Decision Making- Through History

• Plato – Eternal archetypes

• Aristotle- Seeks truth by examining the

actual rather than speculating on the ideal.
• Alexander - To cut the Gordian knot“ single
bold, incisive action.
• Julius Caeser- Crossing the Rubicon"
become synonymous with taking an
irreversible step. Unfortunately, sometimes
we think we've taken this "irreversible" step
because so much blood and treasure hove
been sunk into a project.
• A sunk cost should be ignored in decisions
about future actions
 Decision Making- Through History
• Rene Descartes (1590-1650) – the aim of any inquiry is
certainty and knowledge could only spring from complete
objectivity. He formulated a set of rules that ideally
compose on infallible method whose application is
mechanical and universal
• Blaise Pascal – Theory of probability
• Eighteenth Century- Adam Smith
• Rational self-interest in a free market economy
leads to economic well-being. positive
unintended consequences of decisions: He
maintained that each individual seeking only his
own gain "is led by an invisible hand to promote
an end which was no part of his intentions," that
end being the public interest. "It is not from the
benevolence of the butcher, or the baker, that
we expect our dinner," "but from regard to their
own self-interest."
 Decision Making- Through History
• Nineteenth Century - Oliver Wendell Holmes "The life of
the low has not been logic, it has been experience. Judges should not base
his decisions merely on statutes but on the good sense of reasonable
members of the community.
• 1900 - Sigmund Freud - Core idea, is that causes hidden in the
mind often influence our decisions and actions. Napoleon's rivalry with his
brother Joseph was the driving force of his decision making-accounting for
his pursuit of Josephine in matrimony and his decision lo invade Egypt.
• 1907 Irving Fisher - Economist Fisher introduced the concept of net
present value. When public administrators try to compare the cost and
benefits of a project over, say, a 10 years period , they discount future costs
and benefits to reflect their present value.
• 1947 Herbert Simon - Rejecting Descartes’ notion that decision
makers can and should always act perfectly rationally, Simon argues that
because of the costs of acquiring information, managers make decisions
with only bounded rationality they have limits, or boundaries on how
rational they can be. Research conducted by Simon and his colleagues at
the Carnegie institute of Technology contributed greatly to the
development of early computer-based decision support tools
 Decision Making- Through History
• Joseph Heller In Heller's novel Catch-22, American pilots
during World War II, forced to fly an excessive number of
dangerous missions could not be relieved of duty could,
unless they were diagnosed as insane. On the other
hand, regulations stipulated that a pilot who refused to
fly so that he wouldn’t be killed could not be insane
because he was thinking too clearly. Today, Catch-22
Situation means a decision situation in which no way
out- an insoluble dilemma, a double blind.
• 1968 Irving Janis - Coined the term "groupthink" for
flawed decision making that values consensus over the
best result.
 Decision Making- Through History
• 1972 Michael Cohen, Jomes Morch, and John
Olsen These three scholars give us a "garbage can
model" of organizational decision making. Flowing
through organizations are three separate streams:
– problems,
– solutions, and
– choice opportunities for political climate.
• Individuals drain in and out of decision-making
situations carrying pet problem and solutions with
them, looking for windows of opportunity in which
they might be aired
• Thus, an organization is a kind of garbage can into
which participants randomly dump various kinds of
problems and solutions.
• Decisions then are a function of the mix of garbage
(problems, solutions, and political climate).
• Bottom line· Organizations should search their
informational trash bins for solutions thrown out
 Decision Making- Through History
• 1979 Amos Tversky and Doniel Kohnemon. Faced with the uncertainties of real life, do
people coolly calculate their self-interest and then rationally reason toward an optimal
decision? Not according to these two economists. Often people will use rules of thumb or
heuristics to solve problems
• 2005 Malcolm Gladwell In Blink, Gladwell introduces a range of case studies and experts
including art historians who can tell within seconds that a statue is a fake and a psychologist
who can predict whether a couple will get divorced often observing them for only a few
minutes. But do your instincts make good decisions? It depends on your education level.
The instincts of veteran firefighters have been shaped by years of experience, so when
something tells them to stay off that staircase, there's usually a good reason. Less-
experienced firefighters perform worse at fire scenes, research suggests, because they lack
such subconscious triggers.