs are very popular, the image you choose has to convey the right information and be impactful. You may need to rework the branding for this to work.

While it would be great to have a post that showcases how the product works, it can’t be overly technical.

5. Understand the results you want

This is where the importance of rational decision-making comes into play. Understand what you expect from the solutions. There has to be a clear outcome because of the decision that is made. Knowing what you expect from your actions is important. It’s always a good idea to test the solution to see if it resolves the problem entirely.

Rational decision-making model example continued:

The best course of action might be to assign different teams for the different potential solutions.

One team could create a GIF, while the other works on the video clip and another on the ‘how to use’ post.

Once the teams have all made rough drafts, a productive critiquing session could be conducted. The teams can then look at each others’ solutions and point out the merits and drawbacks of each.

This way a general consensus can be reached and the best option or options can be selected. It is also advisable to use predictive social media tools. There are algorithms and equations that could help predict the success of a post to some degree.

6. Have a backup plan

While this may not always be necessary and can be a little cost-intensive, it may be worthwhile to have a backup plan if the solution doesn’t give you the intended results. This means that you should either have another strategy in place, created using the rational decision-making model .

Even though your plan has been made after careful thought, there is a chance that it either does not go as per plan or that an external factor interferes and throws your plan into chaos.

Try to have a back-up plan to make sure that your business isn’t impacted.

Now that you’ve decided to go with a combination of a GIF and an information-based post, go ahead and begin drafting your white paper as well.

7. Implement

Once the team has done all the work and created the solution, implement it. Implementing this plan means that everyone has to be on board. This means that everyone should be informed and be willing to contribute in executing the plan. The plan won’t work if everyone isn’t working toward the same goal.

As logic and data have been used to reach the decision, it’s likely going to be the most effective one.

Non -Rational Decision-Making

Non-rational decision-making is quite simply the opposite of rational decision-making . Non-rational decision-making is generally used when there isn’t enough information available or when there isn’t enough time to carry out the research and analysis required to employ rational decision-making methods.

Non-rational decision-making can be used when the person or team making the decisions has experienced that issue before or their collective experience allows them to predict what the outcome of their decision would be.

To sum it up, rational decision making can be the difference between a high performance culture driven by results and an unorganized setting. If you would like to drive decisions that guarantee results, you have to employ strategies that kindle organizational objectives based on real data. Let’s sum up the steps explained in this post about the importance of rational decision-making.

• Understand and define the scope
• Research and get feedback
• List your choices
• Analyze your options carefully
• Understand the results you want

Now that you have some idea of what the rational decision-making process is, you may be curious to find out how to make better decisions for your business. To understand more about the importance of rational decision-making , take a look at Harappa’s Making Decisions course. It delves deep into how the best decisions can be reached. The course is for you if you’re looking to get into business and learn how to use rational decision-making.

Explore Harappa Diaries to learn more about topics such as How To Define Problem , Steps involved in Ethical Decision Making , Importance Of Decision Making and How To Overcome Indecisiveness to classify problems and solve them efficiently.

Rational Decision Making Model

• Post author: Patrick Turner
• Post published: June 14, 2022
• Post category: Management Skills

All managers face issues every day that need decisions; decisions about managing employees, and resources, and setting plans and strategies. And to do that, there are two ways to make a decision, the Intuitive way and the rational decision-making way.

In the last article ( Effective decision making ) we’ve discussed how to make Effective decisions, and in this article, we’ll discuss how to make rational decisions.

Amazon Recommended book:  The Decision Book: 50 Models for Strategic Thinking

Rational decision-making model definition:

Rational decision-making is a multi-step and linear process, designed for problem-solving starting from problem identification through solutions, for making logically sound decisions.

The rational decision-making model is a good model to make good decisions because it depends on the rational way used for problem-solving.

Rational decision-making model steps:

If you want to make a good decision that helps you to achieve your goals; you should depend on the available facts to make a careful analysis to make a decision as we’ll explain in the following steps:

Step 1: Identify and define the problem:

The first step to making a rational decision is to identify and describe the problem by defining the current and desired states and defining the alternatives:

• Keep in mind during identifying the problem to identify the cause of the problem, not the symptoms.
• Define the gap between the current state and the desired state. And the gap must be enough to motivate the involved people to implement the decision.
• Define all available options and don’t think about quick solutions.

For example:  if your family is growing and you have a small house that doesn’t meet your needs. Let’s assume that your decision is buying a bigger house to overcome that issue.

Note that:  buying a new house is a solution (not identifying the problem), and in this way you don’t think about the cause of the problem (space), the gap between the current and desired state, and all alternative options.

The cause of the problem:

Buying a new house isn’t a problem, it’s a symptom. And the cause of the problem is (Space).

The gap between the current and desired state:

In our example, you should mention the available space and the needed space.

All alternative options

Think about all alternatives:

• If there is unneeded stuff in your house can be removed to free up space.
• Having a space to build a new room in the house.
• Buying a new house.

Step 2: Identify the decision criteria:

The second step in the rational decision-making model is outlining all the criteria ahead of time because those criteria will be a good guide to making a decision

Example:  let’s get back to our problem, space is our issue and we need to identify some criteria to measure all alternatives and determine if there is a solution that is better than others, in this example our criteria are (time and cost)

Time:  we should think about:

• When will we need that space?
• When will solving the problem be critical?
• And how long will each option take?

Cost:  these criteria are important to know if there are some options cost more than others; so you should know:

• How much will each option cost?
• How much money do we have?

Note that:  if our problem is buying a new house instead of solving a space issue, we would establish criteria a little differently; and we would likely focus on things like distances to activities, crime per capita, quality of schools, and some other factors.

Now we’ve identified the problem and the decision’s criteria, it’s the time to weigh those criteria:

Step3: weight established criteria:

We need to weigh those criteria because each criterion is unlikely to have the same level of importance; there are a few ways you can use to accomplish this step:

1- Using an absolute comparison:

You can use this method which you commonly find costumers’ ratings; this comparison is helpful because it allows you to compare items side by side. So if you’re shopping for a product, you can look through customers’ reports and ratings and compare different types of the product in a specific category.

Those reports and ratings are accomplished by incorporating a ranking system where the user enters a value reflecting the importance of the criteria on a scale.

For example:  let’s say that there is a scale starting from “1” and going to “10”. “1” indicates that the criteria have no importance to us and a score of “10” indicates that the item is very important. So we would go through each criterion and use this method to weigh their significance to us.

Since we are evaluating the criteria on their own metric and not in relation to another criterion so we can assign the same value to different criteria.

2- Using relative comparison

Relative comparison is made by comparing each criterion with another. So by using relative comparison; we can obtain what criteria are most important to us. This can be helpful when you attempt to weigh criteria that have similar ratings by using an absolute comparison.

So by comparing them against one another we firmly know which one is more important.

Step 4: Generate a list of alternatives

Once we have identified a thorough list of criteria and weighed the importance of those criteria, now we can generate a list of alternatives.

During this step, our goal is generating many alternatives as possible. The more alternatives that we generate, the greater the likelihood is that we’ll come up with an effective solution to our problem.

Going back to our problem, we can generate a few alternatives, including buying a new house, building another room, placing possessions in storage, or even placing a few kids up for adoption.

Keep in mind, in this stage we define all possible options, no matter whether they are good or bad solutions because we’ll think about that in the next stage.

Step 5: Evaluate the alternatives:

At this stage, we want to evaluate the alternatives that we’ve identified using the criteria that we’ve identified in step2. This step may be lengthy depending on the number of criteria and the number of alternatives.

Let’s go back to our Example:  we’ll use a simple rank-order method to rank the alternatives in the criteria that we’ve identified. We’re also establishing weights for each criterion based on our findings from step 3. as shown in the following table:

Step 6: Determining the optimal decision

The sixth step in our rational decision-making model is determining the optimal decision. In order to know the optimal decision, we’re going to multiply the ranking for each alternative by that criteria’s respective weight.

Since each criterion has a different level of importance, we use these levels to assign more influence to the results in categories that have more importance.

And since we’ve already weighed the established criteria in step 3, we know exactly which criteria to give more importance to as we determine the optimal decision. As you can see, buying a new house appears to be the best solution based on the evaluation.

