Selecting Decision Rules for Crucial Choices

Abstract

Thompson developed a framework to make strategic choices that indicates when to use optimizing, satisficing, instrumentality, and social tests as decision rules. These oft-cited prescriptions have not been empiricallyinvestigated. This studyprovides such a test by comparing the success realized when Thompson’s prescriptions were or were not followed in more than 300 strategic decisions. The findings indicate that managers followed the prescriptions in 4 of 10 decisions. Failing to follow the prescriptions led managers to applya decision rule that either developed misleading factual information or ignored available information as choices were made. Both misusing and ignoring evaluative information dramaticallylowered the prospect of success. Success improved when a decision rule was selected that adhered to the prescriptions. The implications of these findings for managers and management are discussed.