In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either rational or irrational. Decision-making process is a reasoning process based on assumptions of values, preferences and beliefs of the decision-maker. Every decision-making process produces a final choice, which may or may not prompt action.
Decision-making can be regarded as a problem-solving activity yielding a solution deemed to be optimal, or at least satisfactory. It is therefore a process which can be more or less rational or irrational and can be based on explicit or tacit knowledge and beliefs. Tacit knowledge is often used to fill the gaps in complex decision-making processes. Usually, both of these types of knowledge, tacit and explicit, are used together in the decision-making process.
Human performance has been the subject of active research from several perspectives:
A major part of decision-making, involves the analysis of a finite set of alternatives described in terms of evaluative criteria. Then the task 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 task might be to 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 multiple-criteria decision analysis (MCDA). This area of decision-making, although very old, has attracted the interest of many researchers and practitioners and is still highly debated as there are many MCDA methods which may yield very different results when they are applied on exactly the same data. This leads to the formulation of a decision-making paradox. 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 a diagnosis and the selection of appropriate treatment. But naturalistic decision-making research shows that in situations with higher time pressure, higher stakes, or increased ambiguities, experts may use intuitive decision-making rather than structured approaches. They may follow a recognition primed decision that fits their experience, and arrive at a course of action without weighing alternatives.
The decision-maker's environment can play a part in the decision-making process. For example, environmental complexity is a factor that influences cognitive function. A complex environment is an environment with a large number of different possible states which come and go over time. Studies done at the University of Colorado have shown that more complex environments correlate with higher cognitive function, which means that a decision can be influenced by the location. One experiment measured complexity in a room by the number of small objects and appliances present; a simple room had less of those things. Cognitive function was greatly affected by the higher measure of environmental complexity, making it easier to think about the situation and make a better decision.
It is important to differentiate between problem solving, or problem analysis, and decision-making. Problem solving is the process of investigating the given information and finding all possible solutions through invention or discovery. Traditionally, it is argued that problem solving is a step towards decision making, so that the information gathered in that process may be used towards decision-making.[page needed]
When a group or individual is unable to make it through the problem-solving step on the way to making a decision, they could be experiencing analysis paralysis. Analysis paralysis is the state that a person enters where they are unable to make a decision, in effect paralyzing the outcome. Some of the main causes for analysis paralysis is the overwhelming flood of incoming data or the tendency to overanalyze the situation at hand. There are said to be three different types of analysis paralysis.
On the opposite side of analysis paralysis is the phenomenon called extinction by instinct. Extinction by instinct is the state that a person is in when they make careless decisions without detailed planning or thorough systematic processes. Extinction by instinct can possibly be fixed by implementing a structural system, like checks and balances into a group or one’s life. Analysis paralysis is the exact opposite where a group’s schedule could be saturated by too much of a structural checks and balance system.
Groupthink is another occurrence that falls under the idea of extinction by instinct. Groupthink is when members in a group become more involved in the “value of the group (and their being part of it) higher than anything else”; thus, creating a habit of making decisions quickly and unanimously. In other words, a group stuck in groupthink are participating in the phenomenon of extinction by instinct.
Information overload is "a gap between the volume of information and the tools we have to assimilate" it. Information used in decision making is to reduce or eliminate uncertainty. Excessive information affects problem processing and tasking, which affects decision-making. Psychologist George Armitage Miller suggests that humans’ decision making becomes inhibited because human brains can only hold a limited amount of information. Crystal C. Hall and colleagues described an "illusion of knowledge", which means that as individuals encounter too much knowledge it can interfere with their ability to make rational decisions. Other names for information overload are information anxiety, information explosion, infobesity, and infoxication.
Decision fatigue is when a sizable amount of decision-making leads to a decline in decision-making skills. People who make decisions in an extended period of time begin to lose mental energy needed to analyze all possible solutions. It is speculated that decision fatigue only happens to those who believe willpower has a limited capacity. Impulsive decision-making and decision avoidance are two possible paths that extend from decision fatigue. Impulse decisions are made more often when a person is tired of analysis situations or solutions; the solution they make is to act and not think. Decision avoidance is when a person evades the situation entirely by not ever making a decision. Decision avoidance is different from analysis paralysis because this sensation is about avoiding the situation entirely, while analysis paralysis is continually looking at the decisions to be made but still unable to make a choice.
Decision-making is a region of intense study in the fields of systems neuroscience, and cognitive neuroscience. Several brain structures, including the anterior cingulate cortex (ACC), orbitofrontal cortex, and the overlapping ventromedial prefrontal cortex are believed to be involved in decision-making processes. A neuroimaging study found distinctive patterns of neural activation in these regions depending on whether decisions were made on the basis of perceived personal volition or following directions from someone else. Patients with damage to the ventromedial prefrontal cortex have difficulty making advantageous decisions.[page needed]
A common laboratory paradigm for studying neural decision-making is the two-alternative forced choice task (2AFC), in which a subject has to choose between two alternatives within a certain time. A study 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. A 2012 study found that rats and humans can optimally accumulate incoming sensory evidence, to make statistically optimal decisions. Another study 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. It has recently been argued that the development of formal frameworks will allow neuroscientists to study richer and more naturalistic paradigms than simple 2AFC decision tasks; in particular, such decisions may involve planning and information search across temporally extended environments.
