This or That? The Art of Decision Making I

"The doors we open and close each day decide the lives we live" ....True isn't it??.. Our life is like a "Work in Progress", it takes shape in accordance with the decisions we make... It can come in handy if we know the art of making 'situation appropriate' decisions... Let us first skim through the terms involved in a regular decision making process...

This or That??

Objective(s): This is the what drives the whole process.... We all have objectives .. to do this.. to do that... to do this and that... Please note that I am deliberately not using the word "Goal(s)" but only "Objective(s)"  (Primarily because objectives are more crisp and tangible) and also note that there need not be  just one objective, rather there can be multiple no. of objectives each with its own priority.... Sometimes these objectives can be contradictory to one another... Let us take this example for clarity: My objective is to eat tasty and healthy food for lunch.... We have two objectives here: 1) To eat tasty food 2) To eat healthy food... These two objectives might be contradicting each other, like it might be a bit difficult if not impossible to eat something that is both healthy and tasty... Any case maximization of both health and taste would be my ideal requirement... Regarding the priorities, let us assume that I prioritize health before taste...

Alternatives/ Options/ Choices: This is what makes the process valid... Obviously, we do not talk about decision making when we do not have an option.... In fact 'choosing an alternative so that the objective is realized' pretty much defines decision making... Let us take the same example, say I have two alternatives: 1) Cook and 2) Eat out... Please note that my alternatives are such that they help me in reaching my objectives... So I am not going to list 'Go hungry' as an alternative... In fact 'Go hungry' would be an indecision.... 

Consequences/ Pay- Offs: Every choice has a consequence... Sometimes, the way the consequences will turn out cannot be foreseen beforehand... This looming uncertainty associated with exactly understanding the payoffs is what actually makes the decision making process sometimes too complicated... Because for each alternative, the payoffs may be both positive and negative... It can take us further towards the objective or push us farther away.... For our example, let us say, Consequences for Alternative 1) (Cook) Definitely healthy but not sure if tasty... and for Alternative 2) (Eat out) Definitely tasty but not sure if healthy.... Note the uncertainty involved in the alternatives... See the word "Not sure"... Like in alternative (1)- Cook, it means that the consequence 'taste' has an unknown probability of occurrence....  Lets say I have a track record of cooking food that tastes good half the time.... This means the consequence 'taste' has 50% chances of occurring... Similarly lets say for alternative (2),- Eat out, the food has 50% chances of being healthy...

Decision: So what should I choose?? Should I choose to cook?? The food is going to be healthy, but I run the risk of cooking something that has a history of not tasting good half of the time... or should I choose to eat out?? The food will definitely taste good but I have to play a game on health with 50:50 odds... To arrive at a decision let me do two more things: I) Bring back the priorities... Somewhere in the article I said I was a health conscious person and so I am gonna prioritize health over taste, lets use that trump card here.. If health is crucial, then among the two available alternatives, (1) Cook seems best... II) To have some reassurance in my decision to cook, I am going to bring in more consequences... For this, I am extending the objective as My objective is to eat tasty, healthy and cheaper food for lunch.... Consequence 'cheap/ less cost' will occur only for alternative (1) Cook... Eating out is costly (unless you decide to eat in Anna University Canteen ;-) )... So my analysis unanimously favors decision to (1) Cook... Means that this alternative is going to serve me better in reaching my objective than the other available alternative....

......To be Continued........

**BTW, thanks for making the decision to read this article... Hope your objective was reached**

As an Industrial Engineer, I have studied "Decision Theory" extensively in my curriculum but from a managerial perspective... Read more here: The Mathematics of Decision Making