Decision Making Vocab

Decision mode

Role of decider in relation to decision, e.g., professional.

Discrete possibilities

Take on only a limited number of values

Innovate

1. To use a new, not necessarily better, way of responding to aims or objectives.

Warrant

A basis for drawing a conclusion, such as statistical significance, mathematical proof, or agreement among experts.

Tough decisions

A class of decisions plagued by ambiguity, conflict, and uncertainty.

Setting

A possibility that affects an option consequence but is not itself a consequence.

Option

A possible action to be chosen by decision-maker, alternative, deal.

Personal decision

A private decision involving decision-maker's own action, e.g., whom to marry.

Scenario

A prospect comprising a sequence of events.

Criteria weight

A quantitative value that specifies the relative important criteria.

Availability heuristic

A rule of thumb that is used to acquire information in which easily accessible information is treated as diagnostic.

Schema

A systematic program of action to attain an objective that is often unspoken and applied intuitively.

Formal simulation

A tactic used to promote learning by creating hypothetical decision situations. Decision makers consider hypothetical decisions and make choices that are correlated to the cues (criteria) buried in them to extract values and determine consistency in the use of information.

Optimal Production Function

A technical relationship identifying the maximum output or combination of outputs (products) capable of being produced by a specified input or combinations of inputs (factors of production).

Emotional inoculation

A technique used to reduce stakeholders' fears about decision outcomes over which they have no control.

Frame

A window that focuses attention on what a decision is about, thereby providing direction to subsequent steps in a decision-making process.

Concept

A word or group of words that summarizes or classifies certain facts, events or ideas into one category. Concepts are labels or categories, or selected properties of objects. They are the bricks from which theories are constructed. Theories are constructed by linking concepts representing different attributes or belonging to different classes and by developing sets of interrelated statements concerning the relationship(s) between such concepts.

Inside organizational act

Action within organization, e.g., designing a purchasing procedure, i.e., internal org act. It is the opposite of outside act.

Active Listening

Active listening is a way of listening that focuses entirely on what the other person is saying and confirms understanding of both the content of the message and the emotions and feelings underlying the message to ensure that understanding is accurate.

Realistic assumption

Actual (not arbitrary) position.

Rational

Advances decision-maker's welfare effectively, based on all decision-maker's knowledge and judgments, constrained to be globally coherent.

Conditioning possibility

Affects uncertainty about another possibility, e.g. contributor.

Risk penalty

Amount by which average utility is to be reduced to account for risk, to produce a certain equivalent.

Present equivalent

An amount received now as a judgmental equivalent to future amount, e.g., stream of money, present value.

Descriptive analysis

Answers to the questions similar to: What is; how the real world works?

Attribute

Any property, descriptive or prescriptive, of possibility distinction.

Rating scale

Artificially constructed, e.g., 0 to 100, for an attribute that has no natural metric

Strategic Decision-making

As different from programmed, routine decisions, strategic decisions tend to be relatively infrequent, not repetitive, involve the commitment of considerable resources (capital), and have long-time horizons with significant levels of uncertainty.

Cost-benefit Analysis

Assesses whether the cost of an intervention is worth the benefit by measuring both in the same units; monetary units are usually used.

Equivalent substitute

Assessor is judgmentally indifferent between them, to equate.

LaPlace decision rule

Assume nothing about the likelihood of future conditions, making the valuation of alternatives an average of the payoffs under each future condition (also called the uncertainty rule).

Incremental commitment

At least partially reversible option.

Contributor

Attribute of interest because it influences some criterion but is not itself a criterion.

Prior judgment

Before some specified evidence is learned.

Optimal option

Best, highest utility.

Choice Fork

Branches are options, i.e., act fork.

Gamble

Choice with uncertain outcomes.

Representational decisions

Choices for which there is a rich informational base and an accepted way to manipulate the data.

Casual Dependence

Co-variation where direction matters to determine the influence.

Action

Committing resources, usually following a choice.

Comparative statics

Comparative statics is the process of changing the value of a variable in a model, in order to see its individual impacts on a value function or outcome of the decision.

Problem situations

Concerns that specify what a decision is about, including background information that depicts its origins and the motivations of stakeholders.

Complete model

Covers all relevant considerations comprehensively, implicitly or explicitly.

Valuation information

Criteria, such as cost or profit, used to determine the merit of alternatives so that those with the greatest merit can be selected.

Criterion score

Criterion or attribute, (e.g., impact, value; to assign a score.

Private mode

Decision in private life, personal or civic, i.e., nonprofessional.

Comprehensive coherence

Decision maker judgments are logically consistent; he/she is fully rational.

Individual learning

Decision makers' gaining of insight as they reflect on decision outcomes as missed opportunities.

Optimize

Decision strategy to seek optimal option. The decision strategy of choosing the alternative that gives the best or optimal overall value.

Qualitative information

Descriptions of the basic nature of a decision according to features that characterize sentiments of key stakeholders, winner and losers for particular options, problem definitions, and so on, expressed as criteria weights and likelihood of future conditions.

Elicitor

Determines someone else's judgment, e.g., of uncertainty or preference.

Actor learning

Determining the accuracy of information offered by experts in a decision process, such as the likelihood of a future condition (interest rates), and forming by what has been obtained by the typical experts.

Impact

Difference in value, criterion score or contributor value, due to exercising an option, i.e., compared with null option.

Partitioned utility

Disaggregated into additive components.

Conflict

Disagreement among people with different interests, views, or agendas, causing emotional disturbance and stress.

Learning

Discovering pitfalls to avoid in future decisions and ways to avoid these pitfalls.

Probability tree

Displays unconditional and conditional probabilities of covarying possibilities.