Emotion appears able 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 neurobiological theory of how decisions are made in the face of uncertain outcomes. 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. A recent lesion mapping study of 152 patients with focal brain lesions conducted by Aron K. Barbey and colleagues provided evidence to help discover the neural mechanisms of emotional intelligence.
Decision-making techniques can be separated into two broad categories: group decision-making techniques and individual decision-making techniques. Individual decision-making techniques can also often be applied by a group.
A variety of researchers have formulated similar prescriptive steps aimed at improving decision-making.
In the 1980s, psychologist Leon Mann and colleagues developed a decision-making process called GOFER, which they taught to adolescents, as summarized in the book Teaching Decision Making To Adolescents. The process was based on extensive earlier research conducted with psychologist Irving Janis. GOFER is an acronym for five decision-making steps:
In 2008, Kristina Guo published the DECIDE model of decision-making, which has six parts:
In 2009, professor John Pijanowski described how the Arkansas Program, an ethics curriculum at the University of Arkansas, used eight stages of moral decision-making based on the work of James Rest:: 6
There are four stages or phases that should be involved in all group decision-making:
It is said that establishing critical norms in a group improves the quality of decisions, while the majority of opinions (called consensus norms) do not.
Conflicts in socialization are divided in to functional and dysfunctional types. Functional conflicts are mostly the questioning the managers assumptions in their decision making and dysfunctional conflicts are like personal attacks and every action which decrease team effectiveness. Functional conflicts are the better ones to gain higher quality decision making caused by the increased team knowledge and shared understanding.
In economics, it is thought that if humans are rational and free to make their own decisions, then they would behave according to rational choice theory.: 368–370 Rational choice theory says that a person consistently makes choices that lead to the best situation for themselves, taking into account all available considerations including costs and benefits; the rationality of these considerations is from the point of view of the person themselves, so a decision is not irrational just because someone else finds it questionable.
In reality, however, there are some factors that affect decision-making abilities and cause people to make irrational decisions – for example, to make contradictory choices when faced with the same problem framed in two different ways (see also Allais paradox).
Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. Irrational decision is more counter to logic. The decisions are made in haste and outcomes are not considered. 
One of the most prominent theories of decision making is subjective expected utility (SEU) theory, which describes the rational behavior of the decision maker. The decision maker assesses different alternatives by their utilities and the subjective probability of occurrence.
Rational decision-making is often grounded on experience and theories that are able to put this approach on solid mathematical grounds so that subjectivity is reduced to a minimum, see e.g. scenario optimization.
Rational decision is generally seen as the best or most likely decision to achieve the set goals or outcome.
It has been found that, unlike adults, children are less likely to have research strategy behaviors. One such behavior is adaptive decision-making, which is described as funneling and then analyzing the more promising information provided if the number of options to choose from increases. Adaptive decision-making behavior is somewhat present for children, ages 11–12 and older, but decreases in presence the younger they are. The reason children aren’t as fluid in their decision making is because they lack the ability to weigh the cost and effort needed to gather information in the decision-making process. Some possibilities that explain this inability are knowledge deficits and lack of utilization skills. Children lack the metacognitive knowledge necessary to know when to use any strategies they do possess to change their approach to decision-making.
When it comes to the idea of fairness in decision making, children and adults differ much less. Children are able to understand the concept of fairness in decision making from an early age. Toddlers and infants, ranging from 9–21 months, understand basic principles of equality. The main difference found is that more complex principles of fairness in decision making such as contextual and intentional information don’t come until children get older.
During their adolescent years, teens are known for their high-risk behaviors and rash decisions. Research has shown that there are differences in cognitive processes between adolescents and adults during decision-making. Researchers have concluded that differences in decision-making are not due to a lack of logic or reasoning, but more due to the immaturity of psychosocial capacities that influence decision-making. Examples of their undeveloped capacities which influence decision-making would be impulse control, emotion regulation, delayed gratification and resistance to peer pressure. In the past, researchers have thought that adolescent behavior was simply due to incompetency regarding decision-making. Currently, researchers have concluded that adults and adolescents are both competent decision-makers, not just adults. However, adolescents' competent decision-making skills decrease when psychosocial capacities become present.