As we end I want to leave you with a word of caution. Models, by their very nature, are clear, organized, and logical. Everything in the real world is not. So applying a model to an environment isn’t perfect but it’s a difficult task.

It is true that statistically, those who use such a model will make more rational decisions, whether in their business or in their personal lives. But money, time, and other constraints can affect a manager’s ability to use such a model as it was intended; because maybe you can’t evaluate every alternative and identify every possible option. But if your goal as a manager is to make more rational decisions, this is certainly a start.

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How to Make Rational Decisions in the Face of Uncertainty

• Cheryl Strauss Einhorn

A four-step approach.

We’re all used to operating with a degree of uncertainty, but between the Covid pandemic and a contentious election year, 2020 is shaping up to be even more unpredictable than usual. When we feel such heightened uncertainty, our decision-making processes can break down, and we may act based on bias, emotion, and intuition instead of logic and fact.  The author offers a four-step framework to pause and assess ambiguous data: 1) Identify which data you’re working with; 2) Recognize which cognitive biases might accompany that data; 3) Invert the problem to identify what you really need to know; and 4) Formulate the right questions to get the answers you need.

As we’re battling a virus that scientists still don’t fully understand, watching the stock market sink, then soar, then sink again, and facing a contentious election, the future seems completely unpredictable (instead of merely as unpredictable as it has always been). When we feel such heightened uncertainty, our decision-making processes can break down. We may become paralyzed and afraid to act, or we may act on the basis of bias, emotion, and intuition instead of logic and facts.

• Cheryl Strauss Einhorn is the founder and CEO of Decisive, a decision sciences company using her AREA Method decision-making system for individuals, companies, and nonprofits looking to solve complex problems. Decisive offers digital tools and in-person training, workshops, coaching and consulting. Cheryl is a long-time educator teaching at Columbia Business School and Cornell and has won several journalism awards for her investigative news stories. She’s authored two books on complex problem solving, Problem Solved for personal and professional decisions, and Investing In Financial Research about business, financial, and investment decisions. Her new book, Problem Solver, is about the psychology of personal decision-making and Problem Solver Profiles. For more information please watch Cheryl’s TED talk and visit areamethod.com .

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Kepner Tregoe Method of Problem Solving

Kepner Tregoe Method of Problem Solving: this article explains the Kepner Tregoe Method , also known as the KT-method , developed by Charles Kepner and Benjamin Tregoe in a practical way. Next to what this is, this article also highlights rational processes, the importance of cause and that this method is effective. After reading, you’ll have a basic understanding of this problem solving process. Enjoy reading!

What is the Kepner Tregoe Method?

Problems occur in any given organization. Often there is pressure of time to solve the problems and it is debatable what the right way of solving these problems is.

The Kepner Tregoe method or KT-method is a problem analysis model in which the “problem” is disconnected from the “decision” . An English synonym for this problem solving method is Problem Solving and Decision Making (PSDM).

Traditional thinking pattern

The founders Charles Kepner and Benjamin Tregoe developed a rational working method in the 1960s in which they researched and identified the troubleshooting skills of people.

Throughout the centuries mankind has learned to deal with complexity and to (directly) anticipate on this. As a consequence, the traditional thinking pattern became a part of human nature.

When solving problems people search for the answer to the following four questions:

• What happened?
• Why did it happen?
• How should we act?
• What will be the (future) result?

Kepner Tregoe method: rational processes

To break through this traditional pattern Charles Kepner and Benjamin Tregoe came up with four rational processes in which four fundamental questions are reflected:

1. Situation analysis

This clarifies the problem situation (what happened).

1.1 Problem analysis

Here the actual cause of the problem and the relationship between cause and result are searched for (why did it happen).

1.2 Decision analysis

Based on the decision making criteria, choices are made to arrive at potential problem resolutions (how should we act).

1.3 Potential Problem analysis

Figure 1 – Kepner Tregoe Method Analysis

Distinction

According to the KT-method, different tasks involve different problems, which in turn need different approaches. A situation analysis will clarify the distinctions in all these processes and as a result it will be possible to search for suitable solutions. This situation analysis provides an insight into necessity, priority and urgency of the various tasks.

When it has become clear which tasks are to be prioritized (action list) preparations can be made for potential problems. By using a good problem analysis in advance, a process will be created to prevent future problems or in emergencies, to limit the damage.

The strengths of this method does not stop there. Apart from the fact that problems are specified in terms such as “what, where, when and how big”, the Kepner Tregoe Method focuses on anything that cannot be the cause of the problem.

Certain causes are therefore excluded. Based on a “this is” and “this is not” analysis a clear overview of possible causes can be created and this makes the troubleshooting process consistent.

The Kepner Tregoe Method is efficient

The KT-method deploys an efficient troubleshooting process. Through research Charles Kepner and Benjamin Tregoe discovered that the registration of a problem is not a uniform process. In spite of the available information, people usually process information badly, misinterpret this or overlook important matters.

In addition, Charles Kepner and Benjamin Tregoe examined the discrepancies between successful and less successful troubleshooting.

They discovered that a predetermined logical method facilitates the search for the causes of a problem. In their “Best practice in troubleshooting” , they describe this methodology, which forms the basis for this method.

The Kepner Tregoe Method is Effective

This method is universal and is still used today in many organizations to track down problems and identify potential causes. Apart from the fact that the Kepner Tregoe Method leads to an explanation of problems, it also helps improve mutual understanding within an organization.

It’s Your Turn

What do you think? Is the Kepner Tregoe Method applicable in today’s modern organizations? Do you recognize the practical explanation or do you have more suggestions? What are your success factors for the good Kepner Tregoe Method set up?

Share your experience and knowledge in the comments box below.

More information

• Lussier, R. N.  (2005). Management fundamentals: concepts. applications, skill development . Cengage Learning .
• Payne, S. L. & Marty, C.S. (1966). The Rational Manager: A Systematic Approach to Problem Solving and Decision Making . Journal of Marketing. Vol. 30 Issue 1, p97.
• Kepner, C. H. & Tregoe, B. B. (1965). The Rational Manager . McGraw-Hill.

How to cite this article: Mulder, P. (2012). Kepner Tregoe Method . Retrieved [insert date] from Toolshero: https://www.toolshero.com/problem-solving/kepner-tregoe-method/

Original publication date: 06/30/2012 | Last update: 12/09/2023

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Patty Mulder

Patty Mulder is an Dutch expert on Management Skills, Personal Effectiveness and Business Communication. She is also a Content writer, Business Coach and Company Trainer and lives in the Netherlands (Europe). Note: all her articles are written in Dutch and we translated her articles to English!

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4 responses to “kepner tregoe method of problem solving”.

I am stunned to read that the Kepner Tregoe Method “…… IS STILL used today in many organizations to track down problems and identify potential causes…..”. I have used it all the time along my career as a manager of organizations, with extreme success. As a tool for identifying problems, as a tool for taking better decisions. So, please, I would appreciate to know what kind of system is being used now instead of an approach like K-T, to have provoked your comment about the existence of an alternative way of thinking.

Other than KT, I also use the Analytic Hierarchy Process (AHP) Like KT, it forces discipline and analysis and it helps to explain why decisions are made with understandable background and data. Many of the old Total Quality Management tools are also useful for solving problems and making good management decisions. Nominal Group Technique, Pareto Charts, and weighted multivoting are all quite useful. ITIL is the new way of thinking, but it can be rather dry and robotic unless it is underpinned with good decision tools.

Thank you for your comment and sharing your experience Pete.

Seems that I naturally deal with problems this way without knowing a name for it. In fact, it seems obvious to me that this approach should be taken anyway.

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Article • 8 min read

The Kepner-Tregoe Matrix

Making unbiased, risk-assessed decisions.

By the Mind Tools Content Team

No matter what position you hold, from the board room to the mailroom, you make decisions every day.

And the end result in business is directly linked to the quality of the decisions made at each point along the way.

So, not surprisingly, decision-making is a universally important competence in business. Some decisions clearly have a greater impact on the business than others, but the underlying skill is the same: the difference is in the scope and depth of the process you go through to reach your decision.

One reason why decision-making can be so problematic is that the most critical decisions tend to have to be made in the least amount of time. You feel pressured and anxious. The time pressure means taking shortcuts, jumping to conclusions, or relying heavily on instinct to guide your way.

