The Theories of Decision-Making

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Introduction

Decision-making is vital for any sphere of human activity, which makes it a topic of serious debates. Practitioners tend to rely on their past experience and the narrow collection of evidence related to the particular problem of interest. Conversely, scholars develop theories that summarize human experience and mass evidence. The theories are build on the basis of the assumption that decision-making has certain patterns that can be studied and amended. Researchers work out their own models of decision-making to improve this process in individuals.

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The Problems of Decision-Making

Decision-making is the cognitive process that defines the selection of one option among several alternatives. Decision-making allows individuals to plan their future actions and affects all existing spheres of human life. Poor decision-making results in personal failures, lack of success in business, ineffectiveness of public and private organizations. Considering the utter importance of decision-making, scholars and practitioners are seriously interested in examining the specifics of decision-making processes and the factors that influence these processes. These factors can be internal (the mode of thinking, neurologic processes, and personal features), external (the risk level, time pressure, the things that are at stake, the amount of available information and evidence, and possible reactions of other individuals) or the combination of both. Scholars analyze decision-making from the logical, neuropsychological, and cognitive points of view. Professionals have developed various decision-making models, each of which considers different factors and is built on different assumptions.

Key Arguments

In the field of decision-making, a debate is going on between practitioners and scholars. Practitioners tend to rely on their previous experience regarding each particular action. As they believe, the presence of a decision-making theory reduces the possibility of success dramatically and does not allow the consideration of all unique factors that influence a precise decision (Pfeffer & Fong, 2005, p. 373).

However, the arguments provided by researchers make a lot of sense all well since they devote a significant amount of their attention to the factors that have a negative impact on decision-making. For instance, Ma, Xiong, and Luo (2013) explain in their work on the improvement of MCDM systems that, despite what is said by practitioners, in real life, decision-making is often poor because of time pressure, the insufficiency of necessary data, and the danger of unknown factors. For these reasons, as the authors believe, a comprehensive factors evaluation model (rather than the evidence-based approach that practitioners use) is needed.

In their article, Lauriola, Panno, Levin, and Lejues (2014) examine the problem of the connection between the features of personality and decision-making. They analyze the previous research on this topic and indicate that the results have been ambiguous because of sample variability and low statistical power. As they also concluded, the presence of a sensation-seeking trait in a person make them more likely to take risks. The arguments presented in this article demonstrate that personality traits may have a greater impact on the decision-making process than we have known before.

A great number of research works is devoted to the way in which the mode of an individual’s thinking affects their decision-making abilities. In their famous article published in Harvard Business Review, Hammond, Keeny, and Raiffa (1998) discuss various “brain traps” that hinder the success of the decision-making process and explain how the normal way of brain’s work can lead to the inaccurate evaluation of environmental factors, which makes a decision poor. As they demonstrate, the ability to assign weight to various kinds of information, rely on past experience, maintain the status quo, confirm statements with evidence, restate the problem, be confident in the outcome, and be cautious, while being useful abilities, can turn into “brain traps” and have a dramatic negative impact on the decision-making process. This conclusion contradicts the arguments of practitioners who tend to rely on these abilities.

As Pfeffer and Fong (2005) consider, a comprehensive decision-making theory cannot be disadvantageous for practice. As the researchers believe, the lack of a comprehensive theory that explains human and organizational behavior is among the primary reasons for poor decision-making and lack of success in the individual and business life (Pfeffer & Fong, 2005, p. 372). The authors state that self-enhancement is a core motivation for decision-making since it allows an individual to execute power and influence. They also explain that, since individuals usually see themselves and their actions in a positive light, they can make faulty decisions (Pfeffer & Fong, 2005, p. 381).

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Bazerman and Moore (2008) demonstrate the flaw of thinking that, in their opinion, is the most common cause of poor decision-making. As they explain, our mind is equipped better for finding evidence to confirm statements rather than to reject them.

Drummond (2001) shows the danger that overconfidence poses to decision-makers. She presents several examples, in which an actor believes that the events are under their control while actually they depend on chance. She also states that people often attribute their success or failure to good or bad luck.

Assumptions of the Researchers

The underlying assumption of any research regarding the decision-making process is that decision-making in every individual has similar features, as well as that some consistent patterns exist in decision-making. If it were not for this assumption, however, there would be no point in studying decision-making.

Researchers tend to believe that the majority of the human population share the same false assumptions, fallacies, and brain traps, or at least it is considered that these phenomena are widespread. Moreover, they assume that being aware of these problems and knowing how and why they arise, an individual can improve their ability to execute a proper evaluation of internal and external factors and risks and make a less biased decision.

The majority of scholars do not take cultural differences into account when they discuss decision-making processes. They mostly assume that decision-making flaws are shared by the entire population of Earth without any regard to their national mentality. Pfeffer and Fong (2005), however, see some difference between Eastern and Western cultures. After concluding that decision-making is based on a strive to self-enhancement in the majority of individuals, they make a remark that self-enhancement is typical for the West but is uncommon for the East (Pfeffer & Fong, 2005, p. 374).

Insights

The scholars who analyze the problems of decision-making strive to make innovations that would help improve decision-making in individuals and organization. For instance, Ma and others (2013) presented their improved model of MCDM (multiple criteria decision making) system. Pfeffer and Fong (2005) built their own theory that explains decision-making; the theory is based on the concept of self-enhancement.

Conclusion

Practitioners and researchers assess decision-making differently. While the former rely on their own empirical evidence and experience, the latter construct theories that accumulate the experience and evidence of humanity in general. To do it, they rely on the assumption that decision-making processes in different individuals are similar. Scholars develop decision-making models based on these assumptions.

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References

Bazerman, M.H., & Moore, D.A. (2008) Judgment in managerial decision-making (7th ed.). Chichester, UK: Wiley.

Drummond, H. (2001) The art of decision-making: Mirrors of imagination, masks of fate. Chichester, UK: Wiley.

Hammond, J.S., Keeny, R.L., & Raiffa, H. (1998). The hidden traps of decision-making. Harvard Business Review, 76(5), 47-58.

Lauriola, M., Panno, A., Levin, I.P., & Lejues, C.W. (2014). Individual differences in risky decision making: A meta-analysis of sensation-seeking and impulsivity with the balloon analogue risk task. Journal of Behavioral Decision Making, 27(1), 20-36.

Ma, W., Xiong, W., & Luo, X. (2013). A model for decision-making with missing, imprecise, and uncertain evaluations of multiple criteria. International Journal of Intelligent Systems, 28(2), 152-184.

Pfeffer, J., & Fong, C.T. (2005) Building organization theory from first principles: the self-enhancement motive and understanding power and influence. Organization Science, 16(4), 372-388.

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