Research has shown that risk-taking behaviors in adolescents may be the product of interactions between the socioemotional brain network and its cognitive-control network. The socioemotional part of the brain processes social and emotional stimuli and has been shown to be important in reward processing. The cognitive-control network assists in planning and self-regulation. Both of these sections of the brain change over the course of puberty. However, the socioemotional network changes quickly and abruptly, while the cognitive-control network changes more gradually. Because of this difference in change, the cognitive-control network, which usually regulates the socioemotional network, struggles to control the socioemotional network when psychosocial capacities are present.[clarification needed]
When adolescents are exposed to social and emotional stimuli, their socioemotional network is activated as well as areas of the brain involved in reward processing. Because teens often gain a sense of reward from risk-taking behaviors, their repetition becomes ever more probable due to the reward experienced. In this, the process mirrors addiction. Teens can become addicted to risky behavior because they are in a high state of arousal and are rewarded for it not only by their own internal functions but also by their peers around them. A recent study suggests that adolescents have difficulties adequately adjusting beliefs in response to bad news (such as reading that smoking poses a greater risk to health than they thought), but do not differ from adults in their ability to alter beliefs in response to good news. This creates biased beliefs, which may lead to greater risk taking.
Adults are generally better able to control their risk-taking because their cognitive-control system has matured enough to the point where it can control the socioemotional network, even in the context of high arousal or when psychosocial capacities are present. Also, adults are less likely to find themselves in situations that push them to do risky things. For example, teens are more likely to be around peers who peer pressure them into doing things, while adults are not as exposed to this sort of social setting.
Here is a list of commonly debated biases in judgment and decision-making:
In groups, people generate decisions through active and complex processes. One method consists of three steps: initial preferences are expressed by members; the members of the group then gather and share information concerning those preferences; finally, the members combine their views and make a single choice about how to face the problem. Although these steps are relatively ordinary, judgements are often distorted by cognitive and motivational biases, include "sins of commission", "sins of omission", and "sins of imprecision".[page needed]
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 mind's information-processing ability. Further psychological research has identified individual differences between 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 recognize that a decision turned out to be sub-optimal).
The psychologist Daniel Kahneman, adopting terms originally proposed by the psychologists Keith Stanovich and Richard West, has theorized that a person's decision-making is the result of an interplay between two kinds of cognitive processes: an automatic intuitive system (called "System 1") and an effortful rational system (called "System 2"). System 1 is a bottom-up, fast, and implicit system of decision-making, while system 2 is a top-down, slow, and explicit system of decision-making. System 1 includes simple heuristics in judgment and decision-making such as the affect heuristic, the availability heuristic, the familiarity heuristic, and the representativeness heuristic.
Styles and methods of decision-making were elaborated by Aron Katsenelinboigen, the founder of predispositioning theory. 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 predisposition-methods which may be applicable to other, more complex systems.": 5
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. The two styles reflect two basic approaches to uncertainty: deterministic (combinational style) and indeterministic (positional style). Katsenelinboigen's definition of the two styles are the following.
In defining the combinational style in chess, Katsenelinboigen wrote: "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 player's 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.: 57
"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 player – it helps him to achieve the desirable, keeping in mind a predisposition for the future development. The pyrrhic victory is the best example of one's inability to think positionally."
According to Isabel Briggs Myers, a person's decision-making process depends to a significant degree on their cognitive style.[page needed] Myers developed a set of four bi-polar dimensions, called the Myers-Briggs Type Indicator (MBTI). The terminal points on these dimensions are: thinking 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 psychologists say that the MBTI lacks reliability and validity and is poorly constructed.
Other studies suggest that these national or cross-cultural differences in decision-making 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.
In the general decision-making style (GDMS) test developed by Suzanne Scott and Reginald Bruce, there are five decision-making styles: rational, intuitive, dependent, avoidant, and spontaneous. These five different decision-making styles change depending on the context and situation, and one style is not necessarily better than any other. In the examples below, the individual is working for a company and is offered a job from a different company.
There are a few characteristics that differentiate organizational decision-making from individual decision-making as studied in lab experiments:
1. Unlike most lab studies of individual decision-making, ambiguity is pervasive in organizations. There is often only ambiguous information, and there is ambiguity about preferences as well as about interpreting the history of decisions.
2. Decision-making in and by organizations is embedded in a longitudinal context, meaning that participants in organizational decision-making are a part of ongoing processes. Even if they don't take on active roles in all phases of decision-making, they are part of the Decision Process and its consequences. Decisions in organizations are made in a sequential manner, and commitment may be more important in such processes than judgmental accuracy. In contrast, most lab studies of individual decision-making are conducted in artificial settings (lab) that are not connected to the subjects’ ongoing activities.
3. Incentives play an important role in organizational decision-making. Incentives, penalties, and their ramifications are real and may have long-lasting effects. These effects are intensified due to the longitudinal nature of decision-making in organizational settings. Incentives and penalties are very salient in organizations, and often they command managerial attention.
4. Many executives, especially in middle management, may make repeated decisions on similar issues. Managers may develop a sense of using his/her skills (which may be faulty) and a sense of having control and using one's skills are pervasive in managerial thinking about risk taking. Several repeated decisions are made by following rules rather than by using pure information processing modes.
5. Conflict is pervasive in organizational decision-making. Many times power considerations and agenda setting determine decisions rather than calculations based on the decision's parameters. The nature of authority relations may have a large impact on the way decisions are made in organizations, which are basically political systems.