Kepner-Tregoe: Taking the Guesswork out of Decision-Making

In your organization, you've probably heard of someone who made it all the way to VP by relying on his gut to make decisions. At the other extreme is the guy who simply can't make a decision because he analyzes the situation to death. The bottom line is, you have to make decisions, and you have to make good decisions. Poor decisions are bad for business. Worse still, one poor decision can lead to others, and so the impact can be compounded and lead to more and more problems down the line.

Thankfully, decision-making is a skill set that can be learned and improved on. Somewhere between instinct and over-analysis is a logical and practical approach to decision-making that doesn't require endless investigation, but helps you weigh up the options and impacts.

One such approach is called the Kepner-Tregoe Matrix. It provides an efficient, systematic framework for gathering, organizing and evaluating decision-making information. The approach was developed by Charles H. Kepner and Benjamin B. Tregoe in the 1960s and they first wrote about it in the business classic, The Rational Manager (1965). The approach is well-respected and used by many of the world's top organizations including NASA and General Motors. [1]

The Kepner-Tregoe Approach

The Kepner-Tregoe approach is based on the premise that the end goal of any decision is to make the "best possible" choice. This is a critical distinction: the goal is not to make the perfect choice, or the choice that has no defects. So the decision maker must accept some risk. And an important feature of the Kepner-Tregoe Matrix is to help evaluate and mitigate the risks of your decision.

The Kepner-Tregoe Matrix approach guides you through the process of setting objectives, exploring and prioritizing alternatives, exploring the strengths and weaknesses of the top alternatives, and of choosing the final "best" alternative. It then prompts you to generate ways to control the potential problems that will crop up as a consequence of your decision.

This type of detailed problem and risk analysis helps you to make an unbiased decision. By skipping this analysis and relying on gut instinct, your evaluation will be influenced by your preconceived beliefs and prior experience – it's simply human nature. The structure of the Kepner-Tregoe approach limits these conscious and unconscious biases as much as possible.

The Kepner-Tregoe Matrix comprises four basic steps:

• Situation Appraisal – identify concerns and outline the priorities.
• Problem Analysis – describe the exact problem or issue by identifying and evaluating the causes.
• Decision Analysis – identify and evaluate alternatives by performing a risk analysis for each and then make a final decision.
• Potential Problem Analysis – evaluate the final decision for risk and identify the contingencies and preventive actions necessary to minimize that risk.

Going through each stage of this process will help you come to the "best possible choice", given your knowledge and understanding of the issues that bear on the decision.

How to Use the Tool

The Kepner-Tregoe Matrix is an in-depth approach that can be supported by detailed instruction and worksheets. As an overview of the approach, the following steps show the general principles of how the Kepner-Tregoe approach can apply to a decision-making situation:

1. Prepare a decision statement.

• This is a general overview of what the decision is expected to achieve (the key objective).
• The statement should discuss the action that is required and the result that is desired.

2. Establish strategic requirements ("Must Haves").

• What "musts" will the final decision provide, allow for, include, etc.? For example: we must have 10 percent cost saving, we must include four color choices, the rope must hold 200 lbs.
• These requirements are absolute – there is no compromise.

3. Establish operational objectives ("Want to Haves").

• What do you "want" the final decision to support?
• By identifying the wants you can rank the alternatives according to which ones satisfy the most, or most important, wants.

4. Identify the restraints (Limits).

• What are the things that will limit your ability to do exactly what you want/need?
• These are typically resource constraints like money, materials, and time.

5. Rank the operational objectives and assign relative weights.

• For each "want", assign a rating of 1 – 10 based on the degree of importance.

6. Generate a list of alternatives.

• Think of as many alternative courses of action as you can. Don't be too concerned that they all meet the "musts" and "wants" you just defined. You will rank these alternatives in the next step.
• Brainstorming is a good approach for generating your list of alternatives.

7. Assign a relative score for each alternative.

• First, eliminate any alternatives that do not meet the "musts" – these are not worth considering any further.
• For the first alternative, go through each objective (want) and rate how well the alternative satisfies it using a 1 – 10 scale.
• Multiply the weight of the objective by the satisfaction rating to come up with a weighted score for each objective.
• Add the weighted scores to determine the total weighted score.
• Repeat the process for each alternative.

8. From the total weighted score for each alternative, rank the top two or three alternatives.

• Remember to make sure that the alternatives you choose meet all the "must" criteria.

9. For the top alternatives, generate a list of potential problems (adverse effects) for each.

• Rank the potential problems for each alternative according to probability and significance.
• Obtain a total weighted score for the adverse effect (adversity rating).

10. Analyze the alternative ranking and the adversity rating and make a final decision.

11. decide on mitigating actions for the chosen alternative..

• Look at each of the adverse effects already identified and generate a list of proactive responses to reduce the probability of each.
• Continuously monitor these probabilities and take action as needed.

The Kepner-Tregoe Matrix is a well-respected and systematic approach for making decisions. The matrix process forces users to be well-organized and thorough.

By weighting and ranking both the benefits and risks, it helps you choose the very best alternatives.

Using the Kepner-Tregoe approach requires patience and a commitment: the payoff for the time invested is good, unbiased decision-making that makes good business sense.

[1] Kepner, C. and Tregoe, B. (1965). ' The Rational Manager .' McGraw-Hill Book Company.

Kepner-Tregoe is a trademark of Kepner-Tregoe, Inc. See www.kepner-tregoe.com .

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Rational Decision-Making

• First Online: 11 February 2020

Cite this chapter

• Richard M. Adler 2  

706 Accesses

People employ both intuitive and deliberate thinking when making critical decisions. Chapter 4 described how our intuitions give rise to cognitive biases that impair critical decision-making and open the door to the Law of Unintended Consequences (LUC). Robert K. Merton also identified constraints on deliberate thinking as equally important contributors to LUC. This chapter examines Herbert Simon’s pivotal cognitive scientific research on these bounds on human rationality. Section 5.1 provides a brief sketch of Simon’s accomplishments. Section 5.2 introduces Simon’s concept of bounded rationality and contrasts it with Tversky and Kahneman’s research on cognitive biases. Sections 5.3 through 5.5 unpack the key elements of Simon’s research: his critique of rational choice theory, his cognitive model for deliberate (System 2) thinking, and his cognitive model of how people reason in order to make critical decisions. Section 5.6 recaps the significance of Simon’s research.

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Augier and March [ 1 ], Feigenbaum [ 5 ], and Simon [ 19 ].

Feigenbaum [ 5 ].

Simon and his co-workers developed the first symbolic programming language, the precursor to John McCarthy’s List Processing Language (LISP) that dominated AI for many decades. He used it to create a program that automatically derived theorems for set theory and number theory Simon [ 19 ].

An example cryptarithmetic puzzle is DONALD + GERALD = ROBERT, where the goal is to assign the numbers 0–9 to the letters uniquely, decrypting the code into a correct arithmetic addition problem.

Simon [ 20 ].

Simon cites Tversky and Kahneman’s work in numerous places, such as Simon [ 20 , 21 ].

Simon [ 21 ] viewed intuitions (and cognitive biases) as a mental model, which people inevitably fall back on as a lens for viewing, understanding, and navigating reality due to our cognitive limits in coping with the world. As Heuer [ 7 ] notes, these intuitions are “not always well adapted to the requirements of the real world.”

Their research methodologies differed as well as their agendas. and Kahneman used questionnaires that elicited judgments and choices. These tests were tailored to highlight and isolate where and how our System 1 intuitions fail, in the sense of deviating from what a rational actor would judge or decide. In contrast, Simon investigated what people do to get things right. In addition to watching and interviewing subjects as they performed tasks in the lab, Simon developed computer-based simulations of problem solving and decision-making to emulate human cognitive structures and processes. In doing so, he helped conceive many of the key ideas and tools that catalyzed AI.

Although Kahneman oriented his research towards understanding System 1, he readily acknowledged the second horn of Merton’s LUC dilemma: “System 2 is not a paragon of rationality. Its abilities are limited as is the knowledge to which it has access. We do not always think straight when we reason, and its errors are not always due to intrusive and incorrect intuitions. Often we make mistakes because we (our System 2) does not know any better.” Kahneman [ 10 ].

