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Decision making can be regarded as an outcome of mental processes (cognitive process) leading to the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion.
Human performance in decision making terms has been subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values he/she seeks. From a cognitive perspective, the decision making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to.
Yet, at another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is found. Therefore, decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions.
Decision making is said to have an intentional component. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made to act in a particular way. 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 particular action.
Logical 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. Also, recent robust decision efforts have formally integrated uncertainty into the decision making process.
Factors influencing decision making processes
According to behavioralist Isabel Briggs Myers, a person's decision making process depends on a significant degree on their cognitive style. 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; judgement 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 who scored near the thinking, extroversion, sensing, and judgement ends of the dimensions would tend to have a logical, analytical, objective, critical, and empirical decision making style.
Other studies suggest that these national or cross-cultural differences exist across entire societies. For example, Maris Martinsons has found that American, Japanese and Chinese business leaders each exhibit a distinctive national style of decision making.
Cognitive and personal biases
Some of the decision making techniques that we use in everyday life include:
- listing the advantages and disadvantages of each option, popularized by Plato and 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
- prayer, tarot cards, astrology, augurs, revelation, or other forms of divination
- acquiesce to a person in authority or an "expert"
- calculating the expected value or utility for each option.
For example, a person is considering two jobs. At the first job option the person has a 60% chance of getting a 30% percent raise in the first year. And at the second job option the person has an 80% chance of getting a 10% raise in the first year. The decision maker would calculate the expected value of each option, calculating the probability multiplied by the increase of value. (0.60*0.30=0.18 [option a] 0.80*0.10=0.08 [option b]) The person deciding on the job would chose the option with the highest expected value, in this example option number one. An alternative may be to apply one of the processes described below, in particular in the Business and Management section.
Biases can creep into our decision making processes. Many different people have made a decision about the same question (e.g. "Should I have a doctor look at this troubling breast cancer symptom I've discovered?" "Why did I ignore the evidence that the project was going over budget?") and then craft potential cognitive interventions aimed at improving decision making outcomes.
Below is a list of some of the more commonly debated cognitive biases.
- Selective search for evidence (a.k.a. Confirmation bias in psychology) (Plous, 1993) - 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.
- Selective perception - We actively screen-out information that we do not think is salient. (See prejudice.)
- Wishful thinking or optimism bias - 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.) The opposite effect in the first set of data or other information is termed Primacy effect (Plous, 1993).
- 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.)
- 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 (Self Fulfilling Prophecy) - 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.
Neuroscience perspective of decision making
The anterior cingulate cortex (ACC) and orbitofrontal cortex are brain regions involved in decision making processes. A recent neuroimaging 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.
Emotion appears to aid the decision making process:
- Decision making often occurs in the face of uncertainty about whether one's choices will lead to benefit or harm (see also Risk). The somatic-marker hypothesis is a neurobiological theory of how decisions are made in the face of uncertain outcome. This theory holds that such decisions are aided by emotions, in the form of bodily states, that are elicited during the deliberation of future consequences and that mark different options for behavior as being advantageous or disadvantageous. This process involves an interplay between neural systems that elicit emotional/bodily states and neural systems that map these emotional/bodily states. .
Styles and methods of decision making
Positional and combinational styles
Styles and methods of decision making were elaborated by the founder of Predispositioning Theory, Aron Katsenelinboigen. In his analysis on styles and methods Katsenelinboigen referred to the game of chess, saying that “chess does disclose various methods of operation, notably the creation of predisposition—methods which may be applicable to other, more complex systems.”
In his book Katsenelinboigen states that apart from the methods (reactive and selective) and sub-methods (randomization, predispositioning, programming), there are two major styles – positional and combinational. Both styles are utilized in the game of chess. According to Katsenelinboigen, the two styles reflect two basic approaches to the uncertainty: deterministic (combinational style) and indeterministic (positional style). Katsenelinboigen’s definition of the two styles are the following.
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The combinational style is characterized by
- a very narrow, clearly defined, primarily material goal, and
- a program that links the initial position with the final outcome.
In defining the combinational style in chess, Katsenelinboigen writes:
The combinational style features a clearly formulated limited objective, namely the capture of material (the main constituent element of a chess position). The objective is implemented via a well defined and in some cases in a unique sequence of moves aimed at reaching the set goal. As a rule, this sequence leaves no options for the opponent. Finding a combinational objective allows the player to focus all his energies on efficient execution, that is, the player’s analysis may be limited to the pieces directly partaking in the combination. This approach is the crux of the combination and the combinational style of play.
The positional style is distinguished by
- a positional goal and
- a formation of semi-complete linkages between the initial step and final outcome.
