HOW CAN DECISION

MAKING BE IMPROVED
 THIS PAPER INCLUDES THESE
THINGS:

• First of all we thanks to fifty years of research by judgment and decision

making scholars, psychologists have developed a detailed picture of the
ways in which human judgment is bounded.
• This is a review paper and this paper have no gap, methodology, research
type hypothesis etc.
• In this paper we focus attention on the search for strategies that will improve
the bounded judgment because of :
 THIS PAPER INCLUDES THESE
THINGS:
Decision making errors are costly.
Decision making errors are growing more costly.
Decision makers are receptive.
Academic insights.
This paper organizes the existing literature pertaining to improvement
strategies.
Highlighting promising directions for future research.
 WHAT IS DECISION MAKING?
 Decision-making is the process of selecting a course of action from among
alternatives.
 A decision involves a choice i.e. choose the best one from different
options/alternatives/choices.
 It is goal-oriented.
 Decision Making

Alternatives High risk

Uncertainty
consequences

Interpersonal
Complexity
issues
 INTRODUCTION
The optimal moment to address the question of how to improve Human
decision making has arrived.
Daniel Kahneman, Amos Tversky, and others have clarified the specific
ways to which decision makers are likely to be biased . As a result, we can
now describe how people can make decisions with astonishing details and
reliability. Furthermore, thanks to the normative models of economics theory,
we have a clear vision of how much better decision making could be.
 WHAT IS NORMATIVE MODEL OF
DECISION MAKING:
The normative model of decision making is a leadership model
that helps managers to decide to which degree their team
members should participate in decision-making process. This
model was developed by Victor Vroom in collaboration with
Philip Yetton and Arthur G. jago, and its thus referred to as the
“Vroom-Yetton-Jago model”.
 NORMATIVE MODEL OF DECISION
MAKING(CONT’D)
• Another contingency theory focused on styles of participative decision
making.
• Prescriptive theory indicating which of 5 styles a leader should adopt based
on decision tree.
Autocratic (2 types)
Consultative (2 types)
Group decision (1 type)
 NORMATIVE MODEL OF DECISION
MAKING(CONT’D)
Decisions Styles Definition

AI Leader makes the decision alone.

AII Leader asks for information from
team members but makes the
decision alone. Team members may
or may not be informed what the
situation is.
CI Leader shares situation with each
team members and asks for information
and evaluation. Team members do not
meet as a team, and the leader alone makes
the decisions.
 NORMATIVE MODEL OF DECISION
MAKING(CONT’D)
Decision Styles Definitions
CII Leader and team members meet
as a team to discuss the
situation, but the leader makes
the decision.
G Leader and team members meet
as a team to discuss the situation,
and the team makes the decision.

A=autocratic C=consultative G=group

 IMPORTANCE
• If we behaved optimally in decision-making process, then
Cost and benefits would always be accurately weighted.
Impatience would not exist.
Gains would never be forgone in order to spite others.
No relevant information would ever be overlooked.
Moral behavior would always be aligned with moral attitudes.
 LIMITATIONS

But unfortunately, we have little understanding of

how to help people overcome their many biases
and behave optimally.
 THE BIG QUESTIONS ARE
Q1: While a few important insights about how to improve decision making
have already been identified, but the author argue that there are still many
await discovery on: how can we improve decision making?
Q2: The scholars should focus their attention on seeking to answer the
question: how can we improve decision making?
 WHY THE QUESTIONS ARE
IMPORTANT?
How we will improve decision making question is important, because of biases
like in the following:
Errors are costly
Errors will get even costlier
Decision makers are receptive
Academic insights await
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT’D)
These biases are defined in following:
Errors are Costly:
Decisions shape important outcomes for individuals, families, businesses,
government, and societies, and if we knew more about how to improve
those outcomes, individuals, families, businesses, governments, and societies
would benefits.
Errors induced by biases in judgment lead decision makers to under save for
retirement, engage in needless conflict, marry the wrong partners, accept
the wrong job, and wrongly invade countries.
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT.D)

Given the massive costs that can result from suboptimal decision making, it is
critical for our field to focus increased effort on improving our knowledge
about strategies that can lead to better decisions.
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT’D)
Errors will get even costlier:
The cost of suboptimal decision making have grown, even since the first
wave of research on decision biases began fifty years ago.
As more and more people are being tasked with making decision that are
likely to be biased-because of the presence of too much information, time
pressure, alternative choices etc.
So finally, as the economy becomes increasingly global, each biased
decision is likely to have implication for a broader swath of society
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT’D)
Decision makers are receptive:
Because decision making research is relevant to businesspeople, physicians,
politicians, lawyers, private citizens, and many other groups for whom failures
to make optimal choices can be extremely costly.
Decision makers must ready to learn new knowledge for overcome on biases
decision making. So, then they improve their outcomes.
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT’D)

However, our field primarily offers description about the biases that afflict
decision makers without insights into how errors can be eliminated or least
reduced.
 WHY THE QUESTIONS ARE
IMPORTANT?(CONT’D)
Academic insights await:
Academic insights offers uncover techniques for improving decision making.
Through accurate testing, we know what does and what does not improve
in decision making.
So, then we develop a better understanding of the mechanisms underlying
in decision making errors.
What needs to be done answer the
Question?
 THIS PAPER AIMS

• What steps should be taken to reduce biased

decision making.
• This paper examines existing literature to improved
strategies which are used for further research on
cures for biased decision making.
 DEBASING INTUITION: EARLY
FAILURES

• It is very difficult to find the solution

• Fischhooff reviewed the result four strategies
that has been proposed for biased decision
making
 REVIEWED STRATEGIES

1. Offering warnings about the possibility of bias.

2. Describing the direction of bias
3. Providing a dose of feedback
4. Offering an program of training with feedback and couching to improve
judgment.
According to fischhoff findings first three strategies yield minimal success and
even feedback produced moderate improvement in decision making.
How to improve strategies ?
 SYSTEM 1 AND SYSTEM 2

Through system 1 and system 2 we can improve our strategies.

