DECISION THEORY APPROACH

DECISION THEORY APPROACH

Decision theory is an interdisciplinary area of study, related to and of interest to practitioners in all branches of science, engineering and in all human social activities. It is concerned with how real or ideal decision makers make or should make decisions and how optimal decision can reached. This approach looks at the basic problem of management around decision making-selection of suitable course of action out of given alternatives.

The major emphasis of the approach is that decision making is the job of every manager. The manager is a decision maker and organization is a decisions making unit.

Features of Decision Theory Approach 

1. Management is essentially decision making.

2. Members of organization are decision makers and problem solvers.

3. All factors affecting decision making are area of study for managers. 

4. Quality of decisions affects the organizational effectiveness.

5. Other factors affecting the decisions are processes, information systems, social and psychological aspects of decision makers.