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Theoretical Framework of The Study-Research

The document discusses several theoretical frameworks for decision making. It describes Herbert Simon's decision theory which suggests decisions must be made in a timely manner to not negatively impact organizational objectives. It also discusses psychological aspects considered by Simon around risk and uncertainty. Later frameworks focused on rational choice and establishing rational axioms for decision making under uncertainty. More recent theories emphasize limited human information processing and heuristics used in decision making. Dynamic decision making views decisions as arising from a wider context requiring recognition of when a decision is needed and determining available options and criteria.

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68 views

Theoretical Framework of The Study-Research

The document discusses several theoretical frameworks for decision making. It describes Herbert Simon's decision theory which suggests decisions must be made in a timely manner to not negatively impact organizational objectives. It also discusses psychological aspects considered by Simon around risk and uncertainty. Later frameworks focused on rational choice and establishing rational axioms for decision making under uncertainty. More recent theories emphasize limited human information processing and heuristics used in decision making. Dynamic decision making views decisions as arising from a wider context requiring recognition of when a decision is needed and determining available options and criteria.

Uploaded by

Allaiz g.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Theoretical Framework of the Study

It can even mean choosing between action and non-action. The Herbert Simon’s decision-making theory
first appeared in his renowned book, Administrative Behavior. He suggested that decisions were critical
because if they weren’t taken on time, it will negatively impact an organization’s objective. From this
perspective, ERM will help the organization conduct their risk-based decision-making, which implicitly
considers the process of actions taken upon such a decision at its earliest.

The Decision-Making Theory by Simon also considers psychological aspects that classical economists
overlooked or ignored. It suggests that one should pursue objectives or make decisions that involve
minimum risks and complications instead of focusing on maximizing profits. In contrast to classical
theorists, Simon suggests that there is never one best course of action or decision. It’s because one can’t
have complete information about something, therefore, there will always be a better course of action or
decision.

Prescriptive decision theories have emerged from mathematics and mathematical economics where
rational choice is taken to be central to understanding economic behavior and managing economic
systems efficiently. The methodology focuses on establishing rational axioms for making decisions under
uncertainty and consequences for systems of trade and commerce against defined valuations. The
axioms typically express mathematical constraints which, if violated, can lead a decision-maker into
suboptimal choices. Early psychological models of decision-making were influenced by rationalist
theories as sources of theoretical concepts and normative standards against which to assess human
decision-making, but there has been a trend away from this in recent decades.

For example Simon’s concept of «bounded rationality» emphasized human limited information
processing capacity and strategies for accommodating this . Kahneman and Tversky’s heuristics and
biases program also sought a more realistic account of cognitive processes in decision-making and
Kahneman and Tversky developed a better description of how people evaluate potential losses and
gains compared to mathematically prescribed norms. More recently Gigerenzer and Todd argue for the
practical importance of simple heuristic strategies for fast decision-making. Dynamic Decision-Making In
all the above perspectives decision-making is typically viewed as a choice between a set of predefined
options.

This is unsatisfactory because a decision typically arises within a wider context, in which it is necessary
to recognize when a situation or event requires a decision, determine the set of options, establish
criteria for determining preferences, resolve conflicts, and so on. DDM is fundamental in practical
domains, such as firefighting, factory production, clinical decision-making, air traffic control, military
command, and control, emergency management.  Billions of people have been vaccinated against
COVID-19. Getting vaccinated is one of the most important things you can do to protect yourself against
COVID-19, help end the pandemic and stop new variants emerging.

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