Outcomes

Distinct events due to action; a special case of consequences.

Redundancy

Double-counting.

Uncertainty

Doubt about the magnitude of key future conditions, such as the level of demand, interest rates, or inflation.

Set of possibilities vs. a possibility

E.g., white color is a se of possibilities; red is a possibility within that set.

Additive Component

Elements of a quantity, e.g. utility partitioned into additive criteria.

Emotions

Emotions are psychological feelings that people have that usually result from--and contribute to--a conflict. Examples are anger, shame, fear, distrust, and a sense of powerlessness. If emotions are effectively managed, they can become a resource for effective conflict resolution. If they are not effectively managed, however, they can intensify a conflict, heightening tensions and making the situation more difficult to resolve.

Objective estimates

Estimates of quantitative information obtained by traditional means, such as accounting systems for costs.

Multitier evaluation model

Evaluating choice or uncertainty at different tiers of model

Personal decision analysis

Evaluating options by quantifying decision-maker judgments, based on statistical decision theory, i.e., Bayesian statistics.

Factual judgment assessment

Evaluation, probabilistic or deterministic, of a possibility.

Indicative (of possibility)

Evidence supports truth of a possibility, i.e., a diagnostic.

Rationale

Explanation of reasons for an input.

Disaggregated utility/uncertainty

Expressed as some function of multiple criteria scores/probabilities.

Decomposition

Expressing a quantity in terms of other quantities, e.g., net benefit = gross benefit - cost, whence decomposed (quantity) assessment.

External/Reality check

External to model, based on observed real world, external validation.

Fact-based disputes

Fact-based disputes are disputes about what has occurred or is occurring. Such disputes can be generated from misunderstandings or inaccurate rumors (when someone is accused of doing something they did not actually do). Facts-based disputes can also be generated by differing perceptions or judgments about what has occurred or is now occurring.

Future conditions

Factors beyond the decision maker's control that influence the payoffs associated with alternatives, such as the demand for a product (also called states of nature or states).

Bad decisions

Failures to deal with foreseeable events and cope with behavioral factors that inhibit and mislead decision makers, whether the outcome is favorable or unfavorable.

Dominance decision rule

Find an alternative that is better or worse than all other alternatives, no matter what future conditions arise.

Prospect

Future possibility.

Conditional probability

Given some specified possibility based on knowledge of other events.

Stakeholders

Groups that have a share or interest in a decision and its outcome, or that are impacted by a decision, even if they are not part of the decision making process. That is, people who have legitimate interests or stakes in the decision.

Clairvoyance

Having perfect information, e.g., the insider.

Binary

Having two possibilities.

Decision aid

Help with decision-maker by providing some insight to the decision problem.

Good/bad anchors

Hi/lo anchors for utility rating scale, e.g., 100, and zero, ends of rating scale.

Diagnostic judgment

How strongly a piece of evidence indicates that a possibility is true.

Ethical consideration

Identification of actions that seem acceptable according to organizational standards and modes of conduct but that would be unacceptable or questionable according to personal standards and personal modes of conduct.

Knowledge enriched assessment

Improved by new knowledge.

Organizational learning

Improving the capacity of the organization to make good decisions, neutralizing coverups by removing the incentives for decision makers in the organization to offer only good news.

Decision making Terms and Phrases

In a field such as decision analysis, where precision of communication is critical, it is important to use consistent terms for related but distinct concepts. Language in this field is still evolving and professional decision analyst practice varies.

Interest-Based Problem Solving

Interest-based problem solving defines problems in terms of interests and works to reconcile the interests to obtain a mutually-satisfactory solution.

Background knowledge

In addition to any specified recent knowledge. The knowledge you already possessed when you entered the situation

Uncertainties

In decision theory and statistics, a precise distinction is made between a situation of risk and one of certainty. There is an uncontrollable random event inherent in both of these situations. The distinction is that in a risky situation the uncontrollable random event comes from a known probability distribution, whereas in an uncertain situation the probability distribution is unknown.

Utility

In economics, utility means the real or fancied ability of a good or service to satisfy a human want. An associated term is welfare function (synonym: utility function--not to be confused with utility function in decision theory; see below), which relates the utility derived by an individual or group to the goods and services that it consumes. Marginal utility is the change in utility due to a one unit change in the quantity of a good or service consumed.

Feedback

Information gleaned about a decision after its outcome has been observed.

Order effect

Information received early in a decision process is given more weight than information received later in the process.

Evidence

Information relevant to assessing a possibility.

Empirical decisions

Information-poor decisions that have an accepted way to generate and analyze information for decision-making purposes.

Constituent

Interested party on whose behalf decision-maker is expected to act, stakeholder.

Feasibility Study

It is a study of the technical and economic prospects for developing a system prior to actually committing resources to actually developing it.

Assessor

Judger of a factual possibility based on empirical frequency function.

Personal Probability

Judger's uncertainty, expressed as a number, 0 to 1, i.e., the frequency function.

Enhancement

Judgment made more rational.

Knowledge

Knowledge refers to what one knows and understands. Knowledge is sometimes categorized as unstructured, structured, explicit or tacit. What we know we know is explicit knowledge. Knowledge that is unstructured and understood, but not clearly expressed is implicit knowledge. If the knowledge is organized and easy to share then it is called structured knowledge. To convert implicit knowledge into explicit knowledge, it must be extracted and formatted.

Action learning

Learning focused on outcomes and the future conditions that should have been foreseeable and that produced these outcomes.

Linear programming

Linear programming is a mathematical procedure (it has nothing to do with computer programming languages) that is implemented with computers so that systems of linear equations can be solved to determine the optimal values of variables that affect a value function. This technique is often used in business for solving problems as varied as workforce scheduling, production planning and input selection, loan portfolio funding, gasoline blend mixing, advertising targeting, and many other problems where the allocation of scarce resources is an important consideration.

