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How Do We Make Decisions?

This article explores decision-making processes, focusing on the Rational Model. It discusses how to define problems, identify underlying causes, weigh decision criteria, and develop alternatives. Key questions guide the exploration of whether too few or too many options hinder decision quality. It highlights the limitations of human perception, including attribution errors and biases, emphasizing the need to balance rational approaches with intuitive insights. Ultimately, effective decision-makers harness the strengths of the Rational Model while acknowledging human tendencies that diverge from it.

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How Do We Make Decisions?

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Presentation Transcript

  1. How Do We Make Decisions? • Is there a right way to make a decision? • Decision Conditions: • Certainty • Risk • Uncertainty

  2. The Rational Model • Define the Problem: Is there a discrepancy between an existing and desired state of affairs? • Question 1: What is the underlying cause of the discrepancy? Solve a symptom? • Question 2: Can we do anything about it? • Variance: Random or Systematic?

  3. The Rational Model • Identify and Weigh Decision Criteria: • What are the factors that are relevant to a decision? • What factors define the difference between a good decision and a bad one?

  4. The Rational Model • Develop Alternatives • Based on the assumption that the more options identified the better. • Key Question: • Are decisions harmed by the consideration of too few options or too many options?

  5. The Rational Model • Select and Implement the Best Alternative • Key Question: • Sounds simple, but do we really make the rational choice?

  6. The Rational Model • The Rational Model is a Prescriptive Model, but is it Descriptive?

  7. Rational Model Assumptions • We collect complete and accurate information. • Are we good perceivers? Are our senses good? • Do we interpret information correctly?

  8. Rational Model Assumptions • Example: Attribution Errors • We make patterned mistakes in how we interpret the causes for events we perceive. • The Fundamental Attribution Error: Overweight dispositional explanations in the face of compelling situational reasons • Stereotyping: Assign a dispositional cause based merely on group membership.

  9. Key Observation • The prevalence of perception problems and attribution biases and errors should make us a bit wary of relying entirely on intuition and “gut.” • Though this does not mean that we ignore our unique perspectives and experiences.

  10. Rational Model Assumptions • We generate and evaluate an extensive list of alternatives. • No, we satisfice: We tend to choose the first alternative that is satisfactory rather than the best.

  11. Rational Model Assumptions • We choose the most rational alternative. • No, we practice bounded rationality: We behave rationally, but only within the restricted confines of our own capacities.

  12. Conclusion • There may be great evidence that the rational model improves decision-making. • However, there is also great evidence that we, as humans, diverge from the rational model. • Therefore, the best decision-makers are those who finds ways to employ the best of the rational model in the face of human failing.

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