Decision-making: Techniques and Environment

Meaning of Decision Making

Decision-making is the process of forming opinions to choose something by thinking about it, i.e., mental processes that are affected by emotions or reasons. It is basically the process of choosing one option from several available options. It is preferred to make a rational decision while in the process of decision making, though sometimes it can be irrational too, all depending on the situation, techniques that are followed while decision making, and the environment for the same.  

Techniques of Decision Making

The following techniques can be used during decision-making:

Making a Decision Based on Multiple Criteria : The technique of making a decision on multiple criteria allows a person to choose properly between his intuition and analysis by the proper use of a framework that checks for the options to get a definite success while also evaluating all the factors of risk.

Paired Comparison : In this technique, all the available options are compared to one another so that one can determine their relative importance between them. 

Analytic Hierarchy Process: This technique is an enhanced form of making decisions on multiple criteria with the use of the paired comparison technique. Additionally, this technique uses mathematics that helps to know the correctness of intuition, which is present in the technique of decision making in humans. This process is mostly used to solve complex decisions.

Decision-Making Tree: The technique of making decisions using a tree helps a person to visualize several stages of problems that can arise as an outcome of that decision. This technique has proven to be more useful when deciding on different strategies for several resources.

Pros & Cons: This technique has been used for ages for decision making, which is done by considering the pros and cons of a situation. But one can consider only two of the several available options at one time.

Influence Diagrams: The process of decision-making under this technique is done by using influence diagrams. In this, all the influences are represented graphically while making a decision. It is a technique that helps to make a decision with more variables and is an alternative to decision trees.

The Game Theory: This technique is used for difficult decisions in which the views of outside people are also necessary and can be beneficial while making the decision. Game Theory is a technique for making the right decisions in such situations. This technique is also considered an extension of the technique of influence diagrams.

Multi–Voting: The technique of multi–voting is used for a group of decisions when one needs to choose correctly from various available options. This method is thought to be the best for eliminating low-priority options and then using any other efficient technique to make a final decision on the new, less available options.

Benefit analysis: This technique is basically for decisions based on the finance department. This technique can also be used for making other decisions by evaluating them on the basis of financial criteria.

Present Value and Net Present Value: This technique of present value and net present value is used mostly for decisions that involve investment and capital budgeting.

Linear Programming: This mathematical technique of linear programming is used in cases where the requirements of the situation are written in the form of linear equations. This technique is mostly used for solving useful and important problems in operational research.

Trial and Error analysis: This technique of trial and error has been the basis of decision-making since childhood. This is used when the outcome is minor and the decision is incorrect. Its impact should be minimal.

Heuristic Method: This technique uses the trial and error technique of decision making, which involves the creation of a model in the beginning that keeps on changing with the process as information keeps changing as one proceeds. Thus, the heuristic method is used to save time and get an effective decision.

Scientific Method: This decision-making technique is used to make a decision as well as to investigate some scientific questions. This scientific method is considered to be a heuristic method as in scientific questions, experiments are performed.

Environment for Decision Making

Factors such as the environment affect the quality of decisions. The environment in which the decisions are made is also of a different type, which includes –

Certainty: This type of environment is made when all the information is available to us. This environment is considered to be very safe and is not very expensive. All the information is already provided, so one can consider all the options, analyze them, and in the end, choose the best available option. 

Uncertainty: In the environment of uncertainty during the process of decision-making, the information presented to the manager is not complete and sufficient. The manager has to make an effective decision on his own by creating some reliable data from the information that is available to him and making the most appropriate decision on the basis of his judgment.

Risk: In such an environment that includes risk, several events can take place. Here, the manager has to consider all the possibilities of the events. The past experiences of the manager play a key role in such an environment. The environment, including risks, also includes some information for the manager. But the correctness of that information is not sure.


To choose one option from several available options is called decision making. The process of decision-making is affected by the techniques that are used while making decisions and also by the environment in which they are made. So, one needs to wisely choose the technique to make an effective decision. One must work according to the environment in which he is making the decision. The process of decision-making is done through intuition or reasoning. It is preferred to make the decision using reasoning, i.e., by considering all the facts and figures. A certain process needs to be followed to ensure the outcome of the decision is appropriate.