Professional decision

Made in a professional capacity (e.g., as manager).

Judger

Makes a judgment.

Model

Mathematical function equated to, or approximating, some entity, e.g., option utility as a function of probabilities and component utilities.

Implementing choice

Narrow variant of a broader choice.

Surrogate metric

Numerical natural substitute for a nonnatural measure.

Coherent

Obeys logical rules of consistency.

Target judgment

Objective of the enquiry.

Definitive Choice

Once-and-for-all irreversible action- not incremental.

Prospective decision

One not to be made now, but possibly later. It is the opposite of current.

Option base

One option, e.g., null option is base.

Current decision

One to be made now, before learning anything new.

Judgment

Personal assessment or other evaluation.

Prescriptive

Prescribes action that should be taken.

Selective perspective

Recognition of information only when it is consistent with the decision maker's inclinations or prejudices, a tendency that often leads the decision maker to ignore all other information.

Path dependency

Reference to effects of past commitments or acquired knowledge on subsequent actions and decisions. Recognizing that "history matters" for a future course of action or development, such past commitments or learning activities could entail previous investments, e.g. in transaction-specific assets, contracts, research & development, or the pool of usually locally, learned behaviors and organizational routines which constrain, including spatially future activities.

Human agency

Reference to the independent decision-making intentions, opportunities, capabilities and activities of human beings.

Welfare

Satisfaction, happiness, good.

Choice

Selecting among identified options, a phase of the decision process.

Analysis

Separating or breaking up the component parts needed to value alternatives so that estimates for each component can be made and their effects combined.

Holistic characterization

Single description of total possibilities.

Limited coherence

Some of assessor's judgments are shown logically to be consistant.

Assumptions

Suppositions about values for key factors in a decision process, such as future conditions, that are taken for granted unless subjected to sensitivity analysis.

Input judgment

Term to be supplied in a model or inference procedure, from which output is calculated.

Value

The determination of how much something is worth. If the item being valued is publicly traded, value can be observed in the market. For most real assets, it is not the case and we need to apply valuation techniques to impute a value.

Anchor effect

The failure to make adjustments after the initial estimate has been proved incorrect. This resistance is greater when the initial estimate was very high or very low.

Decentralized Decision-Making

The locus of decision-making is decentralized to the extent to which there are multiple decision-makers involved with their own goals and objectives (utility function) and to the extent to which they follow their own expectations about the developments in the environment including the activities of other actors and competitors.

"What-if" questioning

The logical inquiry applied to examine assumptions about key factors, such as product demand or level of risk inherent in seemingly viable alternatives.

Preventive Strategies for Bad Decisions

Tough decisions can become bad decisions when ambiguity, uncertainty, and conflict are ignored, treated superficially, or assumed away during decision making.

Optimism Decision Rule

Using a maximum rule to find the best payoff for the most likely future conditions or the best payoff regardless of future conditions.

Regret decision rule

Using a minmax rule to find alternatives with the greatest "lost/gain" if not adopted and select the alternative that best manages the postdecisional regret of missed opportunity.

Importance-weighted criteria evaluation

Utility of options = (approximately) sum of criteria scores times importance weights, linear additive multi-attribute utility.

Internal check

Validation internal to model, e.g., by test of technical soundness, science, or logical coherence.

Expected-value decision rule

Value alternatives by weighting payoffs according to the relative importance of criteria and the likelihood of all future conditions. This is the only decision rule that incorporates what can be determined about uncertainty and applies compensatory logic.

Aiding method

Variant of a decision tool.

Missed opportunities

Ways of responding to core problems that were overlooked or rejected during a decision process.

Causality

What is the relationship between variables? Causes make their effects happen. That is more than, and different from, mere association. But it need not be one single different thing. One factor can contribute to the production or prevention if another in a great variety of ways. There are standing conditions, auxiliary conditions, precipitating conditions, agents, interventions, contraventions, modifications, contributory factors, enhancements, inhibitions, factors that raise the number of effects and factors that only raise the level, etc.

Pessimism decision rule

When high stakes call for conservative choices, a minimax rule is used to identify future conditions that lead to the worst outcomes and to make choices that avoid these future conditions by selection of the alternative with the best payoff that is left.

Organizational decision analysis

Where the organization is treated as the decider.

Personal Utility

any quantified measure of welfare, satisfaction, happiness, etc, for decision-maker, reflecting decision-maker's preferences

Risk averse

decision-maker dislikes possibility of bad gamble outcome.

Risk neutral

decision-maker is prepared to play the averages.

Preferences

decision-maker's underlying or reported value judgments, tastes.

Null option

do nothing, may be a dummy option.

Probability distribution

probability assigned to all values of a possibility, mass/density function.

Satisfice

settle on the first option satisfactory to decision-maker.

Core problem

the most important and most central problem provoking action, which can be difficult to identify.

Roll back

to analyze a decision tree by progressively replacing judgments by logically equivalent substitutes, fold back.

Dummy option

unrealistic but analytically convenient option.

Assessment Updating

use of Bayes theorem to revise a probability, based on new evidence, i.e., Bayesian updating of prior to obtain the posterior probabilities.

Structured opportunities

Opportunities that are clear because the set of favorable circumstances that can be exploited is known.

Unstructured opportunities

Opportunities that are vague because key events needed to produce favorable outcomes are uncertain.

Optimization

Optimization is an activity that aims at finding the best (i.e., optimal) solution to a problem. For optimization to be meaningful there must be an objective function to be optimized and there must a set of constraints.