“Unlike the combinational player, the positional player is occupied, first and foremost, with the elaboration of the position that will allow him to develop in the unknown future. In playing the positional style, the player must evaluate relational and material parameters as independent variables. ( … ) The positional style gives the player the opportunity to develop a position until it becomes pregnant with a combination. However, the combination is not the final goal of the positional player—it helps him to achieve the desirable, keeping in mind a predisposition for the future development. The Pyrrhic victory is the best example of one’s inability to think positionally.”
The positional style serves to
a) create a predisposition to the future development of the position;
b) induce the environment in a certain way;
c) absorb an unexpected outcome in one’s favor;
d) avoid the negative aspects of unexpected outcomes.
The positional style gives the player the opportunity to develop a position until it becomes pregnant with a combination. Katsenelinboigen writes:
“As the game progressed and defense became more sophisticated the combinational style of play declined. . . . The positional style of chess does not eliminate the combinational one with its attempt to see the entire program of action in advance. The positional style merely prepares the transformation to a combination when the latter becomes feasible.”
Decision making in groups is sometimes examined separately as process and outcome. Process refers to the group interactions. 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, group decision support systems (GDSS) may have different decision rules. A decision rule is the GDSS protocol a group uses to choose among scenario planning alternatives.
- Unanimity is commonly used by juries in criminal trials in the United States. Unanimity requires everyone to agree on a given course of action, and thus imposes a high bar for action.
- 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.
- Range voting allows a group to select one option from a set by letting each member score one or more of the available options. The option with the highest average is chosen. This method has experimentally been shown to produce the lowest Bayesian regret among common voting methods, even when voters are strategic.
- 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.
- 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.
- Participatory, where each actor would have a say in decisions directly proportionate to the degree that particular decision affects him or her. Those not affected by a decision would have no say and those exclusively affected by a decision would have full say. Likewise, those most affected would have the most say while those least affected would have the least say.
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.
Moral dimension of decision making
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
- everyone participates in a certain class of meta-decisions
- method: parliamentary democracy
- everyone participates in every decision
There are many decision making levels having a participation element. A common example is that of institutions making decisions that affect those for whom they provide. In such cases an understanding of what participation level is involved becomes crucial to understand the process and power structures dynamics.
Control-Ethics. When organisations/institutions make decisions it is important to find the balance between the parameters of control mechanisms and the ethical principles which ensure 'best' outcome for individuals and communities impacted on by the decision. Controls may be set by elements such as Legislation, historical precedents, available resources, Standards, policies, procedures and practices. Ethical elements may include equity, fairness, transparency, social justice, choice, least restrictive alternative, empowerment.
Empowerment is a persons way of expressing control.
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 making in business and management
In general, business and management systems should be set up to allow decision making at the lowest possible level.
Several decision making models or practices for business include:
- SWOT Analysis - Evaluation by the decision making individual or organization of Strengths, Weaknesses, Opportunities and Threats with respect to desired end state or objective.
- Analytic Hierarchy Process - procedure for multi-level goal hierarchy
- Buyer decision processes - transaction before, during, and after a purchase
- Complex systems - common behavioural and structural features that can be modelled
- Corporate finance:
- Cost-benefit analysis - process of weighing the total expected costs vs. the total expected benefits
- Control-Ethics, a decision making framework that balances the tensions of accountability and 'best' outcome.
- Decision trees
- Force field analysis - analyzing forces that either drive or hinder movement toward a goal
- Game theory - the branch of mathematics that models decision strategies for rational agents under conditions of competition, conflict and cooperation.
- Grid Analysis - analysis done by comparing the weighted averages of ranked criteria to options. A way of comparing both objective and subjective data.
- Hope and fear (or colloquially greed and fear) as emotions that motivate business and financial players, and often bear a higher weight that the rational analysis of fundamentals, as discovered by neuroeconomics research
- 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
- Paired Comparison Analysis - paired choice analysis
- Pareto Analysis - selection of a limited of number of tasks that produce significant overall effect
- Robust decision - making the best possible choice when information is incomplete, uncertain, evolving and inconsistent
- Satisficing - In decision-making, satisficing explains the tendency to select the first option that meets a given need or select the option that seems to address most needs rather than seeking the “optimal” solution.
- 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
- Trend following and other imitations of what other business deciders do, or of the current fashions among consultants.
Decision-makers and influencers
In the context of 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. Large purchasing decisions are frequently taken by groups, rather than individuals, and the official buyer often does not have authority to make the decision.
Decision Support Systems
Decision making software is essential for autonomous robots and for different forms of active decision support for industrial operators, designers and managers.
Due to the large number of considerations involved in many decisions, computer-based decision support systems (DSS) 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. DSSs which try to realize some human/cognitive decision making functions are called Intelligent Decision Support Systems (IDSS), see for ex. "An Approach to the Intelligent Decision Advisor (IDA) for Emergency Managers, 1999". On the other hand, an active/intelligent DSS is an important tool for the design of complex engineering systems and the management of large technological and business projects, see also: "Decision engineering, an approach to Business Process Reengineering (BPR) in a strained industrial and business environment".
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