Decision
making is the cognitive process leading to the selection of a
course of action among alternatives. Every decision making process produces a
final choice called a
decision. It can
be an action or an opinion. It begins when we need to do something but we do
not know what. Therefore, decision-making is a reasoning process which can be
rational or irrational, and can be based on explicit assumptions or tacit
assumptions.
Common
examples include shopping, deciding what to eat, when to
sleep, and
deciding whom or what to vote for in an election or referendum.
Decision
making is said to be a psychological construct. This means that although we can
never "see" a decision, we can infer from observable behavior that a
decision has been made. Therefore, we conclude that a psychological event that
we call "decision making" has occurred. It is a construction that
imputes commitment to action. That is, based on observable actions, we assume
that people have made a commitment to affect the action.
Structured
rational decision making is an important part of all science-based professions,
where specialists apply their knowledge in a
given area to making informed decisions. For example, medical decision
making often involves making a diagnosis and
selecting an appropriate treatment. Some research using naturalistic methods shows,
however, that in situations with higher time pressure, higher stakes, or
increased ambiguities, experts use intuitive decision making rather than
structured approaches, following a recognition primed decision approach
to fit a set of indicators into the expert's experience and immediately arrive
at a satisfactory course of action without weighing alternatives.
Due to
the large number of considerations involved in many decisions, computer-based decision support systems have been developed to assist
decision makers in considering the implications of various courses of thinking.
They can help reduce the risk of human errors. The systems which try to realize some human/cognitive decision
making functions are called Intelligent Decision Support Systems (IDSS), see
for ex
Decision making style
According
to behavior list Isabel Briggs Myers (1962), a person's decision
making process depends to a significant degree on their cognitive style.
Starting from the work of Carl Jung, Myers
developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MBTI).
The terminal points on these dimensions are: thinking and feeling;
extroversion and introversion; judgment and perception;
and sensing and intuition. She claimed that a person's decision
making style is based largely on how they score on these four dimensions. For
example, someone that scored near the thinking, extroversion, sensing, and judgment
ends of the dimensions would tend to have a logical, analytical, objective,
critical, and empirical decision making style.
Cognitive and personal
biases in decision making
It is
generally agreed that biases can creep into our decision making processes, calling into
question the correctness of a decision. It is not generally agreed, however,
which normative models are to be used to evaluate what constitutes an erroneous
decision. Nor is the scientific evidence for all of the biases agreed upon. So,
while it is agreed that decision making can be biased, how to tell when it is,
and specific cases of biases, are often challenged. The issue in general can be
quite controversial among scholars in the field. Below is a list of some of the
more commonly debated cognitive biases.
- Selective search for evidence - We tend to be
willing to gather facts that support certain conclusions but disregard
other facts that support different conclusions.
- Premature termination of search for
evidence - We tend to accept the first alternative that looks like it
might work.
- Inertia - Unwillingness to change
thought patterns that we have used in the past in the face of new
circumstances.
- Contrariness or rebelliousness -
Unwillingness to share a view with a perceived oppressive authority.
- Experiential limitations - Unwillingness
or inability to look beyond the scope of our past experiences; rejection
of the unfamiliar.
- Selective perception - We actively screen-out
information that we do not think is salient. (See prejudice.)
- Wishful thinking or optimism -
We tend to want to see things in a positive light and this can distort our
perception and thinking.
- Choice-supportive
bias
occurs when we distort our memories of chosen and rejected options to make
the chosen options seem relatively more attractive.
- Recency - We tend to place more
attention on more recent information and either ignore or forget more
distant information. (See semantic priming.)
- Repetition bias - A willingness to
believe what we have been told most often and by the greatest number of
different of sources.
- Anchoring
and adjustment - Decisions are unduly influenced by initial
information that shapes our view of subsequent information.
- Group think - Peer pressure to conform to
the opinions held by the group.
- Source credibility bias - We reject
something if we have a bias against the person, organization, or group to
which the person belongs: We are inclined to accept a statement by someone
we like. (See prejudice.)
- Incremental decision making and
escalating commitment - We look at a decision as a small step in a process
and this tends to perpetuate a series of similar decisions. This can be
contrasted with zero-based decision making. (See slippery slope.)
- Inconsistency - The unwillingness to
apply the same decision criteria in similar situations.