Alternatives

Optional courses of action from which a decision maker is expected to choose that are obtained from memory, vendor search, research and development, and the like and provide ways to achieve objectives.

Synergy

More of one criterion increases utility of other, e.g., advertising and sales.

Marginal Cost

The addition to total cost resulting from the addition of the last unit of output, to the total quantity of output.

Marginal analysis

The analytical approach which stresses the importance of the margins of an activity: what happens to the costs, benefits (e.g., utility, profits) or combination of substitutable facets or activities as incremental changes are made to an independent variable e.g. in search of an equilibrium, a maximum, minimum or optimum.

Analytical decision process

The process by which a dominant stakeholder can act as the decision maker by applying steps to explore possibilities, access alternatives, ask "what-if" questions, and reflect in order to learn.

Mixed-mode decision process

The process recommended when unknown or competing factions can be identified as stakeholders. A coalition of stakeholders with aims that correspond to those of the organization is formed to explore possibilities, assess options, ask "what-if" questions, and reflect in order to learn.

Group decision process

The process used when there are many known stakeholders. In this process, a decision group made up of these stakeholders takes steps to explore possibilities, assess options, ask "what-if" questions, and reflect in order to learn.

Criterion domain

The proxy measure selected to capture a criterion, such as a morale survey that is used to measure satisfaction.

Marginal Principle

To maximize net benefits, the strategic or action variable should be increased until MB = MC, i.e. marginal benefits equal marginal costs.

Decision levels

A level corresponds to increases in the complexity of decisions, as assumptions about future conditions become more ambiguous.

Tier

A level in hierarchy.

Planning

A managerial function concerned with making forecasts, formulating outlines of things to do, and identifying methods to accomplish them.

Feeder model

A model whose output corresponds to the input of a core model.

Game theory

A reference to a set of optimal strategies for decisions which involve uncertainty resulting from conflicting objectives of players with interdependent decision situations. Distinction is made between zero-sum and non-zero-sum games. Best known among the strategies is the minimax/maximin solution strategy in a two-person game which, if a saddle point (i.e., or equilibrium) is present, results in each player achieving the best of all possible worst outcomes, or pay-off.

Law of Diminishing Returns

A reference to the law which states that additional inputs of a variable factor of production combined with fixed factors of production will eventually lead to a decreasing marginal output.

Tacit Knowledge

A reference to types of knowledge which cannot be stated explicitly and therefore cannot be easily communicated and transferred. It therefore contrasts with "codified" or "explicit" knowledge. Personal skills are frequently cited as an important example of tacit knowledge.

Function

A relation between two or more variables so that the values of one are dependent on, determined by or correspond to values in the other variables, its arguments; a transformation whose range is uniquely specified by its domain. In algebra and set theory, functions are often called many-to-one mappings or images.

Interdependent Decisions

A series of decisions that are interrelated. A sequential set of decisions are usually interdependent.

Knowledge structure

A set of beliefs formed by experience and assembled as theories or scripts that suggest relationships among people, events, and objects.

Group process

A set of procedures used to manage the activities of a group engaged in decision-making activities, such as identifying problems and uncovering alternatives.

Psychological field

All that is in a person's mind.

Rule of thumb

An approach that is based on experience, not scientific knowledge, and is thought to be useful in carrying out some aspects of decision making.

Arbitrary Assumption

An assignment of value or probability, without reference to its realism, e.g., for analytic convenience.

Flipping probabilities

Deriving one set of discrete probabilities from another set.

Plus-minus tally

Deriving utility of an option as the sum of pluses/minuses for each criterion, without explicitly considering the relative importance of the criteria.

Pure Uncertainty model

Elaborates only uncertainty considerations.

Decision Tree Analysis

It is a method for evaluating how user's make decisions in performing their tasks. Through interviews and observations, a decision tree is created to model options a user must choose among in performing a task. The decision tree may be developed with a domain expert as opposed to a typical user to help optimize decision-making performance. The decision tree is then used as a resource in designing user tasks.

Tree Diagram

It is a visual way of representing hierarchies, commonly used, for instance, for representing organization charts. A tree diagram represents the hierarchy by displaying each object in the hierarchy as a box with lines connecting to its parent and to each of its children.

Structured Decision

It is any standard or repetitive decision situation for which solution techniques are already available. It is also sometimes called routine or programmed decisions. The structural elements in the situation, e.g. alternatives, criteria, environmental conditions, are known, defined and understood.

Judgment-intensive model

Main analytic effort is on assessing model inputs, not structure.

Structure-intensive model

Main analytic effort is on structure, not input.

X-Efficiency / X-Inefficiency

Managers are merely x-efficient due, to (1) selective rationality; (2) individual inadequacies; (3) discretionary effort; (4) pervasive inertia; (5) organizational entropy

Ideal rationality

Perfect analysis of all available knowledge.

Gamble-defined utility

Probability in an equivalent gamble between arbitrary good and bad.

Diagnosticity of evidence of a possibility

Probability of evidence conditioned on that possibility, likelihood.

Covaries

Probability of one possibility varies with the value of another possibility, depends on, relevant to.

Joint probability

Probability that two or more events occur together.

Average Personal Utility

Probability-weighted average personal utility, i.e., subjective expected utility.

Unstructured problems

Problems that are poorly understood because most of their component parts are unknown or contentious.

Structured problems

Problems that are understood because most of their component parts can be identified.

Procedural problems

Procedural problems are problems with decision making procedures. Examples are decisions that are made without considering relevant and important facts, decisions that are made arbitrarily without considering the interests or needs of the affected people, or decisions that are made without following the established and accepted process. Often, procedural problems can intensify and complicate disputes which could be resolved relatively easily if proper procedures were followed.

Decision rule

Procedure that are set in advance, for making a prospective decision, in the event of a specified development.

