Decision Making Models and Tools

What are the five types of decision-making in Thompson’s typology (1967)?

Computational, Judgemental, Inspirational, Negotiated/Compromised, and Intuitive decision-making.

What characterizes computational decision-making?

It relies on formal, analytical, and algorithmic approaches to handle complexity and maximize value within constraints.

What assumptions does computational decision-making rely on?

Economic assumptions — maximizing gains, full information, and known, agreed goals.

What is an example of computational decision-making?

Customer Segmentation AI.

What characterizes judgemental decision-making?

Decisions depend on personal judgement, knowledge, experience, ethics, and beliefs rather than formal calculations.

What theory is associated with bounded rationality in judgemental decision-making?

Herbert Simon’s theory of bounded rationality (1960).

What does “satisficing” mean in this context?

Choosing the first “good enough” option instead of the optimal one.

What type of model is judgemental decision-making considered to be?

A descriptive model used in complex, uncertain, or incomplete information situations.

What is an example of judgemental decision-making?

Project prioritization.

What drives inspirational decision-making?

Positive emotions such as hope, passion, and enthusiasm.

What is the main focus of inspirational decision-making?

Aligning decisions with long-term goals and core values, while aiming for collective well-being.

What quality does this decision-making type emphasize?

Courage to take calculated risks.

What is an example of inspirational decision-making?

Adopting a failure-inclusive corporate culture.

What characterizes negotiated or compromised decision-making?

It results from bargaining, political behavior, and compromise between conflicting interests.

What shapes negotiated decision-making outcomes?

Political and organizational interests.

What is an example of negotiated decision-making?

Resource allocation.

What is intuitive decision-making based on?

Subconscious expertise and pattern recognition developed through past experience.

When is intuitive decision-making especially useful?

Under time pressure or when data is incomplete.

How is intuition used with logic in this model?

It combines intuitive judgment with rational analysis.

What is the first step in creating a decision tree?

Start with the main decision that needs to be made.

How are possible solutions represented in a decision tree?

By drawing lines for each possible solution and writing the option along each line.

What do circles and squares represent in a decision tree?

Circles = uncertain outcomes; Squares = decisions.

How is a decision tree evaluated?

Assign a cash value or score to outcomes and estimate the probability of uncertain events.

How are calculations done in a decision tree?

From right to left — multiply value by probability for uncertain outcomes and choose the option with the highest net benefit.

What is the first question to ask in ethical decision-making?

Is the proposed action legal?

If the action is legal, what should be asked next?

Does it maximize shareholder value?

If it maximizes shareholder value, what is the next question?

Is it ethical?

If it is not ethical, what should be asked?

Would it be ethical not to take the action?