Simon [ 18 ], pp. xxviii–xxx.

Simon [ 18 ] offers another rationale for economists’ attachment to rational agent theory: its premises of utility maximization and perfect knowledge “freed economists from any dependence on psychology”. In contrast, bounded rationality entails a deep study of cognitive and behavioral psychology. Bookstaber [ 2 ] makes a similar point: “Modern neoclassical economics sweeps humanity off the stage. It prefers to use mathematical models of a representative agent with stable preferences…”.

Kahneman [ 10 ] writes: “…The definition of rationality as coherence is impossibly restrictive; it demands adherence to rules of logic that a finite mind is not able to implement…our research only showed that Humans are not well described by the rational-agent model.” Klein’s studies of first responders (1998), Simon’s studies of chess grandmasters (2011) and other cognitive experiments show that people generally consider only one or at most a few decision options. Finally, economists criticize the procedural feasibility of defining, much less computing a coherent and defensible metric for utility of outcomes that suitably reflects non-financial benefits of decision options. Levin and Milgrom [ 13 ] and Gollier [ 6 ].

Simon [ 18 ], p. 67. See also Simon [ 18 ], p. 81 and Augier and March [ 1 ], p. 398 for similar formulations.

For example, options to increase growth include: acquiring other companies; licensing products or technologies (from or to others); developing new products or new marketing and sales strategies; and combinations thereof.

Simon [ 21 ].

In fact, Simon’s argument holds even for decisions where our System 1 intuitions don’t distort our judgments or choices: whether or not our judgments are correct, we cannot identify optimal choices.

Simon’s argument is epistemological, grounded in the finite nature of human knowledge and analytical capacity, whereas Tversky and Kahneman’s depends on behavioral dispositions (System 1) that can sometimes be overridden. Bookstaber [ 2 ] offers a more recent critique of rational choice theory in line with Simon’s bounded rationality, focusing on arguments relating to complexity such as computational intractability, emergent behaviors, and history dependence (i.e., ergodicity).

Simon’s use of the term “adaptation” here refers to situation-specific adjustments rather than to generalized evolution in the Darwinian sense. In contrast, System 1 intuitions probably did develop through natural selection. Dennett [ 4 ] and Lo [ 14 ].

The executive control function is an active area of cognitive research. Newell and Bröder [ 16 ].

Sudoku is a popular logic puzzle that consists of a 9 × 9 grid of cells, divided into 3 × 3 blocks, with a few cells filled in with numbers from 0 to 9. The objective is to fill in all of the remaining cells, subject to the constraint that no number can occur more than once in any row, column or block. Sudoku are solved by applying deductive logic to fill in cell values. For example, if 8 values are already filled in a row, you can deduce the ninth value by elimination. Another useful pattern is to identify two cells in a row or column that can only assume the same two values, which allows you to eliminate those values as candidates for other empty cells in that row or column.

Simon’s architecture for AI systems employed heuristic rules called productions. Here is an example expert production rule for automatically diagnosing infectious blood diseases. (Italic terms are properties, underlined terms are symbolic values. The IF clauses represent tests, the THEN clause an action, namely a diagnostic conclusion Buchanan and Shortliffe [ 3 ]:

IF: (1) The identity of the organism is not known with certainty and (2) The stain of the organism is gramneg and (3) The morphology of the organism is ro d, and (4) The aerobicity of the organism is aerobic

THEN: There is strongly suggestive evidence ( .e8 ) that the class of the organism is enterobacteriaceae.

Each such individual “chunk” can be quite complex and informationally dense. For example, chess grandmasters employ “condensed” representations of positions chess boards, as a single (complex encoded) pattern. Mnemonic methods such as “memory palaces” also extend this limit. Miller [ 15 ].

We commonly use external resources to cope with large-scale problems or decisions as solutions are developed, refined, and shared (e.g., blueprints, schematics, word processing documents). These tools allow people to swap chunks of information into and out of short-term memory while preserving an overall context. They scale our capacity for attention and long-term recall somewhat (i.e., by degree, but not by kind).

Neuroscience suggests that our processing of sensory stimuli involves significant parallel processing. However, such “multitasking” seems confined to automatic System 1 functions related to perception. Simon [ 20 ], Hogarth [ 8 ].

See, for example, Simon [ 20 ], Hogarth [ 8 ], Kahneman[ 10 ], and Krippendorff [ 12 ].

Simon [ 18 ] writes: “Administrative theory must be concerned with the limits of rationality and the manner in which organizations affect those limits. Organizations manage complex tasks by leveraging their hierarchical structures to direct work by individuals.

Even when we are forced to make guesses, the key to a reliable process for making judgments is to estimate the level of uncertainty quantitatively, for example using confidence intervals. Hubbard [ 9 ].

Simon models this process using “productions”—conditional (“if-then”) rules that associate particular conditions and changes in states of the world with actions that will bring such changes about. Conditions can be either goal-driven (e.g., “I am trying to achieve X”) or data-driven (e.g., “Y is already done” or “I know that Y”).

These include variations across current and potential product and service lines, marketing and sales programs and channels, and relevant competitors in all of your markets. Not all of these options are equally plausible, but for Simon, this is a search problem, not one of formulating alternatives.

For critical decisions, a goal such as increasing annual growth by 5% decomposes into sub-goals. The actions required to achieve a strategic goal generally must be decomposed similarly into specific, often interdependent sub-actions. For example, expanding production capacity often resolves into an enormous number of subordinate decisions about plants, equipment, and vendors, involving tradeoffs of quality, speed, cost, financing, taxes, resources, plans, and schedules (Sterman [ 22 ]). The resulting hierarchies allow fine-grained projections of how sub-actions close gaps between the current state and goal, they also spawn fine-grained assumptions about contingencies that expand the space of possible action-outcome projections that needs to be searched.

Situational complexity would be even worse were it not for the temporal discounting aspect of bounded rationality: “…the events and prospective events that enter into our value systems are all dated, and the importance we attach to them generally drops off sharply with the passage of time. By applying a heavy discount factor to events, attenuating them with their remoteness in time and space, we reduce our problems of choice to a size commensurate with our limited computing capabilities.” Simon [ 20 ].

Simon [ 20 ] argues that natural and artificial systems that are adaptive and have robust feedback mechanisms. For example, we cannot predict blizzards with great precision, but we can recover from them in cities by having snowplows ready.

Simon [ 20 ]. See also Zsambok and Klein [ 23 ] and Klein [ 11 ] on naturalistic decision-making.

Simon [ 20 ], p. 30. Simon also asserts that aspirations are incommensurable: “There is no simple mechanism for comparison between dimensions. This means that a large gain along one dimension may be needed to compensate for a small loss along another – hence the system’s net satisfactions are history-dependent, and it is difficult for people to balance compensatory offsets.”

Lo [ 14 ] notes that economists criticized Simon’s concept of satisficing because it is not clear when to stop analyzing options on this model, whereas optimality is an unambiguous, mathematically precise notion. He offers a defense of Simon in terms of heuristic rules derived by trial and error.

First responders studied by Klein [ 11 ] apparently consider one or two options at most, a draconian type of satisficing. These decisions are often urgent and life-threatening, but not critical in our sense.

Even powerful AI systems such as IBM’s Big Blue chess program don’t search this enormous space exhaustively; instead, they “prune” their searches for their next best move by restricting how deep into the game they look and with move scoring and heuristics. Human grandmasters employ very different pattern-based heuristics to compensate for their limited speed and focus of attention.

Simon [ 20 ], p. 29.

This is not to assert that human cognition is identical with or reducible to Simon’s cognitive simulations and AI rule-based reasoning systems (i.e., similar to some neuroscientists’ reductionist claims that consciousness is nothing more than neurological events and processes). Rather, the fact that his models and intelligent systems perform in ways that compare qualitatively to human problem solvers and decision-makers warrants a claim that human cognition likely involves similar kinds of structures and processes.

Simon [ 20 ]. See Resnick [ 17 ] for simple rule-based models of ant behavior.

Augier, Mie, and James G. March. 2001. Remembering Herbert A. Simon. Public Administration Review . 61(4): 396–402.

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Dennett, Daniel C. 2017. From Bacteria to Bach and Back: The Evolution of Minds . New York: W. W. Norton & Company.