Tactics

Procedures that specify one or more steps to be taken to deal with a particular stage of the decision process.

Single-pass evaluation

Produces only one evaluation of a given judgment.

Evaluatory

Refers to a judgment of preference.

Symptomatic problems

Signs and signals that suggest superficial concerns and not the underlying issues that are prompting the need to act.

Casual attributes

The assignment of causes to outcomes or events that are observed.

Goal-seeking

The capability of asking what values certain variables must have in order to attain desired goals. It is a tool that uses iterative calculations to find the value required in one parameter in order to achieve a desired outcome.

Objective

An objective is something that a decision maker seeks to accomplish or to obtain by means of his decision. A decision maker should have one objective, while formulating the other objectives as constraints.

Going through the GOO

Analyzing goals, options, and outcomes often in a tabular form.

The following techniques can be used to weight criteria and estimate the likelihood of future conditions

Anchored rating scales, Paired comparisons, Ranked-weight, and Direct assignment.

Hindsight bias

The tendency to treat observed outcomes as if they were more likely than facts would warrant or even as if they were preordained.

Interested party

Their interests are affected by choice.

Musts-and-Wants

There is a conceptual distinction between (e.g. location) requirements which cannot be compromised or substituted (musts) and factors which are open to bargaining or substitution (wants).

Decision theory

Decision theory is a body of knowledge and related analytical techniques of different degrees of formality designed to help a decision maker choose among a set of alternatives in light of their possible consequences. Decision theory can apply to conditions of certainty, risk, or uncertainty. Decision under certainty] means that each alternative leads to one and only one consequence and a choice among alternatives is equivalent to a choice among consequences. In decision under risk each alternative will have one of several possible consequences, and the probability of occurrence for each consequence is known. Therefore, each alternative is associated with a probability distribution, and a choice among probability distributions.

Replacement

Decision tool that bypasses and substitutes for unaided judgment.

Decision Tree and Sequential Decision Making

Decision tree refers to the use of the network-theoretical concept of tree to the uncertainty-related structuring of decision options. A tree is a fully connected network without circuits, i.e. every node is connected to every other node, but only once. A decision tree distinguishes between nodes from which decision options branch off (i.e., decision nodes) and nodes which have branches representing "environmental" options, i.e. environmental states which are associated with alternative decisions ( i.e., chance nodes or, environmental nodes) Every branch eventually leads to a payoff which, together with the environmental branch - specific probability permits the calculation of an expected payoff for each alternative decision and thereby to the selection of decision for action.

Civic decision

Decision-maker takes a private position on a public issue, e.g., government policy.

Sequential decisions

Decisions in which opportunities to purchase clarifying information arise throughout the decision process.

Multicriteria decisions

Decisions in which several outcomes can occur and in which each outcome has a value that must be considered in order to compare the merits of alternatives.

Search decisions

Decisions made in situations that are information-poor and in which there is no obvious or agreed-upon way to formulate the decision to collect and analyze information.

Exogenous

External to the inner workings of a system or model; variables are exogenous to the extent that they are "given" and not the result of the operation of the system, or anything going on in the model itself. It is the opposite of Endogenous.

Adaptation of the Decision Process:

~Most organizations face each of the types of decisions with varying degrees of puzzlement. Decision makers with a repertoire of decision processes, skills or staff support to apply them and guidelines to match decisional tactics to decision types and degrees of puzzlement can improve their decision making practices. When a decision process fits a decision amenable to its procedures, a favorable effect on cost, timeliness, risk of omission, flexibility, acceptance, consistency, and validity should result. ~The mixed-mode decision process is best for search decisions that are very puzzling and involve stakeholders with unknown interests. Wider use of the mixed-mode procedure under these conditions should improve both acceptance and consistency through coalition management. ~The group decision process is recommended for information-rich decisions, moderately puzzling decisions, and decisions involving multiple stakeholders with known interest. When properly managed, groups can be timely, inexpensive, and flexible and can promote acceptance. Reliability, although difficult to achieve in a group setting, may be enhanced when the decision group sponsors analysis that uses a deductive tactic, such as a decision tree. The performance of decision groups should improve when the decision group reconciles evaluation information generated by the analyses that it initiates. ~The analytical decision process is recommended for empirical decisions, decisions with a low degree of puzzlement, and decisions in which there is a single dominant decision maker. Analytical processes stress deduction and help the decision maker identify and organize the activities needed in making tough choices.

Risk

reference to the consequences of uncertainty, such as regret often expressed in terms of probabilities of such consequences uncertainty then reduced to uncertainty about actual occurrence and, possibly, about the reliability of probabilities.

Uncertainty

reference to the lack of knowledge (ignorance) about the state of the environment or other decision variables.

Core model

A coarse model addressing the target evaluation directly.

Model Base

A collection of preprogrammed quantitative models (e.g., statistical, financial, optimization) organized as a single unit.

Decision Support Systems

A computer based system that helps the decision maker utilize data and models to solve unstructured problems.

Inference

A conclusion that is drawn by applying reasoning to available information to arrive at a decision.

Puzzlement

A condition that arises when cues that describe what a decision is about are obscure or vague.

Constraint

A constraint is a mathematical representation in a mathematical programming problem of some situational factors that must be taken into consideration when an attempt is made to optimize a value function with respect to its key variables. For example, when a manager formulates a business plan, she will not be able to spend more money on advertising than the overall budgeted dollar amount for the department allows. There are various kinds of constraints that occur, including policy constraints, financial constraints, physical constraints, ethical constraints and logical constraints, depending on the specifics of the setting that the analyst is modeling.

Criterion

A criterion is a rule or standard by which to rank the alternatives in order of desirability. The use of "criterion" to mean "objective" is incorrect.

