Decision Modeling by ProQuest


Decision modeling attempts to replicate the actual behavior of decision making. A model first identifies specific criteria to be used in making a decision, then allows the decision makers to assess how well competing options meet those criteria. Decision modeling can also explore the market potential of new technologies by assessing how well the new technology meets criteria already established by the marketplace. In these applications, decision modeling quantifies the potential of a product or technology to gain share from products already on the market. In practice, the alternative receiving the highest ratings should be chosen in more decisions than any other alternative, but it may not be chosen in all decisions. In summary, decision modeling describes the decision process as a choice among competing alternatives made on the basis of how well each alternative meets several different criteria of varying importance.

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									The Pursuit of Better Decisions
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“Decision Modeling” by The Futures Group Interna-                       — Editors

By The Futures Group International

Decision Modeling
A systematic approach to                 market systems, the collective deci-      policy, or action that best meets his
                                         sions of consumers constitute market      or her criteria for success. As an ex-
evaluating key factors in the            behavior; in industries, such as the      ample, consider a young person de-
                                         electric utility industry, decisions by   ciding which college to attend. When
choices we make.                         corporate executives on generation        asked what’s important in a college,
                                         expansion determine many charac-          the factors mentioned might include:
  Decision modeling attempts to          teristics of that system. Thus, in or-    excels in my field, has good football,
replicate the actual behavior of deci-   der to understand the behavior of         is co-ed. The parent might add price
sion making. A model first identifies    systems, we must understand the na-       to the set of criteria. These four crite-
specific criteria to be used in making   ture of decision making within the        ria would be weighted according to
a decision, then allows the decision     system.                                   their relative importance. Then, us-
makers to assess how well compet-          Strategic-management professor          ing this method, a matrix could be
ing options meet those criteria. For     Michel Godet has also made some           constructed in which possible col-
example, when purchasing a prod-         interesting additions to the technique    leges would be compared on the ba-
uct, such as an automobile, a con-       of decision modeling. His MULTI-          sis of these criteria. See Table 1.
sumer might consider price, quality,     POL method assumes an alternative            The column labeled “score” is the
service, and options. In decision        future environment rather than the        weighted sum for each college. All
modeling, each attribute is weighted     single-valued future of most deci-        other things being equal, the most
by its relative importance, and each     sions. Godet implements that view         rational choice in this example is col-
car model is judged on how well it       by adjusting the weights involved in      lege 2. If, when such an analysis is
matches each criterion.                  the decision according to the envi-       performed, the results seem subjec-
  Decision modeling can also ex-         ronment that is being forecast. In        tively wrong, it is appropriate to ask
plore the market potential of new        buying a car, for instance, the crite-    if a criterion has been omitted (e.g.,
technologies by assessing how well       rion of fuel efficiency would receive     location — what about urban versus
the new technology meets criteria al-    a higher weight in a low-energy           rural setting or distance from
ready established by the market-         future than in a high-energy one.         home?), or the weights are improper
place. In these applications, decision   This flexibility makes possible the       (the cost could be less of a factor if
modeling quantifies the potential of     discussion of relative advantages of      the student wins a scholarship).
a product or technology to gain share    different policies or strategies across      Although a decision maker may
from products already on the market.     a spectrum of alternative futures.        not actually list these decision factors
  The behavior of a large number of                                                or consciously weigh them, they are
systems is determined, to a great ex-                                              implicit in the perceived value of al-
                                         Methodology and Applications
tent, by decisions made by people or                                               ternatives. To choose the “best” alter-
groups within those systems. In pop-       Decision modeling is related to         native, the decision maker must
ulation systems, the behavior of         utility theory in systems analysis. In    make a judgment about what consti-
couples of childbearing age deter-       utility theory, a rational 
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