Feigenbaum, Edward A. 2001. Herbert A. Simon, 1916-2001. Science . 291 (5511): 2107.

Gollier, Christian. 2001. The Economics of Risk and Time . Cambridge, MA: MIT Press.

Heuer, Richards J., 1999. The Psychology of Intelligence Analysis. Jr. Langley, VA: Central Intelligence Agency. https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/books-and-monographs/psychology-of-intelligence-analysis/PsychofIntelNew.pdf . Accessed 05 Jul 2019.

Hogarth, Robin M. 1980. Judgement and Choice: The Psychology of Decision . Hoboken, NJ: John Wiley & Sons.

Hubbard, Douglas W. 2007. How to Measure Anything: Finding the Value of Intangibles in Business . Hoboken, NJ: John H Wiley and Sons.

Kahneman, Daniel. 2011. Thinking Fast and Slow . New York: Farrar, Strauss & Giroux.

Klein, Gary A. 1998. Sources of Power: How People Make Decisions. Cambridge, MA: MIT Press.

Krippendorff, Kaihan. 2011. Outthink the Competition : How a New Generation of Strategists Sees Options Others Ignore. Hoboken, NJ: John Wiley and Sons.

Levin, Jonathan and Paul Milgrom. 2004. Introduction to Choice Theory. Available at https://web.stanford.edu/~jdlevin/Econ%20202/Choice%20Theory.pdf . Accessed 05 Jul 2019.

Lo, Andrew W. 2017. Adaptive Markets. Financial Evolution at the Speed of Thought . Princeton: Princeton University Press.

Miller, George A. 1955. The Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information. Psychology Review. 101(2): 343-352.

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Zsambok, Caroline E. and Gary Klein (Eds). 1997. Naturalistic Decision Making . New York: Lawrence Erlbaum Associations, Inc.

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Adler, R.M. (2020). Rational Decision-Making. In: Bending the Law of Unintended Consequences. Springer, Cham. https://doi.org/10.1007/978-3-030-32714-9_5

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7.2 Decision-making Models

Decision-making models.

In this section, we are going to discuss different decision-making models designed to understand and evaluate the effectiveness of nonprogrammed decisions. We will cover four decision-making approaches, starting with the rational decision-making model, moving to the bounded rationality decision-making model, the intuitive decision-making model, and ending with the creative decision-making model. The importance of making good decisions relates to our ability to manage our emotional intelligence to make sure we make the right decisions. These models will help us make better decisions, which results in better human relations.

In this Section:

• Rational Decision-making
• Bounded Rationality

Intuitive Decision-making

Creative decision-making, rational decision-making.

The rational decision-making model describes a series of steps that decision makers should consider if their goal is to maximize the quality of their outcomes. In other words, if you want to make sure that you make the best choice, going through the formal steps of the rational decision-making model may make sense.

Let’s Focus: Rational Decision-making Model

Buying your first car.

Let’s imagine that your old, clunky car has broken down, and you have enough money saved for a substantial down payment on a new car. It will be the first major purchase of your life, and you want to make the right choice.

The first step, therefore, has already been completed—we know that you want to buy a new car. Next, in step 2, you’ll need to decide which factors are important to you. How many passengers do you want to accommodate? How important is fuel economy to you? Is safety a major concern? You only have a certain amount of money saved, and you don’t want to take on too much debt, so price range is an important factor as well. If you know you want to have room for at least five adults, get at least twenty miles per gallon, drive a car with a strong safety rating, not spend more than $22,000 on the purchase, and like how it looks, you have identified the decision criteria . All the potential options for purchasing your car will be evaluated against these criteria.

Before we can move too much further, you need to decide how important each factor is to your decision in step 3. If each is equally important, then there is no need to weigh them, but if you know that price and mpg are key factors, you might weigh them heavily and keep the other criteria with medium importance. Step 4 requires you to generate all alternatives  about your options. Then, in step 5, you need to use this information to evaluate each alternative against the criteria you have established. You choose the best alternative (step 6), and then you would go out and buy your new car (step 7).

Of course, the outcome of this decision will influence the next decision made. That is where step 8 comes in. For example, if you purchase a car and have nothing but problems with it, you will be less likely to consider the same make and model when purchasing a car the next time.

While decision makers can get off track during any of these steps, research shows that searching for alternatives in the fourth step can be the most challenging and often leads to failure. In fact, one researcher found that no alternative generation occurred in 85 percent of the decisions he studied (Nutt, 1994). Conversely, successful managers know what they want at the outset of the decision-making process, set objectives for others to respond to, carry out an unrestricted search for solutions, get key people to participate, and avoid using their power to push their perspective (Nutt, 1998).

The rational decision-making model has important lessons for decision makers. First, when making a decision, you may want to make sure that you establish your decision criteria before you search for alternatives. This would prevent you from liking one option too much and setting your criteria accordingly. For example, let’s say you started browsing cars online before you generated your decision criteria. You may come across a car that you feel reflects your sense of style and you develop an emotional bond with the car. Then, because of your love for the particular car, you may say to yourself that the fuel economy of the car and the innovative braking system are the most important criteria. After purchasing it, you may realize that the car is too small for your friends to ride in the back seat, which was something you should have thought about. Setting criteria before you search for alternatives may prevent you from making such mistakes. Another advantage of the rational model is that it urges decision makers to generate all alternatives instead of only a few. By generating a large number of alternatives that cover a wide range of possibilities, you are unlikely to make a more effective decision that does not require sacrificing one criterion for the sake of another.

Despite all its benefits, you may have noticed that this decision-making model involves a number of unrealistic assumptions as well. It assumes that people completely understand the decision to be made, that they know all their available choices, that they have no perceptual biases, and that they want to make optimal decisions. Nobel Prize–winning economist Herbert Simon observed that while the rational decision-making model may be a helpful device in aiding decision makers when working through problems, it doesn’t represent how decisions are frequently made within organizations. In fact, Simon argued that it didn’t even come close.

Think about how you make important decisions in your life. It is likely that you rarely sit down and complete all eight of the steps in the rational decision-making model. For example, this model proposed that we should search for all possible alternatives before making a decision, but that process is time consuming, and individuals are often under time pressure to make decisions. Moreover, even if we had access to all the information that was available, it could be challenging to compare the pros and cons of each alternative and rank them according to our preferences. Anyone who has recently purchased a new laptop computer or cell phone can attest to the challenge of sorting through the different strengths and limitations of each brand and model and arriving at the solution that best meets particular needs. In fact, the availability of too much information can lead to analysis paralysis , in which more and more time is spent on gathering information and thinking about it, but no decisions actually get made. A senior executive at Hewlett-Packard Development Company LP admits that his company suffered from this spiral of analyzing things for too long to the point where data gathering led to “not making decisions, instead of us making decisions (Zell et al., 2007). Moreover, you may not always be interested in reaching an optimal decision. For example, if you are looking to purchase a house, you may be willing and able to invest a great deal of time and energy to find your dream house, but if you are only looking for an apartment to rent for the academic year, you may be willing to take the first one that meets your criteria of being clean, close to campus, and within your price range.

Bounded Rationality: Making “Good Enough” Decisions

The bounded rationality model of decision making recognizes the limitations of our decision-making processes. According to this model, individuals knowingly limit their options to a manageable set and choose the first acceptable alternative without conducting an exhaustive search for alternatives. An important part of the bounded rationality approach is the tendency to satisfice (a term coined by Herbert Simon from satisfy and suffice), which refers to accepting the first alternative that meets your minimum criteria.

For example, many college graduates do not conduct a national or international search for potential job openings. Instead, they focus their search on a limited geographic area, and they tend to accept the first offer in their chosen area, even if it may not be the ideal job situation. Satisficing is similar to rational decision making. The main difference is that rather than choosing the best option and maximizing the potential outcome, the decision maker saves cognitive time and effort by accepting the first alternative that meets the minimum threshold.

