In daily life we sometimes have to make quick decisions when the situation is quite complex and

we have different options to choose from and added time pressure. In such a case we can take
some time in interpreting various scenarios or options based upon our knowledge and
experience. On the other hand, we make some decisions on a regular basis and we don’t even
consider them decisions. The complexity of the problem produces difficulty in problem solving
and decision making.

Definition of decision making

In the decision-making process following tasks are completed.
A person has to choose from a number of different options
A person could have knowledge related to every option.
Time span to take decision could be longer than a second.
It might be not known which option could be the best one.

Decision making can be classified into three stages

Obtaining information and interpreting it.
What every choice can lead to in current and future events.
After assessing every choice planning and selecting the most appropriate choice.

Decision Making models

In the beginning the research was usually compromised on rational decision making. The
assumption was given that if we could evaluate the pros and cons of different choices, we can
assign mathematical models to those values. This theory goes deep into what people should
actually do in a decision-making process. Later on, researchers were more focused on how
human mind process emotions and information and it leads to a decision.

Normative decision models

These models are based on the concept of utility i.e. how much a choice or an option has worth
in the mind of the decision maker. These models can be used to make decisions from daily
routine to making decisions in the corporate culture. Also, a mathematical equation was put forth
which described how much value each option has so that it assisted in making the decision-
making process easier.
Multi attributed utility theory assumes that taking in probability approach different outcomes are
possible but life is uncertain. Another normative decision model is expected value theory which
defines uncertainty. It replaces the concept of utility with expected value and it applies to
decisions which involves one or more outcomes with a definite worth. Expected value theory
also takes into account that different choices have different value for different people.

Descriptive decision models

It was observed that human beings usually don’t really want to think a lot considering rational
decisions however they rely on rule of thumbs or shortcuts, they are referred to as heuristics. One
traditional descriptive model is Simons concept of satisficing. Satisficing takes into account that
people don’t look for a best decision, they just look for a decision that seems to be good enough
or satisfactory and they tend to go for it rather than giving too much thinking to the decision-
making process. It is a good approach considering that different people have different mind
capacity. When the time is limited and information about the choices are low, it is often
advisable to carefully analyze each choice.

Heuristics and Biases

These are the rule of thumbs which make decision making process really easy but they do not
always guarantee an excellent solution. Sometimes heuristics can also lead to errors.

Information processing limits in decision making

There arises a lot of difficulties in decision making process these difficulties are the same which
arise as in selective attention, problem solving and trouble shooting. Working memory and long-
term memory both play an important role in decision making. The following processes occur in
working memory.
1. Cue reception and integration: we take in information from our environment in the form
of pieces of information or cues which goes into the working memory. these cues can
also be incomplete and erroneous.
2. Hypothesis generation and selection: then we assess the information based on our
previous life experiences, we judge each choice and also take into account our long-term
memory. we evaluate hypotheses on basis of how correct they could be. Whether the
information we have taken in from the environment and assessed, does it support our
hypotheses or not and to which extent.
3. Plan generation and action choice. We can add more choices in our decision-making
process by retrieving long term memory. depending upon the time and resources
available we can add one or more choices to our decision-making process.
Heuristics and biases in receiving and using cues
1. There is a limitation to the usage of cues taken in from the environment.
2. When we gain cues over a period of time then we tend to give importance to the cues
gained early It is sometimes called anchoring heuristic.
3. Human mind pays less attention to the cues gained later.
4. Cues that are more salient are more attention catching and tend to have more weight.
Such as bigger displayed words, loudest note of a sound etc.
5. Overweighing of unreliable cues. All the cues don’t carry reliable information some have
a high degree of authentic information others could have the opposite.

Heuristics and biases in hypotheses generation

Evaluation and selection
The different heuristics that affect the decision-making processes are given below.
1. Because we have a limit to the information our mind can process, we generate only a few
hypotheses usually between 1-4.
2. People can retrieve those hypotheses quickly which are more frequently retrieved or
considered recently.
3. Sometimes we go deep into the situation because the pattern of cues seems to be or is
representative of the prototypical example of the situation.
4. Sometimes people are too much focused on one hypothesis and they have put so much
confidence in that cue and which they believe to be true that they don’t investigate other
options or cues.
5. Once a hypothesis has been made, we tend to undermine other cues and don’t pay much
heed to them.
6. When we try to seek the hypothesis, we pay more attention to the cues that is more
confirming in nature i.e people pick up a hypothesis and tend to seek information or cue
that confirms that hypothesis.

