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Decision Making

The document discusses decision making and problem solving processes. It makes the following key points: 1) Decision making requires elements of problem solving, as individuals try to choose the best option from a range of choices. Problem solving also requires some decision making to determine the best strategy. 2) Early models assumed fully rational decision makers who consider all options and outcomes. Later models recognize bounded rationality, where people satisfice by choosing the first option good enough rather than maximizing gains. 3) People also use elimination by aspects, focusing on one option attribute at a time to narrow choices, rather than considering all aspects simultaneously.

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Rodrick Prashanth
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50 views6 pages

Decision Making

The document discusses decision making and problem solving processes. It makes the following key points: 1) Decision making requires elements of problem solving, as individuals try to choose the best option from a range of choices. Problem solving also requires some decision making to determine the best strategy. 2) Early models assumed fully rational decision makers who consider all options and outcomes. Later models recognize bounded rationality, where people satisfice by choosing the first option good enough rather than maximizing gains. 3) People also use elimination by aspects, focusing on one option attribute at a time to narrow choices, rather than considering all aspects simultaneously.

Uploaded by

Rodrick Prashanth
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Decision making

Decision making and Problem solving

Gilhooly (1996) has pointed out that there


are clear similarities between decision Difference
making and problem solving.
• Decision making requires an elemenwt • In problem solving the focus is on
of problem solving, in that individuals selecting among possible actions,
are typically trying to make the best whereas in decision making the options
possible choice from a range of options. are presented and subjects choose
• Problem solving requires some decision among them without the load of option-
making, because it is generally necessary generation.”
to decide which strategy to adopt in
order to solve the problem.
The process - Classical decision theory
According to economic man and woman model, Subjective expected utility theory, predicts that
early models of decision making, decision makers people seek to reach well-reasoned decisions based
are assumed to be on
• Fully informed regarding all possible options for • Consideration of all possible known alternatives,
their decisions and of all possible outcomes of given that unpredictable alternatives may be
their decision options, available
• Infinitely sensitive to the subtle distinctions among • Use of a maximum amount of available
decision options information, given that some relevant information
• Fully rational in regard to their choice of options may not be available
• Careful, if subjective, weighing of the potential
costs (risks) and benefits of each alternative
• Careful (although subjective) calculation of the
probability of various outcomes, given that
certainty of outcomes cannot be known
• A maximum degree of sound reasoning, based on
considering all of the aforementioned factors
Satisficing
In the 1950s some psychologists were beginning to challenge the notion of
unlimited rationality.

Herbert Simon (1957), suggested that we humans are not necessarily irrational,
but rather that we show bounded rationality—we are rational, but within limits.

Simon suggested that we typically use a decision-making strategy he termed


satisficing.
• We do not consider all possible options and then carefully compute which of the entire universe of
options will maximize our gains and minimize our losses.
• Rather, we consider options one by one, and then we select an option as soon as we find one that is
satisfactory or just good enough to meet our minimum level of acceptability.
Elimination by Aspect

Amos Tversky (1972a, 1972b) built on Simon's notion of bounded ra- tionality and observed that we
sometimes use a different strategy when faced with far more alternatives than we feel that we reasonably can
consider in the time we have available.

we use a process of elimination by aspects

• We focus on one aspect (attribute) of the various options, and we form a minimum criterion for that aspect. We then eliminate all options
that do not meet that criterion.
• For the remaining options, we then select a second aspect for which we set a minimum criterion by which to eliminate additional options.
• We continue using a sequential process of elimination of options by considering a series of aspects until a single option remains

In practice, it appears that we may use some elements of elimination hy aspects or satisficing to narrow the
range of options to just a few, then we use more thorough and careful strategies
General phases of decision making (Galotti,
2002)

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