The  intuitive decision-making model has emerged as an alternative to other decision making processes. This model refers to arriving at decisions without conscious reasoning. A total of 89 percent of managers surveyed admitted to using intuition to make decisions at least sometimes and 59 percent said they used intuition often (Burke & Miller, 1999). Managers make decisions under challenging circumstances, including time pressures, constraints, a great deal of uncertainty, changing conditions, and highly visible and high-stakes outcomes. Thus, it makes sense that they would not have the time to use the rational decision-making model. Yet when CEOs, financial analysts, and health care workers are asked about the critical decisions they make, seldom do they attribute success to luck. To an outside observer, it may seem like they are making guesses as to the course of action to take, but it turns out that experts systematically make decisions using a different model than was earlier suspected. Research on life-or-death decisions made by fire chiefs, pilots, and nurses finds that experts do not choose among a list of well thought out alternatives. They don’t decide between two or three options and choose the best one. Instead, they consider only one option at a time. The intuitive decision-making model argues that in a given situation, experts making decisions scan the environment for cues to recognize patterns (Breen, 2000; Klein, 2003; Salas & Klein, 2001). Once a pattern is recognized, they can play a potential course of action through to its outcome based on their prior experience. Thanks to training, experience, and knowledge, these decision makers have an idea of how well a given solution may work. If they run through the mental model and find that the solution will not work, they alter the solution before setting it into action. If it still is not deemed a workable solution, it is discarded as an option, and a new idea is tested until a workable solution is found. Once a viable course of action is identified, the decision maker puts the solution into motion. The key point is that only one choice is considered at a time. Novices are not able to make effective decisions this way, because they do not have enough prior experience to draw upon.

In addition to the rational decision making, bounded rationality, and intuitive decision-making models, creative decision making is a vital part of being an effective decision maker. Creativity is the generation of new, imaginative ideas. With the flattening of organizations and intense competition among companies, individuals and organizations are driven to be creative in decisions ranging from cutting costs to generating new ways of doing business. Please note that, while creativity is the first step in the innovation process, creativity and innovation are not the same thing. Innovation begins with creative ideas, but it also involves realistic planning and follow-through. Innovations such as 3M’s Clearview Window Tinting grow out of a creative decision-making process about what may or may not work to solve real-world problems.

The five steps to creative decision making are similar to the previous decision-making models in some keys ways. All the models include problem identification , which is the step in which the need for problem solving becomes apparent. If you do not recognize that you have a problem, it is impossible to solve it. Immersion is the step in which the decision maker consciously thinks about the problem and gathers information. A key to success in creative decision making is having or acquiring expertise in the area being studied. Then, incubation occurs. During incubation, the individual sets the problem aside and does not think about it for a while. At this time, the brain is actually working on the problem unconsciously. Then comes illumination , or the insight moment when the solution to the problem becomes apparent to the person, sometimes when it is least expected. This sudden insight is the “eureka” moment, similar to what happened to the ancient Greek inventor Archimedes, who found a solution to the problem he was working on while taking a bath. Finally, the verification and application stage happens when the decision maker consciously verifies the feasibility of the solution and implements the decision.

Here’s an Example

A NASA scientist describes his decision-making process leading to a creative outcome as follows: He had been trying to figure out a better way to de-ice planes to make the process faster and safer.

After recognizing the problem, he immersed himself in the literature to understand all the options, and he worked on the problem for months trying to figure out a solution. It was not until he was sitting outside a McDonald’s restaurant with his grandchildren that it dawned on him.

The golden arches of the M of the McDonald’s logo inspired his solution—he would design the de-icer as a series of Ms. This represented the illumination stage. After he tested and verified his creative solution, he was done with that problem, except to reflect on the outcome and process.

How do you know if your decision process is creative?

Researchers focus on three factors to evaluate the level of creativity in the decision-making process. Fluency refers to the number of ideas a person is able to generate. Flexibility refers to how different the ideas are from one another. If you are able to generate several distinct solutions to a problem, your decision-making process is high on flexibility.  Originality refers to how unique a person’s ideas are.

Some experts (Amabile, 1999; Amabile et al., 1996; Ford et al., 2000; Tierney et al., 1999; Woodman et al., 1993) have proposed that creativity occurs as an interaction among three factors: people’s personality traits (openness to experience, risk taking), their attributes (expertise, imagination, motivation), and the situational context (encouragement from others, time pressure, physical structures). For example, research shows that individuals who are open to experience, less conscientious, more self-accepting, and more impulsive tend to be more creative (Feist, 1998).

Consider This

Ideas for enhancing creativity in groups.

Some ideas for enhancing creativity in groups include:

Team Composition

• Diversify your team  to give them more inputs to build on and more opportunities to create functional conflict while avoiding personal conflict.
• Change group membership  to stimulate new ideas and new interaction patterns.
• Leaderless teams  can allow teams freedom to create without trying to please anyone up front.

Team Process

• Engage in brainstorming  to generate ideas. Remember to set a high goal for the number of ideas the group should come up with, encourage wild ideas, and take brainwriting breaks.
• Use the nominal group technique (see  Tools and Techniques for Making Better Decisions  below) in person or electronically  to avoid some common group process pitfalls. Consider anonymous feedback as well.
• Use analogies  to envision problems and solutions.
• Challenge teams  so that they are engaged but not overwhelmed.
• Let people decide how to achieve goals  rather than telling them what goals to achieve.
• Support and celebrate creativity  even when it leads to a mistake. Be sure to set up processes to learn from mistakes as well.
• Role model  creative behavior.
• Institute organizational memory  so that individuals do not spend time on routine tasks.
• Build a physical space conducive to creativity  that is playful and humorous—this is a place where ideas can thrive.
• Incorporate creative behavior  into the performance appraisal process.

Sources: Adapted from ideas in Amabile, T. M. (1998). How to kill creativity. Harvard Business Review, 77-87. Gundry, L. K., Kickul, J. R., & Prather, C. W. (1994). Building the creative organization. Organizational Dynamics, 22(4), 22–37. ; Keith, N., & Frese, M. (2008). Effectiveness of error management training: A meta-analysis. Journal of Applied Psychology, 93(1), 59–69.; Pearsall, M. J., Ellis, A. P. J., & Evans, J. M. (2008). Unlocking the effects of gender faultlines on team creativity: Is activation the key? Journal of Applied Psychology, 93(1), 225–234.; Thompson, L. (2003). Improving the creativity of organizational work groups. Academy of Management Executive, 17, 96-109.

Enhancing Creative Decision-making

There are many techniques available that enhance and improve creativity. Linus Pauling (2008), the Nobel Prize winner who popularized the idea that vitamin C could help strengthen the immune system, said, “The best way to have a good idea is to have a lot of ideas.” One popular method of generating ideas is to use brainstorming. Brainstorming is a group process of generating ideas that follow a set of guidelines, including no criticism of ideas during the brainstorming process, the idea that no suggestion is too crazy, and building on other ideas (piggybacking). Research shows that the quantity of ideas actually leads to better idea quality in the end, so setting high idea quotas,  in which the group must reach a set number of ideas before they are done, is recommended to avoid process loss and maximize the effectiveness of brainstorming. Another unique aspect of brainstorming is that since the variety of backgrounds and approaches give the group more to draw upon, the more people are included in the process, the better the decision outcome will be. A variation of brainstorming is wildstorming , in which the group focuses on ideas that are impossible and then imagines what would need to happen to make them possible (Scott et al., 2004).

One example of a creative decision making model is the Edward Debono model. The  Edward Debono’s model of the Six Thinking Hats  provides us with a different way of thinking about the way we make decisions. The six hats provide us with perspectives from six different perspectives. Similar to the rational decision making model discussed earlier, this model uses hats to represent the steps we need to follow in order to make good decisions. For example, the white hat helps us look at the facts of the situation. The red hat helps us look at the emotional aspect of the problem or solution. The black hat helps us to look at the negatives of the solution, while the yellow hat helps us think about the positives of the solution. The green hat allows us to come up with potential solutions or courses of action, while the blue hat helps us manage the process of making the decision.

Let’s Focus  

Andi and the 6 hats: an example.

Consider the opening scenario where Andi is considering which job to accept. If she were using the six hats model, first she would look at the facts—that is, the aspects of each job offer (white hat). Then, she would look at how she feel (red hat) about each job. Next, she would look at the downsides of each job (black hat). Then, she would look at the positives of each job (yellow hat). Next, she would use the green hat to look at the job offers from a creative way and look at potential of choosing one job over another. Finally, the blue hat would cause Andi to make sure she used all hats to make a decision and, based on the data, would go ahead and make the best choice.

