Rational actor model may reasonably be compared with a well-known concept of economics or business management, and it is cost-benefit approach which denotes that when a businessman decides to adopt a policy he will see first of all how much cost he will have to incur for the implementation of the policy and then how much benefit he expects to receive. An important characteristic of decision-making is that it is never a product of a single man. Lindblom’s incrementalism cannot satisfy all these “ifs” simultaneously. Conclusion: Decision-making theory is one of the contemporary theories that have been built during the mid-20 th century. It describes a way by which people make decisions when all of the outcomes carry a risk. That is why it has been found that the decision maker of the present epoch has become dependent on the empirical data and scientific methods. 77 (2): 137–142. This is a tough job because the quality and efficacy of the decision depends to a large extent on the elements with the help of which it has been made. [7][8], The area of choice under uncertainty represents the heart of decision theory. In recent years the develop- ment of the economic theory of con- sumer's decision making (or, as the Decision-making process is a reasoning process based on assumptions of values, preferences and beliefs of the decision-maker. The first is internal setting of the society: Internal setting includes many elements some of which are: The nature and functioning of the social organisation such as political parties, pressure groups, non-governmental organisations, public opinion, agencies helping the formation of public opinion, nature of the political system etc. The policy maker must see that the policy is not divorced from real situation and the real situation chiefly relates to the declared policy of the management or government organ. In fact, the liberal democratic system state does not play an overriding role. A general criticism of decision theory based on a fixed universe of possibilities is that it considers the "known unknowns", not the "unknown unknowns"[citation needed]: it focuses on expected variations, not on unforeseen events, which some argue have outsized impact and must be considered – significant events may be "outside model". stochastic transitivity axioms), reconciling the Von Neumann-Morgenstern axioms with behavioral violations of the expected utility hypothesis, or they may explicitly give a functional form for time-inconsistent utility functions (e.g. This is because the liberal democracies treat all these as part of the political system and since the decision of the government affects all, their opinion should form a part of the decision making process. In democracy very often the political parties, pressure groups, public opinion, mass media, political agitation etc. Similarly, while a decision is being made the decision maker must demonstrate utmost rationality. But the final decision is taken by few top brass of party or bureaucracy. When an administrator is faced with a number of alternatives, he will accept one or two alternatives or the ones he requires. In his solution, he defines a utility function and computes expected utility rather than expected financial value. We shall now deal with a model which was framed in the background of Cuban Missile crisis in 1962 and the model was championed by Graham Allison in 1971. But so far as the importance of bureaucracy in policy­making affairs is concerned Ralph Miliband, noted Marxist, holds the view that in USA bureaucracy plays vital part in both policy formulation and administration. Making a decision is not the end of the process, rather it is a beginning. One point is the whole process of decision making along with its implementation are very complex and almost all the segments of society are interlinked with each other. Dror argues that incremental change by successive limited comparison is only adequate if the results of present policies are reasonably satisfactory, if there is continuity in the nature of the problem, and if there is continuity in the available means for dealing with it. He calls decision making as the heart of the organisation. Herbert Simon divided the concept into two main parts—one is decision— being arrived at and process of action. Decision-making does not relate to one issue or question but to a number of issues. How the society is to be managed or governmental department is to be administered all is related to the decision taken by human beings. Prophets and seers of all kinds peer into the future. The first is the government or the authority of the political system can take action. 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