Systems can be described in terms of inputs transformed into outputs, as a process of fulfilment of a purpose, or the pursuit of a goal. The last is the equivalent of decision-making and together with monitoring and evaluation it is a basic human activity. As such, it concerns the main components of the cybernetic control loop in all kinds of organizations.
Decision theory is a formal, logical science without normative elements. It tells how to choose between different alternatives, but not how to realize them. It therefore studies a detector/selector function. Practical decision-making is called praxeology and must be considered both a science and an art. It calls for experience and intuition, is sometimes normative and focus on the effector function.
Aspects of human action that can be grasped a priori like conceptual analysis and logical implications of preference, choice, and means- end schemes are typical for praxeology. It is evident that decision theory can be studied separate from praxeology although this in turn always must include components of decision theory. In normative praxeology, the goals are given and the decision method to reach them is prescribed and considered the ultimate. Descriptive praxeology is concerned with the way people actually make decisions without reference to the efficiency of their method.
Game theory is associated both with decision theory and praxeology and has a mathematical approach to problems of games involving conflict or cooperation among the participants. The aim of this area is to find patterns and rules for human behaviour when people try to deceive, mislead and trap each other in order to be a winner. It tries to answer the question what happens if each player acts for his own selfish advantage and what kind of coordinated actions will emerge. Especially, the conditions under which cooperation will emerge is studied. Game theory also works without conscious participants and is then called evolutionary game theory. Complicated interplays and collaboration can originate without central planning or a conscious general view.
The incentive that impels man to make decisions and act has always caused some uneasiness or cognitive dissonance. The acting man is eager to substitute a less satisfactory state of affairs for conditions which suit him better. The rational decision is a typical information processing activity and is the alternative where future benefits exceeds contemporary costs. A decision is always based on the ever existing conflict between different alternatives of costs. If no costs exist, there is no need for a decision.
A decision which is not communicated and put into action is, however, no decision at all. Therefore decision-making and communication must be considered as totally interdependent.
The inner core of decision-making is to make things happen or to prevent them from happening; something which includes both prediction and control. In hierarchic, multilevel systems such as organizations and societies, this kind of operation is mostly dedicated to a specialized group, the management or the government. Mechanisms of decisions are strictly related both to the system to be managed and to the nature of human information processing.
Like other intellectual activities, decision-making can be learned by the use of sequential steps. Its complete success can, however, never be guaranteed because it involves components of both uncertainty and creativity. To make choices is part of mankind’s condition. As an uncertain and erring creature, he sometimes makes decisions, the results of which are often both unknown and unintentional.
Since its arrival, the computer has been used as a means for decision- making, by augmenting the human capacity to gather, store, retrieve and process various kinds of data. As the key component of an information system, it has greatly enhanced the transformation of data into information. As subcomponent of a knowledge system (of which an information system is only a part), it has facilitated both understanding and accumulation of wisdom.
Today, both air force and naval officers are trained for decision- making in simulator installations which resemble the cockpit and the bridge. Decision-making by management staff can also be practised in computerized business simulators that are made to resemble the ordinary decision environment as closely as possible. Beer’s ‘decision room’ or Frontesterion is an example of such an environment (see Beer 1979).
In the light of the close interconnections within the modern world system, bad decisions may have both directly devastating consequences and unforeseen effects. The understanding of decisionmaking processes, particularly in association with computers, has therefore been a high- priority area of systems science. Knowledge of human capacity, specialty and weakness — alone or together with computers — is a basic requisite for every decision maker. Systems theory and related areas such as information theory, computer science and management cybernetics have long been devoted to the study of decision-making. A common assumption of these areas is that all organisms are information systems.
Source: Skyttner Lars (2006), General Systems Theory: Problems, Perspectives, Practice, Wspc, 2nd Edition.