MODELS OF FINANCIAL DECISION MAKING

BY: TAMOOR ZULFIQUAR

• The Market Model

• Rational Model

Requires a great deal of time Requires great deal of information ASSUMES accurate, stable and complete

knowledge of all the alternatives, preferences, goals and consequences

Required more experience and judgment power

In 1971, Allison described this model as "the organizational process," in which the organization's hierarchical structure and systematized routines, or standard operating procedures, are the major determinants of the decision process.

(Equal treatment for all)

Allison , 1971,

PRODUCTION EFFICIENCYProductive efficiency is a situation in which the

economy could not produce any more of one good without sacrificing production of another good.

EXCHANGE EFFICIENCYIf there is a possible trade that would benefit one

unit and in no way harm the other, then further improvement is possible and the original situation is not economically efficient. Further trade would increase value people perceive, and thus increase economic efficiency.

The financial decision making varies depending on the size of the departments, the functioning options available, the needs of the departments and geographical differences.

Financial decision making involves analyzing the financial problems that the system faces and deciding which course of action should be taken. In order to make financial decisions, we must be able to identify potential financial problems and analyze the effects of alternative courses of actions.

http://www.aacrao.org/resources/resources-detail-view/field-notes--6-models-for-decision-making-in-higher-education

http://www.nationalforum.com/Electronic%20Journal%20Volumes/Lunenburg,%20Fred%20C.%20The%20Decision%20Making%20Process%20NFEASJ%20V27%20N4%202010.pdf

http://files.eric.ed.gov/fulltext/ED246828.pdf

http://www.tandfonline.com/doi/abs/10.1080/1360080X.2014.991529#.VpaNWrZ95kg

http://www.cps.neu.edu/courses/detail/EDU7256