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Decision making - Wikipedia, the free encyclopedia

Decision making can be regarded as thecognitive process resulting in the selection of a course of action among several alternative scenarios. Every decision making process produces a final choice.[1] The output can be an action or an opinion of choice.
Contents [hide] 1 Overview 2 Rational and irrational decision making 3 Information overload 4 Problem analysis vs decision making 5 Everyday techniques 6 Decision making stages 7 Decision making steps 8 Cognitive and personal biases 9 Post-decision analysis 10 Cognitive styles 10.1 Influence of Myers-Briggs type 10.2 Optimizing vs. satisficing 10.3 Combinatorial vs. positional 11 Neuroscience perspective 12 See also 13 References

Overview

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Human performance in decision terms has been the 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 they seek. 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 thelogic of decision making and rationality and the invariant choice it leads to.[2] Yet, at another level, it might be regarded as a problem solving activity which is terminated when a satisfactory solution is reached. Therefore, decision making is a reasoning or emotional process which can be rational or irrational, can be based on explicit assumptions or tacit assumptions. Decisions are likely to be involuntary and following the decision, we spend time analyzing the cost and benefits of that decision.[3] This is known as "Rational Choice Theory," which encompasses the notion that we maximize benefits and minimize the costs.[4] One must keep in mind that most decisions are made unconsciously. Jim Nightingale, Author of Think Smart-Act Smart, states that "we simply decide without thinking much about the decision process." In a controlled environment, such as a classroom, instructors encourage students to weigh pros and cons before making a decision. However in the real world, most of our decisions are made unconsciously in our mind because frankly, it would take too much time to sit down and list the pros and cons of each decision we must make on a daily basis.[citation needed] 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 making a diagnosis and selecting an appropriate treatment. Some[which?] research using naturalistic methods shows, however, that in situations with higher time pressure, higher stakes, or increased ambiguities, experts
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useintuitive 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. Recent robust decision efforts have formally integrated uncertainty into the decision making process. However, decision analysis, recognized and included uncertainties with a structured and rationally justifiable method of decision making since its conception in 1964. A major part of decision making involves the analysis of a finite set of alternatives described in terms of evaluative criteria. Information Overload is when there is a substantial gap between the capacity of information and the ways we adapt. The overload of information can be related to problems processing and tasking, which impacts decision making.[5] These criteria may be benefit or cost in nature. Then the problem 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 goal might be to just 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 multi-criteria decision analysis (MCDA) also known as multi-criteria decision making (MCDM). This area of decision making, although it is very old and has attracted the interest of many researchers and practitioners, is still highly debated as there are many MCDA / MCDM methods which may yield very different results when they are applied on exactly the same data.[6] This leads to the formulation of a decision making paradox.

Rational and irrational decision making

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In economics, it is thought that if humans are rational and free to make their own decisions, then they would behave according to the rational choice theory.[7] This theory states that people make decisions by determining the likelihood of a potential outcome, the value of the outcome and then multiplying the two. For example, with a 50% chance of winning $20 or a 10% chance of winning $10, people more likely to choose the first option.[7] However, in reality, there are some factors that affect decision making abilities and cause people to make irrational decisions, one of them being availability bias. Availability bias is the tendency for some items that are more readily available in memory to be judged as more frequently occurring.[7] For example, someone who watches a lot of movies about terrorist attacks may think the frequency of terrorism to be higher than it actually is.

Information overload

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This section does not cite any references or sources.Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. (April 2013) Information overload is "a gap between the volume of information and the tools we need to assimilate it."[8] It is proven in some studies [which?] that the more information overload, the worse the quality of decisions made. There are 5 factors concerning information overload: Personal Information Factors: personal qualifications, experiences, attitudes etc. Information Characteristics: information quality, quantity and frequency Tasks and Process: standardized procedures or methods Organizational Design: organizations' cooperation, processing capacity and organization relationship Information Technology: IT management, and general technology Hall, Ariss & Todorov with an assistant Rashar phinyor (2007) described an illusion of knowledge, meaning that as individuals encounter too much knowledge it actually interferes with their ability to make rational decisions.[9] decision making process

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Problem analysis vs decision making

