DECISION-MAKING

Individuals, corporations, and governments

make important decisions every day. To mak
e the best decisions, they need to accurately
weigh the relative benefits and costs of vario
us alternatives.
 PROBLEM DEFINITION

Take time to properly define the problem.

What is the issue to be covered?
What is the problem?
What decisions need to be taken?
PROBLEM
DEFINITION
1) Does a problem
exist?

2) Can anything be done

about it?

3) Does the client have

the power?
Pitfalls in public policy problem definition:

1) accepting the client's definition of the

problem
2) looking only for the simple and obvious
3) thinking that any and all problems need
a public solution
4) confusing the need for short- versus
long-term solutions
5) confusing the values of individuals
versus collectivities
DEVELOPING PROBLEM STATEMENTS

1) think about the problem

2) delineate the boundaries of the
problem
3) develop a fact base
4) list goals and objectives for policy
solutions
5) identify the policy envelope (key
players)
6) develop preliminary costs and
benefits
 BACK-OF-THE-ENVELOPE CALCULATIONS

dimensions of the problem and potential solutions

1) How many people are we talking about?

2) What is the likely cost per unit of service?
3) How much of the target population can we
serve?
4) How much do we have available to spend?
5) Will more staff be needed?
6) Will this impact the budget/tax rate?
7) What are the trends in this area?
8) What will happen if we do nothing?
The information for doing back-of-
the-envelope calculations can come
from:

1) reference works
2) experts
3) past studies or quick research
4) informed guesses, extrapolation,
rules of thumb, estimation,
parallel reasoning, triangulation,
etc.
 Setting Goals
•Clarify goals
•Resolve conflicting goals
•Focus on the central, critical factors
•Is it important? Is it unusual? Can it be
solved?
•Identify who is concerned, and why?
•What power do concerned parties have?
•Make a quick estimate of resources
required to deal with the problem
A fish-bone diagram will sometimes help in understanding
the complex inter-linkages that create a particular 'problem'.

For each of the causes or its effects, make a list of

information or data that will be required, and clarify how that
information will lead to a better decision.
PROBLEM TREE
GATHERING AND ANALYZING INFORMATION
 Information you
Information you
know you don't
know you have have

Information you Information you

don't know you don't know you
have don't have

Four states of information possession

GENERATING ALTERNATIVES
AND SELECTION CRITERIA
TYPES OF ALTERNATIVES

Incremental
Branching
Innovative
DECIDING
Decision-making as Problem-solving?
A Developmental Problem Solving Process
 Decision analysis

A structured way of thinking

about how the action taken in the
current decision would lead to a
result
 Alternatives

Are the courses of action that one might take

 Uncertainties

These are those uncontrollable

elements that we sometimes call
luck. The chance of an event
happening or not happening
 Outcome

Is the result of the decision

situation and is measured on the
scale of the decision maker's
values.
 Option

An option is an alternative
that permits a future
decision following revelation
of information.
 Forecasts

Predictions of the future, to

guide choice of alternatives.
 Trade-offs

Are judgments about how much a

person is willing to sacrifice on one
value in order to receive more of
another.
 Risk

Is the possibility of an undesirable result.

 Risk tolerance

Is a technical term describing the

decision maker's attitude toward risk.