Decision Making: Factors that Influence Decision Making, Heuristics Used, and Decision Outcomes
Some individual differences may also influence decision making. Research has indicated that age, socioeconomic status (SES), and cognitive abilities influences decision making (de Bruin, Parker, & Fischoff, 2007; Finucane, Mertz, Slovic, & Schmidt, 2005). Finucane et al. established a significant difference in decision making across age; that is, as cognitive functions decline as a result of age, decision making performance may decline as well. In addition, older people may be more overconfident regarding their ability to make decisions, which inhibits their ability to apply strategies (de Bruin et al., 2007). Finally, with respect to age, there is evidence to support the notion that older adults prefer fewer choices than younger adults (Reed, Mikels, & Simon, 2008).
Age is only one individual difference that influences decision making. According to de Bruin et al. (2007), people in lower SES groups may have less access to education and resources, which may make them more susceptible to experiencing negative life events, often beyond their control; as a result, low SES individuals may make poorer decisions, based on past decisions.
Over and above past experiences, cognitive biases, and individual differences; another influence on decision making is the belief in personal relevance. When people believe what they decide matters, they are more likely to make a decision. Acevedo and Krueger (2004) examined individuals’ voting patterns, and concluded that people will vote more readily when they believe their opinion is indicative of the attitudes of the general population, as well as when they have a regard for their own importance in the outcomes. People vote when they believe their vote counts. Acevedo and Krueger pointed out this voting phenomenon is ironic; when more people vote, the individual votes count less, in electoral math.
Heuristics are general decision making strategies people use that are based on little information, yet very often correct; heuristics are mental short cuts that reduce the cognitive burden associated with decision making (Shah & Oppenheimer, 2008). Shah and Oppenheimer argued that heuristics reduce work in decision making in several ways. Heuristics offer the user the ability to scrutinize few signals and/or alternative choices in decision making. In addition, heuristics diminish the work of retrieving and storing information in memory; streamlining the decision making process by reducing the amount of integrated information necessary in making the choice or passing judgment (Shah & Oppenheimer, 2008).
As a result of research and theorizing, cognitive psychologists have outlined a host of heuristics people use in decision making. Heuristics range from general to very specific and serve various functions. The price heuristic, in which people judge higher priced items to have higher quality than lower priced things, is specific to consumer patterns; while the outrage heuristic, in which people consider how contemptible a crime is when deciding on the punishment (Shah, & Oppenheimer, 2008). According to Shah and Oppenheimer three important heuristics are the representative, availability, and anchoring and adjustment heuristics.
In decision making, people rely on a host of heuristics for convenience and speed. One important heuristic is the representative heuristic (RH), which is an extremely economical heuristics (Pachur, & Hertwig, 2006). In the event that one of two things is recognizable, people will tend to choose the recognized thing; utilizing or arriving at a decision with the least amount of effort or information (Goldstein & Gigerenzer, 2002; Hilbig & Pohl, 2008). Hilbig and Pohl remarked that it is difficult to research and answer definitively if an individual is using the RH alone, or if the person is using other information in drawing a conclusion. As a result, the research on the RH is mixed (Goldstein & Gigerenzer, 2002; see also Hilbig & Pohl, 2006). Goldstein and Gigerenzer provided seminal research on the RH. They maintained recognition memory is perceptive, reliable, and more accurate than chance alone; they argued less recognition leads to more correct decisions. On the other hand, according to Hilbig and Pohl, people often use additional information when utilizing the RH; that is, they do not rely solely on recognition along in decision making. Further, Hilbig and Pohl concluded that even when sound recognition was established, people use additional information, in conjunction with the RH.
Another highly researched heuristic is the availability heuristic. According to this heuristic, people are inclined to retrieve information that is most readily available in making a decision (Redelmeier, 2005). Interestingly, this is an important heuristic, as it is the basis for many of our judgments and decisions (McKelvie, 2000; Redelmeier, 2005). For example, when people are asked to read a list, then identify names from the list, often, the names identified are names of famous individuals, with which the participants are familiar (McKelvie, 2000). In the field of medicine, Redelmeier charged that missed medical diagnoses are often attributable to heuristics, the availability heuristic being one of those responsible. Redelmeier explained heuristics are beneficial as they are cognitively economical, but cautioned clinicians and practitioners need to recognize when heuristics need to be over-ridden in favor of more comprehensive decision making approaches.
The anchoring and adjustment heuristic is the foundational decision making heuristic in situations where some estimate of value is needed (Epley, & Gilovich, 2006). In this particular heuristic, individuals first use an anchor, or some ball park estimate that surfaces initially, and adjusts their estimates until a satisfactory answer is reached. For example, if a person were asked to answer the question, “In what year did John F. Kennedy take office?” the anchoring and adjustment heurist would be used. The person may start with a known date, such as the date he was shot, November 22, 1963; then make an estimate based on the known information (Epley, & Gilovich, 2006). The practical application of the anchoring and adjustment heuristic is in negotiations; people make counter offers based on the anchor that is provided to them. Epley and Gilovich explained often people tend to make estimates which tend to gravitate towards the anchor side, where actual values tend to be farther away from the anchor initially planted. Further, anchoring requires effort; such work is important in avoiding anchor bias.
After the Decision
After a decision is made, people experience a variety of reactions. In addition, present decisions influence future decision making. Several of the outcomes that may result from a decision are regret or satisfaction; both of which influence upcoming decisions.
Regret, feelings of disappointment or dissatisfaction with a choice made is one potential outcome of decision making. Interestingly, regret may shape the decision making process. According to Abraham and Sheeran (2003), anticipated regret is the belief that the decision will be result of inaction. Anticipated regret may prompt behavior; that is, when a person indicates they will do something, such as exercise, they may follow through with their intended decision, to avoid regret. Once the decision is made, the impact of the decision, if regret is experienced, will impact future decisions. People can often get consumed with examining the other options that were available; the path not taken (Sagi & Friedland, 2007).Continued on Next Page »