- Attribution asymmetry - We tend to
attribute our success to our abilities and talents, but we attribute our
failures to bad luck and external factors. We attribute other's success to
good luck, and their failures to their mistakes.
- Role fulfillment - We conform to the
decision making expectations that others have of someone in our position.
- Underestimating uncertainty and the
illusion of control - We tend to underestimate future uncertainty because
we tend to believe we have more control over events than we really do. We
believe we have control to minimize potential problems in our decisions.
- Faulty generalizations - In order to
simplify an extremely complex world, we tend to group things and people.
These simplifying generalizations can bias decision making processes.
- Ascription of causality - We tend to
ascribe causation even when the evidence only suggests correlation. Just
because birds fly to the equatorial regions when the trees lose their
leaves, does not mean that the birds migrate because the trees lose
their leaves. .
Cognitive neuroscience of
decision making
The anterior cingulated cortex (ACC)
and orbit frontal cortex are brain regions involved in
decision making processes. A recent Neurons imaging study, Interactions
between decision making and performance monitoring within prefrontal cortex, found
distinctive patterns of neural activation in these regions depending on whether
decisions were made on the basis of personal volition or
following directions from someone else.
Another
recent study by Kennerly,
et al. (2006) found that lesions to the ACC in the macaque resulted
in impaired decision making in the long run of reinforcement guided tasks
suggesting that the ACC is responsible for evaluating past reinforcement
information and guiding future action.
Decision making in groups (Team)
Decision
making in groups (team) is sometimes
examined separately as process and outcome. Process refers to the interactions
among individuals that lead to the choice of a particular course of action. An
outcome is the consequence of that choice. Separating process and outcome is
convenient because it helps explain that a good decision making processes does
not guarantee a good outcome, and that a good outcome does not presuppose a
good process. Thus, for example, managers interested in good decision making
are encouraged to put good decision making processes in place. Although these
good decision making processes do not guarantee good outcomes, they can tip the
balance of chance in favor of good outcomes.
A critical aspect for decision
making groups is the ability to converge on a choice.
Politics is one
approach to making decisions in groups. This process revolves around the
relative power or ability to influence of the individuals in the group. Some
relevant ideas include coalitions among participants as well as influence and
persuasion. The use of politics is often judged negatively, but it is a useful
way to approach problems when preferences among actors are in conflict, when
dependencies exist that cannot be avoided, when there are no super-ordinate
authorities, and when the technical or scientific merit of the options is
ambiguous.
In
addition to the different processes involved in making decisions, groups can
also have different decision rules. A decision rule is the approach used by a
group to mark the choice that is made.
- Unanimity is commonly
used by juries in criminal trials in the
- Majority requires
support from more than 50% of the members of the group. Thus, the bar for
action is lower than with unanimity and a group of "losers" is
implicit to this rule.
- Consensus decision-making tries to avoid
"winners" and "losers". Consensus requires that a
majority approve a given course of action, but that the minority agree to
go along with the course of action. In other words, if the minority
opposes the course of action, consensus requires that the course of action
be modified to remove objectionable features.
- Gathering involves all participants acknowledging
each other's needs and opinions and tends towards a problem solving
approach in which as many needs and opinions as possible can be satisfied.
It allows for multiple outcomes and does not require agreement from some
for others to act.
- Sub-committee involves
assigning responsibility for evaluation of a decision to a sub-set of a
larger group, which then comes back to the larger group with
recommendations for action. Using a sub-committee is more common in larger
governance groups, such as a legislature. Sometimes a
sub-committee includes those individuals most affected by a decision,
although at other times it is useful for the larger group to have a
sub-committee that involves more neutral participants.
Less desirable group team decision rules are:
- Plurality, where the
largest block in a group decides, even if it falls short of a majority.
- Dictatorship, where one
individual determines the course of action.
Plurality
and dictatorship are less desirable as decision rules because they do not
require the involvement of the broader group to determine a choice. Thus, they
do not engender commitment to the course of action chosen. An absence of commitment
from individuals in the group can be problematic during the implementation
phase of a decision.
There are
no perfect decision making rules. Depending on how the rules are implemented in
practice and the situation, all of these can lead to situations where either no
decision is made, or to situations where decisions made are inconsistent with
one another over time.
