BUAD 304 Lecture Notes - Lecture 2: Decision Analysis, Risk Aversion
Document Summary
The proact decision making model provides a systematic approach for making decisions. It consists of eight elements that when worked through systematically will help you make better decisions. The proact decision making model was developed by john s. hammond, ralph l. keeney, and howard raiffa. They described how to make a decision using the proact model in the book smart choices: a practical guide to making better decisions . The term proact is an acronym of the five core elements of the decision model: problem, objectives, alternatives, consequences, tradeoffs. The remaining three elements help clarify decisions in volatile or evolving environments: uncertainty, risk tolerance, linked decisions. Let"s take a look at each of the elements of this decision making model. The first step to making a good decision is to work on the right decision problem. The way you frame your decision problem drives everything else in the decision making process.