Norm

A standard identifying a level of performance that is expected or required.

Goal

A state that decision-maker prefers to be in, e.g., an increase in a positive criterion.

Prototyping

A strategy in system development in which a scaled down system or portion of a system is constructed in a short time, tested, and improved in several iterations. A prototype is an initial version of a system that is quickly developed to test the effectiveness of the overall design being used to solve a particular problem.

Normative

A type of statement that suggests how a decision should be carried out (also called prescriptive).

Variable

A variable or variable number is a unspecified quantity that may assume any one of a set of values ( i.e., the "range" of a variable). Variables can be continuous or discontinuous and dependent and independent.

Rationality

A way of thinking about a decision that stresses political, logical, and ethical means of drawing an inference to make a judgment.

Systems Thinking

A way of thinking about, and a language for describing and understanding, the forces and interrelationships that shape the behavior of systems... helps us to see how to change systems more effectively, and to act more in tune with the larger processes of the natural and economic world.

Decision Maker

A decision maker is a person who makes the final choice among the alternatives.

Satisficing

A decision rule calling for the first alternative that meets preset norms to be adopted.

Theories

A Theory is a systematic explanatory statement comprising a deductively connected set of (inductively/empirically derived) laws or propositions which relate (dependent and independent) variables to each other. Theories are the propositions that describe what one believes to be true about people, object, and event relationships.

Pallid

A characteristic of information that makes it hard to recall because of a lack of personal identity, distance, or abstractness.

Vividness

A characteristic of information that makes it memorable because of its emotional appeal, proximity, or seeming reality.

Prisoners' Dilemma

A decision situation which illustrates the benefits of cooperation or collective action but also the difficulty of arriving at such an outcome. The decision payoffs are structured so that it is individually beneficial not to collaborate (with the fellow prisoner) even though collaboration by both would yield acceptable outcomes (and clearly better than if both defect). Each prisoner feels that she has to defect due to the uncertainty about the "partner's" action.

Behavioral

A description of how decision makers act when making decisions without the aid of normative tactics (also called descriptive).

Learning to learn

A form of learning in which reflection on both process and outcome occurs, leading to a reappraisal of norms and values applied in making decisions and the steps to follow (also called double-loop learning and learning two).

Linear function

A function whose graph is a straight line

Zero sum game

A game in which the payoffs to the players add up to zero, so that a gain for one is necessarily equaled by loss to others. It contrasts with positive sum game. Zero-sum games or situations are situations in which the only way one side can get ahead (or get more of something) is if the other side gets less. This occurs when there is a finite amount of a resource to be distributed, and the together the parties want more than is available. In this situation, no side can get what they want unless the other side gets less than they want. This is also referred to as win-lose situations.

Substitute

A hypothetical entity, model, judgment, treated as if it were another entity

Monte-Carlo simulation

A simulation technique that allows combining various factors with probabilistic outcomes to characterize the distribution of an end result. This is especially useful when the number of factors affecting the outcome is large. It allows modeling of complex problems with relative ease. We use Monte Carlo simulation for solving problems such as demand and capacity forecasting, process optimization and real options analysis

Informal simulation

A technique applied in important and recurring decisions to promote learning by recreating actual decision situations. The parties involved are disguised, and the decision is described with the facts available when the actual decision was rendered. A comparison of the simulated decisions and the original choices in terms of outcomes indicates how well one can do.

Decision analysis

A technique used to explore various facets of a decision, such as consistency or accuracy, the importance of criteria, the influence of extraneous factors, and norms within and among factions to promote insight that leads to learning.

Elimination by aspects

A technique used with multicriteria to speed decision making in short-fuse situations. Many alternatives are ruled out, one at a time, on the basis of criteria norms (for example, budget constraints or user views), thus eliminating all of the alternatives that fail to satisfy these norms.

Coalition

A temporary union or alliance of stakeholders as a decision group to make a particular decision.

Heuristic

A trial-and-error tactic used by a decision maker to speed the process of learning or finding out.

Emulation

Aid that mimics some expert's judgment

Illusion of control

An act of prediction that makes the predicted outcome seem more certain- for example, attributing good outcomes to skill and bad ones to chance, which leads to treating out-of-control situations as if they were under control and to minimal learning about missed opportunities.

Hypothetical judgment

Based on a possibility that has not, or not yet, occurred, e.g., likelihood in statistical theory. It is the opposite of actual judgment.

Actual judgment

Based on what the assessor really knows, it is the opposite of hypothetical judgment.

Rational Decision Behavior

Behavior that is goal-oriented in reaching a decision. Behavior is guided by the consequences likely to result from the selection of a given alternative. A decision maker believes based upon analysis that a chosen alternative will result in achieving one or more desired objectives.

Subjective estimates

Best guesses about factors influenced by chance events, such as the prospects of high demand for a product or high usage for a service, and the relative importance of criteria used to compare alternatives.

Possibility fork

Branches of outcomes, i.e., event fork.

Output judgment

Calculated from a model or inference procedure, including their inputs.

Standard Base

Fixed base corresponding to a normal or average situation.

Formal Models

Formal models are models said from the outset to be such, and built as such. That is they are built knowing that each component is labeled a component, or a process, or a phenomenon or a part, and that the model, when "finished", will perform in a certain way, that is, (a) specific outcome/s is/are anticipated.Such models can be loosely arranged packages of variables (forces, vectors, such as "population," or "agriculture" or "population growth" or "taxes"), with or without quantification. That is, the variable might have a numerical value--or it might not. The easiest to imagine models are those with variables that are both linked and quantified. Such as the following, where population and land each have values and so much labor can be applied to so much land, producing so many yields (food). Add space (more land), time (days, years, centuries), and population growth (as a rate), and you have a very dynamic situation, i.e., lots of different outcomes are possible. Why possible? Because they are dependent, dependent upon which values of which variables are set into the model. The society might grow, might expand beyond its "means" of subsistence, might adopt a new technology, might experience drought, or abundant agro-conditions. Who knows?

