Transportation Economics/Decision making

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Decision Making

Decision Making is the process by which one alternative is selected over another. Decision making generally occurs in the planning phases of a transportation project, but last minute decision making has been shown to occur, sometimes successfully. Several procedures for making decisions have been outlined in effort to minimize inefficencies or redundancies.

Contents 1 Rational Planning 2 Step A. Define the System 3 Step B Generate and assess alternatives available to management 4 Step C Choose alternatives 5 Step D Implementation 6 Step E Evaluation 7 Thought Question 8 Some Issues with Rational Planning 9 Alternative Planning Decision Making Paradigms. ¿Are They Irrational?

[edit] Rational Planning

(see Rational planning model article in wikipedia)

How does one (rationally) decide what to do?

1. Identify Needs
2. Set Objectives
3. Develop Options
4. Evaluate Options
5. Select Best Option
6. Implement Best Option
7. Evaluate Outcome

We need a tool to "Identify Needs" and "Evaluate Options". This may be the transportation forecasting model.

[edit] Step A. Define the System

1. objectives - measures the effectiveness or performance
2. environment - things which affect the system but are not affected by it
3. resources - factor inputs to do the work
4. components - set of activities or tasks of the system
5. management - sets goals, allocates resources and exercises control over components
6. model of how variables in 1-5 relate to each other

[edit] Step B Generate and assess alternatives available to management

1. . algorithms-systematic search over available alternatives
   1. analytical
   2. exact numerical
   3. heuristic numerical
2. generate alternatives selectively, evaluate subjectively
   1. fatal flaw analysis
   2. simple rating schemes
   3. Delphi exercises
3. generate alternatives judgmentally, evaluate scientifically using system model
4. need for "stopping rule"

[edit] Step C Choose alternatives

The analyst is generally not the decision maker. The actual influence of the results of the analysis in actual decisions will depend on:

1. determinacy of evaluation
2. confidence in the results on the part of the decision maker
3. consistency of rating among alternatives

[edit] Step D Implementation

Just Do It.

[edit] Step E Evaluation

1. definition: output from a later step in systems analysis used as input to a later step.

1. Examples.

analysis leads to revisions in systems definition implementation experience leads to a revision of output system definition or values that underlay that definition.

[edit] Thought Question

Is the Rational Planning process Rational?

[edit] Some Issues with Rational Planning

Nevertheless, some issues remain with the rational planning model:

• Limited Computational or Solution Generating Capacity
• Incomplete Information
• Cost of Analysis
• Conflicting Goals/Evaluation Criteria
• Reliance on Experts (What about the People?)

[edit] Alternative Planning Decision Making Paradigms. 
¿Are They Irrational?

No one really believes the rational planning process is a good description of most decision making, as it is highly idealized. Alternatives paradigms to the rational planning process include:

• Satisficing
• Incrementalist
• Organizational Process
• Political Bargaining
• Decomposition/Hierarchical Strategy/Tactics/Operations