Principles
The
ethical principles of decision making vary considerably. Some common choices of
principles and the methods which seem to match them include:
- the most powerful person/group decides
- method: dictatorship or oligarchy
- everyone participates in a certain class
of meta-decisions
- method: parliamentary democracy
- everyone participates in every decision
There are
many grades of decision making which have an element of participation. A common
example is that of institutions making decisions which affect those they are
charged to provide for. In such cases an understanding of what participation is, is
crucial to understand the process and the power structures at play.
Decision making in one's
personal life
Some of the decision making
techniques that we use in everyday life include:
- listing the advantages and disadvantages
of each option, popularized by Benjamin Franklin
- flipping a coin, cutting a deck of
playing cards, and other random or coincidence methods
- accepting the first option that seems
like it might achieve the desired result
- tarot cards, astrology, augurs,
revelation, or other forms of divination
- acquiesce to a person in authority or an
"expert"
An
alternative may be to apply one of the processes described below, in particular
in the Business and Management section.
Decision making in healthcare
In the health
care field, the steps of making a decision may be remembered with the
mnemonic Brand, which includes
- Benefits of the action
- Risks in the action
- Alternatives to the prospective action
- Nothing: that is, doing
nothing at all
- Decision
Path
dependency
It is
perhaps pertinent to note that the cost of making no decision at all itself is
a factor, and that the benefit of making some decision, even a random choice,
can be beneficial in the longer term. Thus the reversibility of an action may
be a good way to judge whether or not an action or process is beneficial. A resource can also be viewed as something expendable, or bearing a cost, rather
than the implication of selecting something irrevocably.
Decision making in
business and management
In
general, business and management systems should be set up to allow decision
making at the lowest possible level.
- Analytic Hierarchy Process - procedure for
multi-level goal hierarchy
- Buyer
decision processes - transaction before, during, and after
a purchase
- Complex systems - common behavioral
and structural features that can be modeled
- Corporate finance:
- The investment
decision
- The financing
decision
- The dividend decision
- working capital
management decisions
- Cost-benefit
analysis
- process of weighing the total expected costs vs. the total expected
benefits
- Decision trees
- Program Evaluation and Review Technique (PERT)
- critical path analysis
- critical chain analysis
- Force
field analysis - analyzing forces that either drive or hinder
movement toward a goal
- Grid Analysis - analysis done
by comparing the weighted averages of ranked criteria to options. A way of
comparing both objective and subjective data.
- Linear programming - optimization
problems in which the objective function and the constraints are all
linear
- Min-max criterion
- Model (economics)- theoretical
construct of economic processes of variables and their relationships
- Monte Carlo method - class of
computational algorithms for simulating systems
- Morphological
analysis
- all possible solutions to a multi-dimensional problem complex
- optimization
- Paired Comparison Analysis - paired choice
analysis
- Pareto Analysis - selection of
a limited of number of tasks that produce significant overall effect
- Scenario analysis - process of
analyzing possible future events
- Six Thinking Hats - symbolic
process for parallel thinking
- Strategic planning process -
applying the objectives, SWOTs, strategies, programs process
- Ubiquitous command and control is a concept
for dynamic decision making based on "agreement between an individual
and the world", and "agreements between individuals"
Decision-makers and influencers
In the
context of industrial goods marketing, there is much theory, and even more
opinion, expressed about how the various `decision-makers' and `influencers'
(those who can only influence, not decide, the final decision) interact.
Decisions are frequently taken by groups, rather than individuals, and the
official buyer often does not have authority to take the decision.
Miller
& Heiman, for example, offered a more complex view of industrial buying
decisions (particularly in the area of `complex sales' of capital equipment).
They see three levels of decision-making:
'economic
buying influence' - the decision-maker who can authorize the necessary funds
for purchase
'user
buying influences' - the people in the buying company who will use the product
and will specify what they want to purchase
'technical
buying influence' - the `experts' (including, typically, the buying department)
who can veto the purchase on technical grounds
Webster
and Wind, in a similar vein, identify six roles within the `buying centre':
'users' -
who will actually use the product or service
'influencers'
- particularly technical personnel
'deciders'
- the actual decision-makers
approvers'
- who formally authorize the decision
'buyers'
- the department with formal authority
'gatekeepers'
- those who have the power to stop the sellers reaching other members of the
`buying centre'
