DECISION MAKING - THEORY
Something behind decision making …


How and why do people make decisions
•We make decisions every day (realize it or not)
•Big (university, life partner, career, medical treatment) and small (color of shoes, meal, summer
holydays …), sometimes small become big (unhealthy food)
•Decision-making is natural
•„Not to do something“  or avoiding decision („flip the coin“) is also certain decision decision
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•Since we are doing it – lets do it right …

Big or small decision  is determined by the impact / consequences and possibility to change /
reverse them
Small decision can turn into the lifa-changing decision (going into a certain restaurant and
meeting life partner etc.)

Military decisions - discussion
•Strategy decisions –
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•Operational decisions –
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•Tactical decisions –
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•Time framework, complexity, resources involved, costs, gains,  …

Basic terms I
•Alternative: One of many choices or courses of action that might be taken in a given situation.
•Benefit: Monetary or non-monetary gain received  / acquired because of an action taken or a
decision made.
•Choice: Decision made or course of action taken when faced with a set of alternatives.
•Cost: An amount that must be paid or spent to buy or obtain something. The effort, loss or
sacrifice necessary to achieve or obtain something.

Basic terms II
•Decision: A conclusion reached after considering alternatives and their results.
•Opportunity cost: The second-best alternative (or the value of that alternative) that must be
given up when scarce resources are used for one purpose instead of another.
•Scarcity: The condition that exists because human wants exceed the capacity of available resources
to satisfy those wants; also a situation in which a resource has more than one valuable use. The
problem of scarcity faces all individuals and organizations, including firms and government
agencies.

PACED method
•Problem I am hungry
•Alternatives / solutions Cook for myself x going to the restaurant
•Criteria Price, Time, Taste, Energy
•Evaluate Budget constraint, time pressure, …
•Decide Going to McDonald … (Just kidding J …)
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PACED - P
•Problem
•

PACED - A
•Alternatives


PACED - C
•Criteria


PACED - E
•Evaluation


PACED - D
•Decision
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Processes of Decision Making
•Step 1. Fully analyse the problem and identify the decision purpose.
•Step 2. Try to collect all the information and stakeholders related to the problem.
•Step 3. Set up the criteria for judging the alternatives.
•Step 4. Brainstorm all the ideas and evaluate them.
•Step 5. Choose the best one among alternative
•Step 6. Carry out the decision.
•Step 7. Review your decision and its consequences