TO BE OR NOT TO BE: A quick guide on decision-making and decision-making strategies
By: Amistad, Stella Lyn Salvador, Christer
Have you ever encountered a situation where you have too many options to choose from, but cannot decide which of those is the best? Have you ever dealt with that situation wherein you are unsure which is which? Say, buying a new house or a new car? Or how about new phone or even new pair of jeans? This module will help you on your future decisions no matter how big or small. First things first, assess or evaluate the worth of your decisions. For example, deciding on which house to buy is more worthy of cognitive efforts than simply deciding on which pair of jeans to buy. By assessing the worth of your decisions, it will help you decide on which decisionmaking strategies to be used.
The Economist Model
Subjective Expected Utility
The first model of decisionmaking is the model of the Economic man and woman. In this model, there are assumptions that decision makers are fully informed of all the possible options and their consequences, that they are sensitive to distinctions among the options, and they are fully rational in decision making. This method or model is particularly useful for big decisions. Going back to our example of buying a new house, buyers tend to search all possible options and list them down. After which, they tend to survey all possible outcomes of each option, the pros and cons of buying one among the other options, and once they laid them all down, only then they would decide which option is the best.
Another model in decision making uses the assumption that humans and their behaviors tend to seek pleasure and avoid pain or the unpleasant. This is the subjective expected utility model. In this model, options are judged subjectively by the decision maker based on its value or utility. Its main difference with the first model is that decisions and valuations of options are based on subjective perceptions and not based on objective components such as the pro’s and con’s mentioned earlier. This model might also be helpful regarding big issues, but it is more applicable to less serious issues such as buying a new phone. In that example, all possible options are observed, and valued based on how the person likes the product over the other.
At this point in time, have you considered which model to use? Or is it that even deciding which decision making model to use needs the decision making models themselves? But wait, there’s more! These are not the only two strategies on coming up with a decision and not all people are inclined to use these two strategies. From our day-to-day experiences, we often use heuristics, or mental shortcuts, to ease the burden of thinking too much just to come up with decisions. The following section is intended for some of the heuristic models on decision making.
Satisficing This model suggests that people are rational in making decisions, but our rationality are just within limits. This is technically called bounded rationality. This arises from the notion that we do not have enough resources such as time and cognitive space to exert much effort in making decisions. Such that in this model, we tend to screen the options one by one, and choose the option as soon as it meets the minimum criteria or acceptability we decision makers set. This decision-making strategy can be used on varying levels of issues, from those needing small decisions to those that may have serious consequences. Going back to the example of buying a new house, we may set criteria for the options, say less than a million pesos and near EDSA. As we screen the properties listed as our options, the first option that meets both criteria shall be selected, regardless to whether all options have been surveyed or not. The advantage of this strategy is that it saves you time by not going through all possible options in the list. But the disadvantage of such process is that there might be better options in the list after the one you selected, and you might regret your first choice because of the better option not chosen.
Elimination by Aspects
Representativeness
Similar to the satisficing model, this heuristic model of elimination by aspects uses criterion or series of criteria to eliminate all possible options, narrowing down the list until the best option remains, passing all the criteria. This could also be used on from small to large decision-making issues. Going back to the example of buying a new house, the first criterion of being less than a million pesos was set. All possible options that are more than a million pesos are eliminated. For the next round, the next criterion is that the house should be near EDSA. This means that all possible options that are not near EDSA, same as those more than a million pesos, shall be eliminated. The next processes go on until the last option fitting all the criteria set shall be considered.
This heuristic model uses the probability or likelihood of an option to be the best representative of all other options in the list. Let us say that we are deciding which Android smartphone to buy: Lenovo, HTC, Samsung, LG, Sony Xperia, or Asus? Among these options, we choose which phone best represents all other phones, maybe in terms of their features, price, etc. For this example, let us say we have chosen Asus because all features of the other smartphones are present on the said phone and the price is reasonably more affordable than others.
Availability
These are the models that can be used for different Another heuristic model is circumstances involving the availability model, in decision-making. There is which decisions are based no single strategy that is on top-of-the-mind applicable to all kinds of options or those perceived decision-making events to be relevant options that since all of them have can easily be retrieved. For different natures. There is example, your family wants no silver bullet to all to buy a sport-utility decision-making dilemma. vehicle or SUV. Options These are just guides on that could be easily how to reach a stable, recalled are some of the satisfying decisions given more popular car models different circumstances. such as Mitsubihi Always remember that Monterosport, Toyota whatever decision you Fortuner, and Hyundai make, you should gain Tucson. Since they are the more benefits than loses to models that were easily it. retrieved and recognized by your family, they will just choose among these options recalled.
Reference: Sternberg, R., Sternberg, K., & Mio, J (2012).Cognitive Psychology. Philippine Edition. Cengage Learning