Which Model is Best?

Now that we’ve reviewed all four types of models for non-programmed decisions, you may be wondering: which model is best to use when I make a decision? As we’ve learned, each of these models has potential advantages and disadvantages. Figure 7.6 below offers some suggestions as to when each model is helpful based on the time/information available, the importance of the decision, and the clarity of the problem/solutions.

Table 7.2 Which decision-making model should I use?

Let’s review.

• In this section we learned about four models for nonprogrammed decision-making: rational, bounded rationality, intuitive, and creative decision making.
• Each of these can be useful, depending on the circumstances and the problem that needs to be solved.
• Have you used the rational decision-making model to make a decision? What was the context? How well did the model work?
• Share an example of a decision in which you used satisficing. Were you happy with the outcome? Why or why not? When would you be most likely to engage in satisficing?
• Do you think intuition is respected as a decision-making style? Do you think it should be? Why or why not?

This section is adapted from:

Chapter 8: Make Good Decisions   in  Human Relations  by Saylor Academy under a  Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License

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Tierney, P., Farmer, S. M., & Graen, G. B. (1999). An examination of leadership and employee creativity: The relevance of traits and relationships.  Personnel Psychology ,  52 , 591–620.

Woodman, R. W., Sawyer, J. E., & Griffin, R. W. (1993). Toward a theory of organizational creativity.  Academy of Management Review ,  18 , 293–321.

Zell, D. M., Glassman, A. M., & Duron, S. A. (2007). Strategic management in turbulent times: The short and glorious history of accelerated decision making at Hewlett-Packard. Organizational Dynamics ,  36 , 93–104.

Psychology, Communication, and the Canadian Workplace Copyright © 2022 by Laura Westmaas, BA, MSc is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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10 Modeling Problem Solving

We’ve discussed in previous chapters how part of a tutor’s task is to model good learning habits. When tutors are organized, use good time management, and leverage resources, we demonstrate the skills that students can use to be successful learners.

Problem-solving is an additional skill that tutors model for students. An organized and- intentional problem-solving approach helps us to efficiently work through challenges, and many of us effectively problem solve without much thought given to our approach. 1 However, it makes sense to take a step back and do our best to model problem-solving best-practices. Remember that repeated demonstration of a tutor’s problem-solving strategies can help students learn from our example.

We know the tutor’s role is not to solve a student’s problem for them. How do we model good problem-solving, without actually solving the problem ourselves? It’s tricky, but not impossible. We can empower students to work their way through any problem by asking good questions and walking them through the steps of the process.

The Rational Problem-Solving Process

Problem-solving is something many of us have taught ourselves through practice. However, there are many scholars and professionals who have examined and broken down effective problem-solving strategies into a series of logical steps. 2 We can check our own process by reflecting on what has been written about best-practices in problem-solving, and maybe make changes to be more consistent and effective. This can better prepare tutors to guide a student through the process when we apply it in a tutoring session.

Step 1: Define the Problem

It may seem obvious to state that the first step in solving a problem is to notice that we have a problem. Unless we take time to understand precisely what is wrong, however, we may find ourselves creating a solution that doesn’t actually fix anything. It’s very common to dive straight into devising a solution only to find that we’ve solved the wrong problem. Alternatively, we might develop a solution only to discover that the real problem is bigger than we thought.

A good practice for starting out is to try to define the problem in words. By writing or stating a problem definition, we’re challenged to identify the root cause, and this information can guide us in developing effective solutions.

In a tutoring session, sometimes the problem can take a variety of forms. The problem could be:

• the literal problem given in a student’s homework assignment (a word problem in math, or a case study in biology, for example.)
• a lack of clarity in assignment instructions.
• the student not having a strategy for planning a project or starting a paper.
• the student lacking confidence to tackle their homework or study independently

Keep in mind that the form the “problem” takes will change based on the student’s needs and goals. If the problem is that the student doesn’t understand something, the first step is to identify precisely what they don’t understand. If the problem is that something is missing, then understanding exactly what necessary parts are missing is the first step.

In a tutoring session this may mean asking the student to start the process, or begin describing the concept from the beginning, until they reach the point where things become unclear. Together, you can determine where the gaps are, and begin to develop a problem definition.

Step 2: Pull from Existing Knowledge

After we’ve identified and defined the problem, the next step is to ask ourselves what we already know about the situation. Take an inventory. What information do we already have? What can we learn from the context? What resources have we been given?

When working with a student, pulling from existing knowledge might involve reviewing the concepts already covered and the student’s existing knowledge of the course material. It may also mean reaching into material and experiences outside of the student’s course.

Some helpful questions to guide this step include:

• What does the student know about topics related to the course material?
• What experience might the student have from prior courses?
• In what context might the student have heard these ideas discussed in their everyday lives or in popular culture?

When we encourage students to step back and really take account of everything they already know about the problem and its context, they can be surprised at how much knowledge they actually bring.

Step 3: Refer to support materials

Once we’ve pulled from the knowledge we already have, we can expand our search for supporting knowledge to outside resources. Are there reference materials we can access? Are there experts we can consult?

The first thing we can encourage students to do is to refer to their course texts, notes, study guides, and materials provided by the class instructor. These are often the best places to start because they’re most likely to provide relevant information. Once these resources have been referenced, we can also encourage students to look for information and guidance from other academic resources.

Students often forget that they can reference what others have written about their problem. Outside textbooks and supporting texts may offer similar ideas presented in a different way, and this could help the student approach the problem with new understanding or perspective. Online research and reference materials are good places to look for clarification of rules, theories, laws, formulas, processes, and examples. While these sources may not be quite as specific to a student’s class assignment, they can sometimes provide confirmation or clarity in areas where a student might need it.

Students should be made to feel free to leverage other academic supports as well. They are already leveraging one aspect of this support when they come to see a tutor. Other supports may include making use of the library or computer center, visiting their instructor’s office hours to ask questions, or even reaching out to other classmates. It’s always helpful for tutors to remind the student that these other supports are available and to encourage them to use these resources.

If a student is unsure or intimidated by contacting an instructor or a classmate, or is uncomfortable learning how to use other support resources, encouragement from a tutor can often be the nudge a student needs. Remind them of these supports and offer to help them access them where appropriate.

Step 4: Brainstorm Solutions

There’s usually more than one way to solve a problem, and it’s helpful to brainstorm multiple solutions to find the one that works best.

It’s important that tutors allow students to take an active role in developing their own solutions to the problem. This is where our Socratic questioning skills become really crucial and can help the students to apply what they know to the problem they’ve identified. The tutor’s role here is to facilitate the solution-generating process, contributing where appropriate, and helping to guide the student in a productive direction.

It is possible that the student will suggest a solution that we know will not solve the problem. Depending on the nature and scale of the problem, it may not always be appropriate for us to tell the student that we think it won’t work. Guiding the student through the problem-solving process is about helping students to engage with the process itself. That way, they can feel confident applying it on their own, even when a helpful tutor isn’t around to give hints. It’s up to each tutor in each situation to decide when it is appropriate to expedite the process by providing insights into solutions, and when it is best to allow students to test their solutions to determine their effectiveness.

Step 5: Test a Solution

Choose a solution and try it out. Maybe it will work! Maybe it doesn’t. Having a variety of solutions to try is why we brainstorm more than one. Though trial and error can sometimes feel frustrating, it is in the testing of our solutions that we often learn the most. We’re able to better understand the parts that work, the parts that don’t, and hopefully learn the reasons why. This can result in solutions that are more efficient and better suited to our needs.

Solution-testing is an opportunity for students to learn from mistakes in a safe, low-risk way. Often mistakes in class result in deducted points, a bad grade, or maybe an embarrassing moment in from t of classmates. As a guide through the problem-solving process, tutors can help students to see mistakes as necessary and helpful steps on the way to a solution that works, rather than as failures. It’s important that the tutor help the student see mistakes as progress, especially when a student becomes discouraged. This helps the student maintain a growth mindset while identifying ways to improve.

Step 6: Revising the Solution

When a solution doesn’t work, it may not mean the whole idea was bad. Maybe it needs some revisions and refining, but doesn’t always need to be discarded. We can use what we learned from solution-testing to make effective revisions.