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It is important to differentiate between problem analysis and decision mak ing. The concepts are completely separate from one another. Traditionally it is argued that problem analysis must be done first, so that the information gathered in that process may be used towards decision making.[10] Problem analysis Analyze performance, what should the results be against what they actually are Problems are merely deviations from performance standards Problem 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 hasn't been affected by a cause Causes to problems can be deducted from relevant changes found in analyzing the problem Most likely cause to a problem is the one that exactly explains all the facts Decision making Objectives must first be established Objectives must be classified and placed in order of importance Alternative actions must be developed The alternative must be evaluated against all the objectives The alternative that is able to achieve all the objectives is the tentative decision The tentative decision is evaluated for more possible consequences The decisive actions are taken, and additional actions are taken to prevent any adverse consequences from becoming problems and starting both systems (problem analysis and decision making) all over again There are steps that are generally followed that result in a decision model that can be used to determine an optimal production plan.[11] In a situation featuring conflict, role-playing is helpful for predicting decisions to be made by involved parties.[12] Decision planning Making a decision without planning is fairly common, but does not often end well. Planning allows for decisions to be made comfortably and in a smart way. Planning makes decision making a lot more simple than it is. Decision will get four benefits out of planning: 1. Planning give chance to the establishment of independent goals. It is a conscious and directed series of choices. 2. Planning provides a standard of measurement. It is a measurement of whether you are going towards or further away from your goal. 3. Planning converts values to action. You think twice about the plan and decide what will help advance your plan best. 4. Planning allows for limited resources to be committed in an orderly way. Always govern the use of what is limited to you. (e.g. money, time, etc.)[13] Analysis paralysis Analysis paralysis is the state of over-analyzing (or over-thinking) a situation, or citing sources, so that a decision or action is never taken, in effect paralyzing the outcome.

Everyday techniques

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Decision making techniques can be separated into two broad categories: Group decision making techniques and individual decision making techniques: Group decision making techniques 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
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minority opposes the course of action, consensus requires that the course of action be modified to remove objectionable features. Voting-based methods Range voting lets 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.[citation needed] 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.[citation needed] Plurality, where the largest block in a group decides, even if it falls short of a majority. Delphi method is structured communication technique for groups, originally developed for collaborative forecasting but has also been used for policy making Dotmocracy is a facilitation method that relies on the use of special forms called Dotmocracy Sheets to allow large groups to collectively brainstorm and recognize agreement on an unlimited number of ideas they have authored. Individual decision making techniques Pros and cons: listing the advantages and disadvantages of each option, popularized by Plato and Benjamin Franklin.[14][15] Contrast the costs and benefits of all alternatives. Also called Rational decision making. Simple prioritization: choosing the alternative with the highest probability-weightedutility for each alternative (see Decision analysis) Satisficing: examining alternatives only until an acceptable one is found. Elimination by Aspects: choosing between alternatives using Mathematical psychology [16] Technique was introduced by Amos Tversky in 1972. It is a covert elimination process that involves comparing all available alternatives by aspects. The decision-maker chooses an aspect; any alternatives without that aspect are eliminated. The decision-maker repeats this process with as many aspects as needed until there remains only one alternative[17] Preference Trees: In 1979 Amos Tversky and Shmuel Sattach updated the elimination by aspects technique by presenting a more ordered and structured way of comparing the available alternatives. This technique compared the alternatives by presenting the aspects in a decided and sequential order. It became a more hierarchical system in which the aspects are ordered from general to specific [18] Acquiesce to a person in authority or an "expert", just following orders Flipism: flipping a coin, cutting a deck of playing cards, and other random or coincidence methods [19] Prayer, tarot cards, astrology, augurs, revelation, or other forms of divination Taking the most opposite action compared to the advice of mistrusted authorities (parents, police officers, partners ...) Opportunity cost: calculating the opportunity cost of each options and decide the decision Bureaucratic: set up criteria for automated decisions Political: negotiate choices among interest groups Participative decision-making (PDM): a methodology in which a single decision maker opens up the decision making process to a group for a collaborative effort in order to take advantage of additional input. Use of a structured decision making method [20] Individual decision making techniques can often be applied by a group as part of a group decision making technique. A need to use software for the decision making process is emerging for individuals and businesses. This is due to increasing decision complexity, and increased requirements to consider additional stakeholders, categories, elements, or factors that impact important decisions.

Decision making stages

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Developed by B. Aubrey Fisher, there are four stages that should be involved in all group decision making. These stages, or sometimes called phases, are important for the decision making process to begin Orientation stage This phase is where members meet for the first time and start to get to know each other. Conflict stage Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out. Emergence stage The group begins to clear up vague opinions by talking about them. Reinforcement stage Members finally make a decision, while justifying themselves that it was the right decision. It is said that critical norms in a group improves the quality of decisions, while the majority of opinions (called consensus norms) do not. This is due to collaboration between one another, and when group members get used to, and familiar with, each other, they will tend to argue and create more of a dispute to agree upon one decision. This does not mean that all group members fully agree they may not want argue further just to be liked by other group members or to "fit in".[21]

