Complexity of Decision Making

Definition

Organizational decision-making theory must be differentiated from rational choice theory. The essence of rational choice models resides in the assumption that individuals make decisions on a voluntary basis. Individual decision makers are antecedent to groups, and thus the only independent, self-interested, rational calculative actors, who maximize utility based on one stable set of rank order preferences to maximize their rewards and limit their costs. They have full information and behave independently of others and their own previous decisions, without constraints. If these conditions are satisfied, these “rational” choices yield a Pareto-like optimality equilibrium in which no one can do better without making someone else worse off. Social action is a zero-sum game. Individual decision making makes organizational functioning rational.

Organizational decision-making theory is a group activity; is collectively oriented, that is, selfand otheroriented; and is based on limited awareness, limited information, and bounded rationality and as such exhibits great complexity. As opposed to a set of underlying assumptions, as is found in rational choice theory, organizational decision-making theory began as a set of nonlinear, interrelated processes that consist of (1) canvassing a wide range of courses of action; (2) surveying the full range of objectives to be fulfilled and the value implication of each; (3) carefully weighing what is known about the costs and benefits of negative consequences as well as positive consequences of each decision; (4) intensively searching for new information relevant to further evaluation of the alternatives; (5) correctly assimilating and considering any new information or expert judgment to which they are exposed, even if the information and judgment do not support the course of action initially preferred by the most powerful members of the group or organization; (6) reexamining the positive and negative consequences of all known alternatives for various stakeholders; and (7) making detailed provisions for implementing or executing the chosen course of action, with special attention to required contingency plans if various known risks were to become manifest. See Janis and Mann for similar lists of processes and further explanations of these processes.

These steps in the decision-making process are descriptive of how decision makers arrive at reasoned choices out of alternative options. These models assume that decision-making theories deal exclusively with the process of decision making and not with the establishment of goals. They had become well established by 1970, when they were extended by a wide array of organizational scholars from multiple disciplines. These processes are not carried out by a single person, or even a single entity within the organization. Furthermore, the steps do not constitute a single linear process. Wilson, Pettigrew, Bacharach, and Lawler have added power, politics, and conflict to these processes.

...