Subjective evaluation and allocation of resources in routine decision making

Abstract Routine decision making is a process of identifying goals, evaluating alternatives, and formulating appropriate strategies for attaining these goals. The latter two stages of this process were examined in a two-part experiment. In the first part, subjects scaled alternative combinations of the resources required for goal attainment. The results showed that an explicitly defined goal directly influenced the utility of resources. In essence, mean utilities were equivalent to point estimates of cost-benefit analyses. In the second part, subjects performed a decision-making task, allocating the initial resource combinations to achieve an explicitly defined goal. Task performance was modeled with linear programming techniques which provide a means of evaluating both the subjects' decisions and the process of resource allocation and strategy formulation. Results indicated that only 1 of 12 subjects allocated resources optimally in making decisions, even though all of the subjects had appropriately scaled the utility of these resources in the first part of the experiment. Moreover, half the subjects failed to utilize the maximum available resources in making their decisions. This outcome is discussed in terms of the memory and attentional constraints on routine decision-making processes. The results suggest that these constraints are most severe at the time of strategy formulation, even when the utility of resources and the explicit goal are known.