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Decision-making

In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rational or irrational. The decision-making process is a reasoning process based on assumptions of values, preferences and beliefs of the decision-maker.[1] Every decision-making process produces a final choice, which may or may not prompt action.

This article is about decision-making as analyzed in psychology. For a broader discipline, see Decision theory. For decision-making in groups, see Group decision-making.

Research about decision-making is also published under the label problem solving, particularly in European psychological research.[2]

: examining individual decisions in the context of a set of needs, preferences and values the individual has or seeks.

Psychological

: the decision-making process is regarded as a continuous process integrated in the interaction with the environment.

Cognitive

: the analysis of individual decisions concerned with the logic of decision-making, or communicative rationality, and the invariant choice it leads to.[4]

Normative

Decision-making can be regarded as a problem-solving activity yielding a solution deemed to be optimal, or at least satisfactory. It is therefore a process which can be more or less rational or irrational and can be based on explicit or tacit knowledge and beliefs. Tacit knowledge is often used to fill the gaps in complex decision-making processes.[3] Usually, both of these types of knowledge, tacit and explicit, are used together in the decision-making process.


Human performance has been the subject of active research from several perspectives:


A major part of decision-making involves the analysis of a finite set of alternatives described in terms of evaluative criteria. Then the task might be to rank these alternatives in terms of how attractive they are to the decision-maker(s) when all the criteria are considered simultaneously. Another task might be to find the best alternative or to determine the relative total priority of each alternative (for instance, if alternatives represent projects competing for funds) when all the criteria are considered simultaneously. Solving such problems is the focus of multiple-criteria decision analysis (MCDA). This area of decision-making, although long established, has attracted the interest of many researchers and practitioners and is still highly debated as there are many MCDA methods which may yield very different results when they are applied to exactly the same data.[5] This leads to the formulation of a decision-making paradox. Logical decision-making is an important part of all science-based professions, where specialists apply their knowledge in a given area to make informed decisions. For example, medical decision-making often involves a diagnosis and the selection of appropriate treatment. But naturalistic decision-making research shows that in situations with higher time pressure, higher stakes, or increased ambiguities, experts may use intuitive decision-making rather than structured approaches. They may follow a recognition-primed decision that fits their experience, and arrive at a course of action without weighing alternatives.[6]


The decision-maker's environment can play a part in the decision-making process. For example, environmental complexity is a factor that influences cognitive function.[7] A complex environment is an environment with a large number of different possible states which come and go over time.[8] Studies done at the University of Colorado have shown that more complex environments correlate with higher cognitive function, which means that a decision can be influenced by the location. One experiment measured complexity in a room by the number of small objects and appliances present; a simple room had less of those things. Cognitive function was greatly affected by the higher measure of environmental complexity, making it easier to think about the situation and make a better decision.[7]

Problems are merely deviations from performance standards.

Problems must be precisely identified and described

Problems are caused by a change from a distinctive feature

Something can always be used to distinguish between what has and has not been affected by a cause

Causes of problems can be deduced from relevant changes found in analyzing the problem

Most likely cause of a problem is the one that exactly explains all the facts, while having the fewest (or weakest) assumptions ().

Occam's razor

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.

Consensus decision-making

Voting-based methods

Majority

is a structured communication technique for groups, originally developed for collaborative forecasting but has also been used for policy making.[42]

Delphi method

is a facilitation method that relies on the use of special forms called Dotmocracy. They are sheets that allows large groups to collectively brainstorm and recognize agreements on an unlimited number of ideas they have each wrote.[43]

Dotmocracy

occurs when an authority opens up the decision-making process to a group of people for a collaborative effort.

Participative decision-making

uses a visual map of the decision-making process based on system dynamics and can be automated through a decision modeling tool, integrating big data, machine learning, and expert knowledge as appropriate.

Decision engineering

Orientation. Members meet for the first time and start to get to know each other.

Conflict. Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out.

Emergence. The group begins to clear up vague opinions by talking about them.

. Members finally make a decision and provide justification for it.

Reinforcement

Rational and irrational[edit]

In economics, it is thought that if humans are rational and free to make their own decisions, then they would behave according to rational choice theory.[54]: 368–370  Rational choice theory says that a person consistently makes choices that lead to the best situation for themselves, taking into account all available considerations including costs and benefits; the rationality of these considerations is from the point of view of the person themselves, so a decision is not irrational just because someone else finds it questionable.


In reality, however, there are some factors that affect decision-making abilities and cause people to make irrational decisions – for example, to make contradictory choices when faced with the same problem framed in two different ways (see also Allais paradox).


Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. Irrational decision is more counter to logic. The decisions are made in haste and outcomes are not considered.[55]


One of the most prominent theories of decision making is subjective expected utility (SEU) theory, which describes the rational behavior of the decision maker.[56] The decision maker assesses different alternatives by their utilities and the subjective probability of occurrence.[56]


Rational decision-making is often grounded on experience and theories that are able to put this approach on solid mathematical grounds so that subjectivity is reduced to a minimum, see e.g. scenario optimization.


Rational decision is generally seen as the best or most likely decision to achieve the set goals or outcome.[57]

Children, adolescents, and adults[edit]

Children[edit]

It has been found that, unlike adults, children are less likely to have research strategy behaviors. One such behavior is adaptive decision-making, which is described as funneling and then analyzing the more promising information provided if the number of options to choose from increases. Adaptive decision-making behavior is somewhat present for children, ages 11–12 and older, but decreases in presence the younger they are.[58] The reason children are not as fluid in their decision making is because they lack the ability to weigh the cost and effort needed to gather information in the decision-making process. Some possibilities that explain this inability are knowledge deficits and lack of utilization skills. Children lack the metacognitive knowledge necessary to know when to use any strategies they do possess to change their approach to decision-making.[58]


When it comes to the idea of fairness in decision making, children and adults differ much less. Children are able to understand the concept of fairness in decision making from an early age. Toddlers and infants, ranging from 9–21 months, understand basic principles of equality. The main difference found is that more complex principles of fairness in decision making such as contextual and intentional information do not come until children get older.[59]

Selective search for (also known as confirmation bias): People tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions. Individuals who are highly defensive in this manner show significantly greater left prefrontal cortex activity as measured by EEG than do less defensive individuals.[67]

evidence

Premature termination of search for evidence: People tend to accept the first alternative that looks like it might work.

is the unwillingness to change existing thought patterns in the face of new circumstances.

Cognitive inertia

Selective perception: People actively screen out information that they do not think is important (see also ). In one demonstration of this effect, discounting of arguments with which one disagrees (by judging them as untrue or irrelevant) was decreased by selective activation of right prefrontal cortex.[68]

Prejudice

is a tendency to want to see things in a certain – usually positive – light, which can distort perception and thinking.[69]

Wishful thinking

occurs when people distort their memories of chosen and rejected options to make the chosen options seem more attractive.

Choice-supportive bias

Recency: People tend to place more attention on more recent information and either ignore or forget more distant information (see ). The opposite effect in the first set of data or other information is termed primacy effect.[70]

Semantic priming

Repetition bias is a willingness to believe what one has been told most often and by the greatest number of different sources.

: Decisions are unduly influenced by initial information that shapes our view of subsequent information.

Anchoring and adjustment

is peer pressure to conform to the opinions held by the group.

Groupthink

Source credibility bias is a tendency to reject a person's statement on the basis of a bias against the person, organization, or group to which the person belongs. People preferentially accept statements by others that they like (see also ).

Prejudice

Incremental decision-making and escalating commitment: People 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

: People tend to attribute their own success to internal factors, including abilities and talents, but explain their failures in terms of external factors such as bad luck. The reverse bias is shown when people explain others' success or failure.

Attribution asymmetry

Role fulfillment is a tendency to conform to others' decision-making expectations.

Underestimating and the illusion of control: People tend to underestimate future uncertainty because of a tendency to believe they have more control over events than they really do.

uncertainty

Framing bias

[71]

involves the idea that when faced with a decision-making event, an individual is more likely to take on a risk when evaluating potential losses, and are more likely to avoid risks when evaluating potential gains. This can influence one's decision-making depending if the situation entails a threat, or opportunity.[54]: 373 

Prospect theory

is a tendency to overestimate the likelihood of positive events occurring in the future and underestimate the likelihood of negative life events.[72] Such biased expectations are generated and maintained in the face of counter-evidence through a tendency to discount undesirable information.[73] An optimism bias can alter risk perception and decision-making in many domains, ranging from finance to health.

Optimism bias

was developed to eliminate or reduce cognitive biases in decision-making.

Reference class forecasting

Biases usually affect decision-making processes. They appear more when decision task has time pressure, is done under high stress and/or task is highly complex.[66]


Here is a list of commonly debated biases in judgment and decision-making:

a very narrow, clearly defined, primarily material goal; and

a program that links the initial position with the outcome.

Brockman, John (2013). Thinking: The New Science of Decision-Making, Problem-Solving, and Prediction. Harper Perennial.  9780062258540.

ISBN

Kahneman, Daniel; Lovallo, Dan; Sibony, Olivier; Charan, Ram (2013). HBR's 10 Must Reads on Making Smart Decisions. Harvard Business Review Press.  978-1422189894.

ISBN

Partnoy, Frank (2013). Wait: The Art and Science of Delay. PublicAffairs.  978-1610392471.

ISBN