Model to Take Decisions


There are 2 models to take a decision, the first is rational and second the identity model.

James March a professor from Stanford University proposes that we use two basic models to make decisions:

Rational model:

The first model involves calculating consequences. We weight out our alternatives, assessing the value of each one, and we choose the alternative that yields us the most value.  this model is the standard view of decision-making in economics: “people are self-interested and rational”.

The rational agent asks, which political candidate will best serve my economic and social interests?.

Identity model:

The second model is quite different. It assumes that people make decisions based on identity. The ask themselves three questions: (1) who am I?; (2) What kind of situation is this? and (3) What people like me to do in this situation?.

Notice that in the second model people aren’t analysing the consequences ou outcomes for themselves. There are no calculations, only norms and principles. It’s almost as if people consulted an ideal self-image: What would someone like me to do?.

The identity agent asks, which political candidate will someone like me be more likely to vote?.

Further reading: Chip Heath, Dan Heath. Made to Stick: Why Some Ideas Survive and Others Die.  Random House, 2007.

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