Intractable Conflicts

It is used to refer to conflicts that go on for a long time, resisting most (if not all) attempts to resolve them. Typically they involve fundamental value disagreements, high stakes distributional questions, domination issues, and/or denied human needs--all of which are non-negotiable problems. They often involve unavoidable win-lose situations as well.

Deterministic Model

Mathematical models that are constructed for a condition of assumed certainty. The models assume there is only one possible result (which is known) for each alternative course or action.

Natural Metric

Measure of a real quantity, e.g., money.

Quantitative information

Measurements of factors pertinent to decisions, such as costs or questionnaire results that capture sentiments.

Probability

Metric 0-1 obeying certain formal rules (e.g., sum to 1), frequency, chance.

Sufficient model

Minimum of analysis complexity that permit options to be evaluated.

Illusory associations

Misleading connections between signs and conditions they are thought to predict.

Modeling

Modeling is an attempt to represent the bare bones of reality, so that aspects of it can be described, explained, optimized or predicted what the reality is; so that we can predict it. We can use a model to understand how changes in the environment impact the decision problem that a manager faces. The outputs or findings from the modeling process enable an analyst to determine the logical results of decision, and choose an optimal course of action. Similarly, changes in the environment and variables surrounding the decision problem can be studied to determine the effects that they have on the decision problem.

Personalist position

Models human judgment, e.g., to maximize personal average utility.

Multicriteria model

Only addresses conflicting criteria considerations.

Bias

Partiality or prejudice in interpreting information and applying it to a decision situation.

Monetary conversion

Partitioned evaluation, summing money-equivalent components of criteria scores.

Middleman

Person or group dealing with aider on behalf of decision-maker.

Decider

Person responsible for making choice, i.e., committing resources.

Factual possibility

Possible fact, event, quantity, property, proposition.

Culminating prospect

Possible places that an incremental commitment strategy may lead to.

Sole practitioner

Professional decision-maker in "private practice"

Consequences

Prospects due to decision-maker action, they might be any defined outcomes or ill-defined.

Decision aider

Provides decision analyst or other aid to decision-maker.

Influence sketch

Qualitative influence diagram shows casual linkages between choice and utility.

Opportunism

Refers to the suggestion (widely associated with transaction cost analysis) that a decision-maker may unconditionally seek his/her self-interests, and that such behavior cannot necessarily be predicted. This proposition extends the simple self-interest seeking assumption to include "self-interest seeking with guile" thereby making allowance for strategic behavior. For example, strategic manipulation of information or misrepresentation of intentions; false or empty, i.e. self-disbelieved, threats or promises, has profound implications for choosing between alternative contractual relationships. Opportunistic behavior contrasts with stewardship behavior which involves a trust relation in which the word of a party can be taken as his bond.

Preference covariation

Related to value judgments.

Importance weights

Relative importance of criteria, trading off units, i.e., coefficient.

Objectivist position

Relies on data-based analysis rather than on human judgment.

Certain Equivalent

Single quantity, judgmentally equated to a gamble, i.e., certainty equivalent in construction of a utility function.

Probability-weighted average

Sum of all possible outcomes of a gamble times the probability of each, expected value, e-value, and expectation, mean.

Benchmarking

Setting reference points or standards by which behaviors or developments can be measured at a point in time or over time; a practical tool for improving performance by learning from best practices and the processes by which they are achieved.

Group Decision Making

Several tactics can improve the performance of groups. In particular, organizations that stress participation emphasize the formulation and cohesion stages and tend to ignore the process and control stages. This practice reduces the effectiveness of groups. Carefully considering each phase is the key to successful group performance.

Form

Shape or outline as a criterion in decisions, such as the style of a building that gives it a distinctive appearance.

Tree sequence

Single succession of possibilities on a decision or probability tree.

Representative value

Single value substituted for segment of a distribution.

Average value

Sum of possible values times probability, e.g., average personal utility.

Consultant

Someone who assembles information, creates a knowledge base and provides professional advise relating to a decision problem of an individual, group or organization on a volunteer basis or for remuneration.

Informant

Source of judgment to be assessed.

Decision-aiding tool

Specific analytic procedure to aid decision, aide.

Coarse model

Structurally a simpler model.

Approximate equivalent

Substitute close enough to be useful.

Multiple perspectives

Technical, personal, and organization views of a decision that are used to incorporate a balanced view of factors that merit consideration.

Complex model

That has elaborate structure.

Conditioned assessment

That is, "it all depends"

Risk

The chance that a bad outcome will occur, no matter what precautions are taken. Generally defined as the cost/expected value of an unfavorable outcome in decision situation where the probabilities are known. Thus, risk is used to describe the costs associated with the inability to predict exactly, even if you have (what you think are) "precise" probabilities, since any probability that you can expect a favorable outcome up to 99.9..% leaves the (possibly very small) chance that it does not come about.

Information-processing capability

The ability of decision makers to observe, catalogue, and make judgments on the basis of information they observe.

Janusian thinking

The ability to hold multiple views while making a decision. The term comes from the Roman god Janus, who was the patron of beginnings and endings and is usually shown with two faces symbolize the need for multiple views as a decision is made.

Prediction

The act of estimating something before it occurs.

Diagnosis

The action taken by decision makers to determine the underlying factors prompting a decision, using powers of observation and intuition.

