Purposes and Limits of Decision Rules

Published by Mario Oettler on

Decision rules have the following purposes:

  • Rationalize decisions: By using influence factors, emotions should be eliminated
  • Highlight influence factors: By creating a table of influence factors the decision maker is forced to reveal relevant factors that influence their decision.
  • Legitimation: By using a recognized decision scheme, decisions can be legitimated for supervisors, audits, etc.

But there are also limitations. While most decision rules try to rationalize decisions, they are prone to subtle biases. Such biases can come from the choice of influence factors (kpis), the choice of the weights, transforming values from a nominal scale into an ordinal scale (rank) or how they deal with criteria for exclusion of certain alternatives.