Constrained Rationality: Formal Value-Driven Enterprise Knowledge Management Modelling and Analysis Framework for Strategic Business, Technology and Public Policy Decision Making & Conflict Resolution

Abstract

The complexity of the strategic decision making environments, in which busi- nesses and governments live in, makes such decisions more and more difficult to make. People and organizations with access to the best known decision support modelling and analysis tools and methods cannot seem to benefit from such re- sources. We argue that the reason behind the failure of most current decision and game theoretic methods is that these methods are made to deal with operational and tactical decisions, not strategic decisions. While operational and tactical decisions are clear and concise with limited scope and short-term implications, allowing them to be easily formalized and reasoned about, strategic decisions tend to be more gen- eral, ill-structured, complex, with broader scope and long-term implications. This research work starts with a review of the current dominant modelling and analysis approaches, their strengths and shortcomings, and a look at how pioneers in the field criticize these approaches as restrictive and unpractical. Then, the work goes on to propose a new paradigm shift in how strategic decisions and conflicts should be modelled and analyzed.

Constrained Rationality is a formal qualitative framework, with a robust method- ological approach, to model and analyze ill-structured strategic single and multi- agent decision making situations and conflicts. The framework brings back the strategic decision making problem to its roots, from being an optimization/efficiency problem about evaluating predetermined alternatives to satisfy predetermined pref- erences or utility functions, as most current decision and game theoretic approaches treats it, to being an effectiveness problem of: 1) identifying and modelling explic- itly the strategic and conflicting goals of the involved agents (also called players and decision makers in our work), and the decision making context (the external and internal constraints including the agents priorities, emotions and attitudes); 2) finding, uncovering and/or creating the right set of alternatives to consider; and then 3) reasoning about the ability of each of these alternatives to satisfy the stated strategic goals the agents have, given their constraints. Instead of assuming that the agents’ alternatives and preferences are well-known, as most current decision and game theoretic approaches do, the Constrained Rationality framework start by capturing and modelling clearly the context of the strategic decision making situation, and then use this contextual knowledge to guide the process of finding the agents’ alternatives, analyzing them, and choosing the most effective one.

The Constrained Rationality framework, at its heart, provides a novel set of modelling facilities to capture the contextual knowledge of the decision making sit- uations. These modelling facilities are based on the Viewpoint-based Value-Driven - Enterprise Knowledge Management (ViVD-EKM) conceptual modelling frame- work proposed by Al-Shawa (2006b), and include facilities: to capture and model the goals and constraints of the different involved agents, in the decision making situation, in complex graphs within viewpoint models; and to model the complex cause-effect interrelationships among theses goals and constraints. The framework provides a set of robust, extensible and formal Goal-to-Goal and Constraint-to Goal relationships, through which qualitative linguistic value labels about the goals’ op- erationalization, achievement and prevention propagate these relationships until they are finalized to reflect the state of the goals’ achievement at any single point of time during the situation.

The framework provides also sufficient, but extensible, representation facilities to model the agents’ priorities, emotional valences and attitudes as value properties with qualitative linguistic value labels. All of these goals and constraints, and the value labels of their respective value properties (operationalization, achievement, prevention, importance, emotional valence, etc.) are used to evaluate the different alternatives (options, plans, products, product/design features, etc.) agents have, and generate cardinal and ordinal preferences for the agents over their respective alternatives. For analysts, and decision makers alike, these preferences can easily be verified, validates and traced back to how much each of these alternatives con- tribute to each agent’s strategic goals, given his constraints, priorities, emotions and attitudes.

The Constrained Rationality framework offers a detailed process to model and analyze decision making situations, with special paths and steps to satisfy the spe- cific needs of: 1) single-agent decision making situations, or multi-agent situations in which agents act in an individualistic manner with no regard to others’ current or future options and decisions; 2) collaborative multi-agent decision making situ- ations, where agents disclose their goals and constraints, and choose from a set of shared alternatives one that best satisfy the collective goals of the group; and 3) adversarial competitive multi-agent decision making situations (called Games, in gamete theory literature, or Conflicts, in the broader management science litera- ture).

The framework’s modelling and analysis process covers also three types of con- flicts/games: a) non-cooperative games, where agents can take unilateral moves among the game’s states; b) cooperative games, with no coalitions allowed, where agents still act individually (not as groups/coalitions) taking both unilateral moves and cooperative single-step moves when it benefit them; and c) cooperative games, with coalitions allowed, where the games include, in addition to individual agents, agents who are grouped in formal alliances/coalitions, giving themselves the ability to take multi-step group moves to advance their collective position in the game.

....