Steps
- Establish the scenario; you are wanting to buy something. Lets exemplarize - you are a big fan of "X", a series of books based on science fiction and space travel. Your friend has told you of an upcoming title in the series which is out in stores.
- Set a goal, being clear on the decision being made - what you are trying to achieve? In this case, you want to read the new book.
- Identify obstacles to achieveing the goal - what are the problems? The problem is that you may not have enough money for the book, or the local bookstore has run out of copies.
- Identify the alternatives to achieving the goal - what options are available? Some of your alternatives may include:
- buying the book at a store
- reading the book after your friend has bought it and finished it
- downloading the book from the internet as an eBook
- buying the book at a secondhand store
- Evaluate advantages and disadvantages for each alternative - what are the costs and benefits of each option?
- Advantages: book is good quality and brand new, and you can keep the book for as long as you want. Disadvantages: costs full price which may exceed budget, have to search around shops to find right book.
- Advantages: reading is free and convenient. Disadvantages: may have to wait long for friend to finish, can't keep book for ever - temporary.
- Advantages: free, can keep for as long as you want. Disadvantages: could take a long time for book to become available on internet, may have to pay a small fee, could be on internet illegally.
- Advantages: cheap and often fairly good quality, can keep for as long as you want. Disadvantages: finding a store which sells the book - maybe long time, quality is always not as good as retail store version.
- Rank the alternatives - put each option in order of preference.
- (1) buying the book from a secondhand store.
- (2) reading your friends book after they've finished
- (3) buying book from a retail store
- (4) downloading book as an eBook from the internet
- Choose the best alternative - which option do you prefer most? You prefer to buy the book from a secondhand store.
- You can evaluate the consequences of your decision.
- the consequences of buying the book from a secondhand store may include: the opportunity cost (next-best alternative) is reading your friends book after they have finished. The positives are the quality of your book will usually be expected to be above average, the price is cheaper, you can keep and read the book for as long as you want - unlimited, you can lend it to your friends. The negative aspects of the choice are that the quality of the book is never going to be perfect, secondhand stores might not have the book - or they may not be selling the book for a very long time because it is a new title, your friends may ridicule you for buying at a secondhand shop.
- You have completed a thorough decision making process! Well done, and go buy your favourite book of all time, "X: The Last Hope"!
Tips
- To help with the ranking in step four, you may want to identiy some of the factors influencing your decision. Give a score for each option and then total the scores. E.g. use a table listing the options along the top, factors down the left, numbers in the middle (+1 = good; -1 = bad; 0 = has no effect) and totals down the bottom.
- To further your economic decision making, you may want to consider the ethics concerning different alternatives. For example; if the "eBook" option was chosen, you would evaluate the differences between right and wrong - is it right to download a book that has been put on the internet illegally, even though it is completely free of charge? Should I really be doing this?
- Remember, this article is using an example of Consumer Decision Making. You being the consumer about to buy "X: The Last Hope" is of course a fictional scenario!
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