This may mean we guide a student back to previous steps in the problem-solving process. Students may once more need to pull from existing knowledge, revisit those support materials, or look at some of the alternative solutions that the student developed.

Step 7: Revisit the Problem

We’ve got a solution that works! Did it fix our problem? If yes, then great!

Sometimes, however, a solution may “work,” without fixing our problem.

When this happens, we need to revisit the problem definition. Do we really understand it? Is there a detail we didn’t consider when developing our solutions? Did we misinterpret what the problem actually is when we crafted our problem definition?

At this point, perhaps we need to revise the solution once more. Sometimes in our process of researching and brainstorming, we can get off course, and taking time to refer to the initial problem can help us recalibrate our efforts and get us back on track.

Other times we may need re-define our problem. Perhaps after developing and testing several solutions, it becomes clear that the real problem is different than what we initially thought it was. Or perhaps our solutions address parts of the problem, but don’t get to the deeper root of the issue.

When a student has worked through the problem-solving process and still feels stuck, tutors can guide them to revisit the problem and clarify the initial goal. Returning to previous steps of the process as needed is normal and often necessary. Ensuring students that they’re still correctly applying the process, even when they need to jump back and forth between these steps, can help keep them from getting discouraged.

Quickwrite Exercise

Think back to a time you solved a problem in the past. It could be an obstacle you encountered in an academic setting (completing an assignment, researching for a paper, troubleshooting a technical problem) or in your personal life.

Take a moment to reflect:

• Did you use pieces of the rational problem solving process, without knowing?
• If you could go back and approach the problem again, how would you implement this problem solving approach? What would it look like? How would it have been different?

Facilitating the Problem-Solving Process

The rational problem-solving process is an excellent tool to help tutors guide students through problems big and small. This organized way of approaching the task can help us make sure we’re heading in a productive direction, from solving a math problem to developing a strategy to finish a research paper. How do we ensure we’re empowering students to use this process on their own?

It can be helpful to both tutors and students to use the process as a checklist during a problem-solving session. We can name each step as we move through, and make it clear to the student the purpose of each activity. This doesn’t mean we turn a session of math tutoring into a lesson on the problem-solving process, but explicitly stating the names of each step can make it clear to the student the purpose of each activity, and help them to become familiar with the process. If we “narrate” our process as we go, students can experience a guided problem-solving process during their tutoring session and be encouraged to apply it independently.

Once we’ve guided a student through the process, we can then provide opportunities for the student to take charge. We can prompt the student to move from step to step, supporting them in their problem-solving efforts along the way. This guided practice can help students to become well-versed in the process itself, and to feel more comfortable applying it independently. 3

Something to Try

In your next session, when a student comes to you with a problem, use your Socratic questioning skills to walk the student through the problem solving process. (This may be something you’re already implementing naturally!)

Be deliberate about each step. Assist the student in defining the problem, guide the student to collect their existing knowledge, help the student pull from reference materials available, etc.

How does it work for you?

Practicing the Problem-Solving Process

Don’t forget, that while this process is an excellent tool for helping students to solve problems during a session, it can also help tutors to problem-solve during a session!

Perhaps you encounter a student faced with a problem you yourself don’t know how to solve. No worries! The problem-solving process works just the same.

We can apply it to challenges with assignments, and we can also apply it to other issues we encounter during a tutoring session. Every student is unique, and it may take some problem-solving to learn how to best work with each student. Identifying the “problem,” pulling from our knowledge, consulting our supports, brainstorming, and testing solutions are all ways tutors can determine how best to assist students.

• Dane, E., Baer, M., Pratt, M. G., and Oldham, G. R. (2011). Rational versus intuitive problem solving: How thinking “off the beaten path” can stimulate creativity. Psychology of Aesthetics, Creativity, and the Arts.  5 (1), 3–12.  https://doi.org/10.1037/a0017698.
• Uzonwanne F.C. (2016). Rational Model of Decision Making. In: Farazmand A. (eds) Global Encyclopedia of Public Administration, Public Policy, and Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-31816-5_2474-1.
• Klegeris, A., Bahniwal, M., and Hurren, H. (2017). Improvement in Generic Problem-Solving Abilities of Students by Use of Tutor-less Problem-Based Learning in a Large Classroom Setting. Life Sciences Education. 12(1), 1-116. https://doi.org/10.1187/cbe.12-06-0081.

Additional Resources:

McNamera, C. (2020). Problem Solving and Decision Making (Solving Problems and Making Decisions). Free Management Library. Authenticity Consulting LLC. https://managementhelp.org/personalproductivity/problem-solving.htm . Accessed 26 Apr. 2021.

Nezu C., Palmatier, A., and Nezu, A. (2004). Social Problem-Solving Training for Caregivers. In Chang, D’Zurilla, & Sanna (Eds.) Social Problem Solving: Theory, Research, and Training. (223-238). American Psychological Association. https://doi.org/10.1037/10805-013 .

Nezu, A., Nezu, C., and D’Zurilla, T. (2007). Solving Life’s problems: a 5 Step Guide to Enhanced Well-Being. Springer Publishing Company LLC. https://www.springerpub.com/solving-life-s-problems-9780826114891.html .

Scott, G. M., Lonergan, D. C., and Mumford, M.D. (2010).  Conceptual Combination: Alternative Knowledge Structures, Alternative Heuristics. Creativity Research Journal. 17(1), 79-98. https://www.tandfonline.com/doi/abs/10.1207/s15326934crj1701_7 .

Tutor Handbook Copyright © 2021 by Penny Feltner and gapinski is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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BUS401: Management Leadership

Problems with the rational decision-making model.

Compare and contrast Prospect Theory and Bounded Rationality. In your journal, discuss which theory you believe to be more valid and why.

Critics of the rational model argue that it makes unrealistic assumptions in order to simplify possible choices and predictions.

LEARNING OBJECTIVE

Summarize the inherent flaws and arguments against the rational model of decision-making within a business context

• Critics of the rational decision-making model say that the model makes unrealistic assumptions, particularly about the amount of information available and an individual's ability to processes this information when making decisions.
• Bounded rationality is the idea that an individual's ability to act rationally is constrained by the information they have, the cognitive limitations of their minds, and the finite amount of time and resources they have to make a decision.
• Because decision-makers lack the ability and resources to arrive at optimal solutions, they often seek a satisfactory solution rather than the optimal one.

A framework for understanding and often formally modeling social and economic behavior.

The idea that decision-making is limited by the information available, the decision-maker's cognitive limitations, and the finite amount of time available to make a decision.

One who seeks a satisfactory solution rather than an optimal one.

Critiques of the Rational Model

Critics of rational choice theory – or the rational model of decision-making – claim that this model makes unrealistic and oversimplified assumptions. Their objections to the rational model include:

• People rarely have full (or perfect) information. For example, the information might not be available, the person might not be able to access it, or it might take too much time or too many resources to acquire. More complex models rely on probability in order to describe outcomes rather than the assumption that a person will always know all outcomes.
• Individual rationality is limited by their ability to conduct analysis and think through competing alternatives. The more complex a decision, the greater the limits are to making completely rational choices.
• Rather than always seeking to optimize benefits while minimizing costs, people are often willing to choose an acceptable option rather than the optimal one. This is especially true when it is difficult to precisely measure and assess factors among the selection criteria.

Alternative Theories of Decision-Making

Prospect theory.

Alternative theories of how people make decisions include Amos Tversky's and Daniel Kahneman's prospect theory. Prospect theory reflects the empirical finding that, contrary to rational choice theory, people fear losses more than they value gains, so they weigh the probabilities of negative outcomes more heavily than their actual potential cost. For instance, Tversky's and Kahneman's studies suggest that people would rather accept a deal that offers a 50% probability of gaining $2 over one that has a 50% probability of losing $1.

Bounded Rationality

Other researchers in the field of behavioral economics have also tried to explain why human behavior often goes against pure economic rationality. The theory of bounded rationality holds that an individual's rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. This theory was proposed by Herbert A. Simon as a more holistic way of understanding decision-making. Bounded rationality shares the view that decision-making is a fully rational process; however, it adds the condition that people act on the basis of limited information. Because decision-makers lack the ability and resources to arrive at the optimal solution, they instead apply their rationality to a set of choices that have already been narrowed down by the absence of complete information and resources.