Arena

The context in which a decision is made that captures background and motivating information that characterize a decision. Arenas identify contexts that are assumed by decision makers, which may or may not frame a decision in the most opportune manner.

Opportunity Cost

The cost of an activity in terms of foregone or sacrificed next best alternative uses of the assets involved. Can also be formulated as "amount of product B we must give up to produce a unit of product A.

Decision making process

The decision making process is the process that is used to make a decision. It can be an expert process, where the decision is made by one or more "experts" who look at the "facts" and make the decision based on those facts; it can be a political process through which a political representative or body makes the decision based on political considerations, or it might be a judicial process where a judge or a jury makes a decision based on an examination of legal evidence and the law.

Analytical Components of Decision Making:

The decision procedure outlined in this site will help decision makers cope with ambiguity, uncertainty, and conflict in tough decisions and the behavioral factors that inhibit and mislead decision makers. To introduce efficiencies, this procedure is tailored to three types of situations: -dominant stakeholder or single decision maker -multiple, known stakeholders -multiple stakeholders with conflicting aims and the strong likelihood of unknown interest groups Analytical, group, and mixed-mode decision processes have been formulated for the three situations, including the essential stages and steps in each process. The reader is encouraged to do still more tailoring, selecting among the suggested process steps those that seem essential by appraising the decision being confronted.

Representation

The formulation or view of a problem. It is developed so the problem will be easier to solve.

Ambiguity

The inability to characterize or describe important aspects of a decision, such as core problems, future conditions, alternatives, or criteria.

Objective

The intentions of the decision process that set out what is to be strived for or sought (also called aims).

Criteria

The means used to make a comparison among alternatives such as cost and quality.

Context

The situation that captures background information and insights relevant to a decision and from which meaning and understanding are extracted (also called environment).

Root cause

The source or origin of a decision that indicates the necessity to act.

Analytical Problem Solving

This is an approach to deep-rooted or intractable conflicts that brings disputants together to analyze the underlying human needs that cause their conflict, and then helping them work together to develop ways to provide the necessary needs to resolve the problem.

Neural Nets

This technique is useful when a large number of independent factors affect an outcome in complex and non-linear fashion. Multivariate and non-linear regressions can be used as substitutes. Regressions have the advantage of being able to demonstrate the individual factorial relationships. However, neural nets are useful when relationships are non linear and complex.

System Analysis

This term has many different meanings. The systems analysis is an explicit formal inquiry carried out to help someone (referred to as the decision maker) identify a better course of action and make a better decision than he might otherwise have made. The characteristic attributes of a problem situation where systems analysis is called upon are complexity of the issue and uncertainty of the outcome of any course of action that might reasonably be taken. Systems analysis usually has some combination of the following: identification and re-identification) of objectives, constraintS, and alternative courses of action; examination of the probable consequences of the alternatives in terms of costs, benefits, and risks; presentation of the results in a comparative framework so that the decision maker can make an informed choice from among the alternatives. A systems analysis that concentrates on comparison and ranking of alternatives on basis of their known characteristics is referred to as decision analysis.

Problem Solving

This term is sometimes used to refer to analytical problem solving workshops that seek to analyze and resolve conflicts based on identifying and providing the underlying human needs. In other situations, it refers to an approach to mediation that focuses primarily on resolving the conflict

Unstructured Decisions

This type of decision situation is complex and no standard solutions exist for resolving the situation. Some or all of the structural elements of the decision situation are undefined, ill-defined or unknown. For example, goals may be poorly defined, alternatives may be incomplete or non-comparable, choice criteria may be hard to measure or difficult to link to goals.

Analyze

To break into component parts and study those parts to gain a better understanding of the whole.

Conspicuous alternatives

Traditional or habitual ways of responding to core problems that arise early in a decision process.

Outside organizational act

Transaction between organization (as decision-maker) and outside world, e.g., to purchase equipment.

Gambler's fallacy

Treating random events such as a dice roll as if the outcome of one roll implies something about the outcome of the next roll.

Informational decisions

Unique or problematic interpretations drawn from information-rich situations in which the means used to assess information are controversial.

Fixed base

Unrelated to options.

Representation heuristic

Use of a past decision as an example from which premises about information relationships are drawn and used to make future decisions.

Use as a criterion in decisions, such as the use of a building that gives rise to space allocations and other user requirements that stipulates its design. A function is a relation in which each element in the domain is matched with only one element of the range. A function may be specified

numerically: by means of a table, algebraically: by means of a formula, and graphically: by means of a graph.

Evaluation

putting a number to a judgment, not necessarily a preference judgment, e.g., assessing a probability.

A model is a set of propositions or equations describing in simplified form some aspects of our experience. Every model is based upon a theory, but the theory may not be stated in concise form. An object or process which shares crucial properties of an original, modeled object or process, but is easier to manipulate or understand. A scale model (i.e., Iconic model) has the same appearance as the original save for size and detail. However, increasing use is made of computer simulation

the model is a program that enables a computer to determine how key properties of the original will change over time. It is easier to change a program than to rebuild a scale model if we want to explore the effect of changes in policy or design.

Conceptualization

the process of clarifying and specifying the meaning(s) of variables in a problem statement or hypothesis in order to facilitate examination of relevant research by refining and developing a clear, precise, testable hypothesis

Design Rationale

the reasoning that leads to design decisions. Documenting design rationale is important for validating that the correct design decision was made, to help those who are trying to interpret ambiguous design decisions or examples that don't fall clearly within a design principle, and to avoid going back and changing design decisions without knowing the original reasons in the first place. A design rationale can be an important tool in arriving at the initial design decision in the first place. Rationale should give advantages and disadvantages of a choice and include rejected alternatives, so that those alternatives don't keep popping up for reconsideration.