Heuristics and biases in action selection

1. There are a limited amount of actions that people can retrieve from the long term
memory.
2. When people retrieve information from the long-term memory, only most available
actions can be retrieved which is a function of how frequently that information was
accessed, recency and how stronger associations are connected with it.
3. A decision maker has different actions form which he has to choose for a decision. These
actions can lead to a number of outcomes which are probabilistic in nature.
When people tend to say that this outcome was obvious and they knew it is going to
happen it is called hindsight bias. At a particular time, a decision maker is unable to
 identify all the possible outcomes which may arise from corresponding actions typically
under stress.
4. How a person judgment is influenced by the presentation of the decision is called framing
bias. According to the normative utility theory how a problem is presented should have
no effect on the judgment.

Benefit of heuristics and the cost of biases

The heuristics are responsible for making decisions as they serve as a rule of thumb for the
decision makers. They simplify the decisions and allow to make a decision quickly. This is
extremely important especially when there is less time to take the decision. Sometimes poor
decision makers because of the limited time can escape other options which might have led to a
good decision. However, experts would love to use Heuristics because it would involve years of
experience in it.

Dependency of decision making on the decision Context

The biases and heuristics discussed in the above paragraphs dictate that in everyday situations
people are not good decision makers. However, some people make good everyday decisions.
One reason could be that the heuristics are accurate most of the time. A second reason could be
that make a lot of decisions or they a lot of experience, knowledge and mental capability to make
decisions.

Skill, Rule and knowledge-based behavior

The above mentioned three behaviors are associated with different decision-making processes
and people can choose in between them based on their knowledge and adaptability. People who
have gained experienced in a task and have done an activity frequently they process the input at a
skill-based level where the subconscious mind is making decisions for them because they have
done this activity again and again. When people know what the task is all about but don’t have
prior experience, they use rule-based behavior. When a person is experiencing a unique and a
new situation which he has never witnessed before he uses knowledge-based behavior.

Recognition-primed decision making

Recognition primed decision making provides us more detail about how SRK distinctions
interact when we have to make complex decisions in stressful situations. In order to make this
work it requires a huge amount of background experience to avoid errors. In this case action is
selected similar to the rule-based behavior. The three assumptions for the RPD model are: 1.
experts gather their information and experience to come up with a reasonable option. 2. Experts
use rapid pattern matching which produces no time-based pressure. 3. Expert decision makers
using their past experience knows how to respond.
Factors affecting decision making performance: an integrated description of
decision making
It is helpful to combine different decision-making models into one integrated approach.
Rasmussen’s Cognitive control is one of them. In this model people interpret cues from the
environment on three levels: automatic skill-based processing. Intuitive rule based processing
and analytical knowledge-based processing. Observing the result and feedback of a decision in
also important in real world scenario. Feedback can lead to correcting poor decisions but poor
feedback can result in producing inaccurate or erroneous models.

Improving human decision making

Task redesign
We sometimes believe that if a decision yields poor results then it is probably the fault and
inexperience of the person who made it but it could be possible that besides a change in the
person a change in the system is needed.

Decision support system

Help to decision makers can be provided in various forms i.e. tables, charts, graphs, computer
aiding in calculations etc. they all fall in the category of decision support systems. It is a system
that is designed in such a way that user after interacting with it gets help in decision making
process because it sorts of enhances its mental or cognitive abilities.

Decision matrices and trees

This method uses decision table or matrices. Decision tables guides us in listing the possible
outcomes and probabilities. Decision makers enters values of the probabilities into the table.
With the help of computer aided software it performs calculation on that data and helps in
decision making process.

Spreadsheets
Spreadsheets are widely used in industries as a decision helping tool. They reduce the thinking
load and stress and visualizes data in a user-friendly manner. However human errors occurring in
spread sheets is a concern. Studies have shown that about 24-91 percent of the spreadsheets
contains errors.
Simulation
In order to perform more in-depth analysis of what if problems and a more conditioned one
simulation can be used. Use of dynamic simulations is preferred because it has ability to evaluate
hypothesis, goals and values for people.

Expert systems
Expert systems provide you help in terms of knowledge such as in an expert system different
expert have gathered their knowledge and put forth in a computer aided system and the required
personnel has the access to this data which can help in decision making.

Displays
Expert systems help in reducing the mental load but they are other display aids which address the
display representation of the cues.