Decision making steps

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Each step in the decision making process may include social, cognitive and cultural obstacles to successfully negotiating dilemmas. It has been suggested that becoming more aware of these obstacles allows one to better anticipate and overcome them.[22] The Arkansas Program presents eight stages of moral decision making based on the work ofJames Rest: 1. Establishing community: creating and nurturing the relationships, norms, and procedures that will influence how problems are understood and communicated. This stage takes place prior to and during a moral dilemma 2. Perception: recognizing that a problem exists 3. Interpretation: identifying competing explanations for the problem, and evaluating the drivers behind those interpretations 4. Judgment: sifting through various possible actions or responses and determining which is more justifiable 5. Motivation: examining the competing commitments which may distract from a more moral course of action and then prioritizing and committing to moral values over other personal, institutional or social values 6. Action: following through with action that supports the more justified decision. Integrity is supported by the ability to overcome distractions and obstacles, developing implementing skills, and ego strength 7. Reflection in action 8. Reflection on action Other decision making processes have also been proposed. One such process, proposed by Dr. Pam Brown of Singleton Hospital in Swansea, Wales, breaks decision making down into seven steps:[23] 1. Outline your goal and outcome. 2. Gather data. 3. Develop alternatives (i.e., brainstorming) 4. List pros and cons of each alternative. 5. Mak e the decision. 6. Immediately tak e action to implement it. 7. Learn from and reflect on the decision.

Cognitive and personal biases

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Biases can creep into our decision making processes. Many different people have made a decision about the same
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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. Here is a list of commonly debated biases in judgment and decision making. Selective search for evidence (a.k.a. Confirmation bias in psychology) (Scott Plous, 1993) 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.[24] Premature termination of search for evidence People tend to accept the first alternative that looks like it might work. Cognitive inertia Unwillingness to change existing thought patterns in the face of new circumstances. Selective perception We actively screen-out information that we do not think is important. (See prejudice.) 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.[25] Wishful thinking a tendency to want to see things in a positive light, which can distort perception and thinking.[26] Choice-supportive bias occurs when people distort their memories of chosen and rejected options to make the chosen options seem more attractive. Recency People 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.[27] Repetition bias A willingness to believe what one has been told most often and by the greatest number of different 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 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 statement by others that they 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 mak ing (see slippery slope). Attribution asymmetry 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. Role fulfillment A tendency to conform to others' decision-making expectations. Underestimating uncertainty 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. Framing bias is best avoided by using numeracy with absolute measures of efficacy.[28] Sunk-cost fallacy is a specific type of framing effect that affects decision making. It involves an individual making a decision about a current situation based on what they have previously invested in the situation.[29] A possible example to this would be an individual that is refraining from dropping a class that that they are most likely to fail, due to the fact that they feel as though they have done so much work in the course thus far. Prospect theoryinvolves 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.[30]
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Reference class forecasting was developed to eliminate or reduce cognitive biases in decision making.

Post-decision analysis

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Evaluation and analysis of past decisions is complementary to decision making; see alsomental accounting and Postmortem documentation.

Cognitive styles

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Influence of Myers-Briggs type

According to behavioralist Isabel Briggs Myers, a person's decision making process depends to a significant degree on their cognitive style.[31] Myers developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MBTI). The terminal points on these dimensions are: think ing and feeling; extroversion and introversion; judgment and perception; and sensing and intuition. She claimed that a person's decision making style correlates well with how they score on these four dimensions. For example, someone who 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. However, some[who?] psychologists say that the MBTI lacks reliability and validity and is poorly constructed. 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.[32]

Optimizing vs. satisficing

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Herbert A. Simon coined the phrase "bounded rationality" to express the idea that human decision making is limited by available information, available time, and the information-processing ability of the mind. Simon also defined two cognitive styles: maximizers try to make an optimal decision, whereas satisficers simply try to find a solution that is "good enough". Maximizers tend to take longer making decisions due to the need to maximize performance across all variables and make tradeoffs carefully; they also tend to more often regret their decisions (perhaps because they are more able than satisficers to recognise that a decision turned out to be sub-optimal).[33]

Combinatorial vs. positional

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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 predispositionmethods which may be applicable to other, more complex systems.[34] 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). Katsenelinboigens definition of the two styles are the following. This article contains embedded lists that may be poorly defined, unverified or indiscriminate . Please help toclean it up to meet Wikipedia's quality standards. Where appropriate, incorporate items into the main body of the article. (February 2008)

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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, 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 players 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.[34] 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 playerit helps him to achieve the desirable, keeping in mind a predisposition for the future development. The Pyrrhic victory is the best example of ones inability to think positionally."[35] The positional style serves to create a predisposition to the future development of the position; induce the environment in a certain way; absorb an unexpected outcome in ones favor; avoid the negative aspects of unexpected outcomes. 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.[36]

Neuroscience perspective

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The anterior cingulate cortex (ACC), orbitofrontal cortex (and the overlapping ventromedial prefrontal cortex) are brain regions involved in decision making processes. A recentneuroimaging study [37] 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. Patients with damage to the ventromedial prefrontal cortexhave difficulty making advantageous decisions.[38] A recent study [39] of a Two-alternative forced choice task involving Rhesus monkeys found that neurons in the parietal cortex not only represent the formation of a decision but also signal the degree of certainty (or "confidence") associated with the decision. Another recent study [40] 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 may be involved in 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
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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.[41] Although it is unclear whether the studies generalize to all processing, subconscious processes have been implicated in the initiation of conscious volitional movements. See theNeuroscience of free will.

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