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How Do We Make Decisions?

How Do We Make Decisions?. Is there a right way to make a decision? Decision Conditions: Certainty Risk Uncertainty. The Rational Model. Define the Problem: Is there a discrepancy between an existing and desired state of affairs?

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How Do We Make Decisions?

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  1. How Do We Make Decisions? • Is there a right way to make a decision? • Decision Conditions: • Certainty • Risk • Uncertainty

  2. The Rational Model • Define the Problem: Is there a discrepancy between an existing and desired state of affairs? • Question 1: What is the underlying cause of the discrepancy? Solve a symptom? • Question 2: Can we do anything about it? • Variance: Random or Systematic?

  3. The Rational Model • Identify and Weigh Decision Criteria: • What are the factors that are relevant to a decision? • What factors define the difference between a good decision and a bad one?

  4. The Rational Model • Develop Alternatives • Based on the assumption that the more options identified the better. • Key Question: • Are decisions harmed by the consideration of too few options or too many options?

  5. The Rational Model • Select and Implement the Best Alternative • Key Question: • Sounds simple, but do we really make the rational choice?

  6. The Rational Model • The Rational Model is a Prescriptive Model, but is it Descriptive?

  7. Rational Model Assumptions • We collect complete and accurate information. • Are we good perceivers? Are our senses good? • Do we interpret information correctly?

  8. Rational Model Assumptions • Example: Attribution Errors • We make patterned mistakes in how we interpret the causes for events we perceive. • The Fundamental Attribution Error: Overweight dispositional explanations in the face of compelling situational reasons • Stereotyping: Assign a dispositional cause based merely on group membership.

  9. Key Observation • The prevalence of perception problems and attribution biases and errors should make us a bit wary of relying entirely on intuition and “gut.” • Though this does not mean that we ignore our unique perspectives and experiences.

  10. Rational Model Assumptions • We generate and evaluate an extensive list of alternatives. • No, we satisfice: We tend to choose the first alternative that is satisfactory rather than the best.

  11. Rational Model Assumptions • We choose the most rational alternative. • No, we practice bounded rationality: We behave rationally, but only within the restricted confines of our own capacities.

  12. Conclusion • There may be great evidence that the rational model improves decision-making. • However, there is also great evidence that we, as humans, diverge from the rational model. • Therefore, the best decision-makers are those who finds ways to employ the best of the rational model in the face of human failing.

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