• System 1 and system 2 thinking both are different cognitive function to

improving strategies for decision making.
WHAT IS SYSTEM 1 AND SYSTEM 2
DIFFERENCE BETWEEN SYSTEM 1
AND SYSTEM 2
 NOW THE QUESTION IS

•Can we move from system 1

to system 2?
 MOVE FROM SYSTEM 1 TO SYSTEM 2 ?

• One successful strategy for moving toward system 2 thinking relies on

replacing intuition with formal analytical process

For example data exits from past inputs and outcomes from a particular
decision making procsese,desion makers can construct linear model or
formula that weights and sums the relevant predictor variables to reach at a
particular quantitative forecast about the outcome.
 SYSTEM 2 INVOLVES TAKING AN
OUTSIDER PERSPECTIVE

• Trying to remove intuition from specific situation.

• Taking an outsider perspective reduce decision makers overconfident about

their knowledge.

• Decision makers also be able to improve their judgment by asking a outsider

for his or her view regarding a decision .
 OTHER RESEARCH ON SYSTEM 2
• Other research give more importance to system 2 and encourage people to
shift toward system 2 to reduce the errors in judgment occurs due to
overconfidence and hind sight bias.(focus one factor and forget other
factor)
• Biasness can be reduce in decision making by having group of people
rather individual make decisions and trained individual for making people
accountable for their decisions .
 OTHER SUPPORTING RESEARCH
ON SYSTEM 2
• Slovic and fischhoff developed a hypothesis about the mechanism
producing the bias.
• They believed that hindsight bias resulted from subjects’ failure to use their
available knowledge and powers of inference.
• Along these lines another group of researchers hypothesized that over
claiming credit results from focusing only on estimates of one’s own
contributions and ignoring those of others in a group.
 OTHER SUPPORTING RESEARCH
ON SYSTEM 2
• Research that examines how system 2 thinking can be used to reduce
system 1 errors has shown that analogical reasoning can be used to reduce
bounds on people’s awarness.
• Who were encouraged to see and understand the commen principle
underlying a set of seemingly unrelated tasks.
• Subsequently demonstrated an improved ability to discover solutions in a
different task that relies on the same underlying principle.
 OTHER SUPPORTING RESEARCH
ON SYSTEM 2
According to researcher:
• Surface details of learning opportunities often distract us from seeing
important underlying, generalizable principles.
• Work on joint vs separate decision making also suggests that people can
move from suboptimal system 1 thinking toward improved.
• System 2 thinking when they consider and choose between multiple options
simultaneously rather than accepting or rejecting options separately.
 OTHER SUPPORTING RESEARCH
ON SYSTEM 2
• The research discussed above suggests that any change in decision’s
context that promotes cool-headed system 2 thinking has the potential to
reduce common biases resulting from hotheadness.
• Research on joint vs separate decision making highlights the fact that our first
impulses tend to be more emotional and logical (Moore and
Loewenstein,2004) .
 OTHER SUPPORTING RESEARCH
ON SYSTEM 2

• Other research has shown that people make less impulsive, suboptimal
decisions in many domains when they make choices further in advance of
their consequences (see milkman, Rogers and Bazerman, in press, for a
review).
• Can we leverage system 1 to improve decision
making?
 CAN WE LEVERAGE SYSTEM 1 TO
IMPROVE DECISION MAKING
• We can’t solve problems by using the same kind of thinking we used when
we created them .
• It is possible that the unconscious mental system can be occur.
• A new general strategy for improving biased decision making has been
proposed that leverages our automatic cognitive processes and turns them
to our advantage
• Trying to change a decision maker’s thinking from system 1 to system 2, this
strategy tries to change the environment so that system 1 thinking will lead to
good results.
SYSTEM 1 AND SYSTEM 2
 HOW TO IMPROVE DECISION
MAKING
• Control your emotions
• Understand logical decision
• Know what you want
• Build a filter system
• Develop wisdom
• Build an a team
• Focus on the mission
• Pay attention to workplace
 SOME BIASES IN DECISION
MAKING
• Confirmation bias
• Authority bias
• Action bias
• Self serving bias
• Ambiguity bias
• Pro innovation bias
 CONCLUSION
• People put great trust in their intuition.
• The past 50 year of decision making research challenges that trust.
• Psychologists is to identify how and in what decision making situations
people should try to move from intuitive ,emotional thinking to more
deliberative, logical thinking.
• The researchers potentially harmful effects of some biased decision making,
more important it is to have empirically tested strategies for reaching better
decisions.
• This paper calls for more research on strategies for improving decision.