DECISION MAKING: BETWEEN RATIONALITY AND REALITY

BAB 4 : DECISION MAKING: BETWEEN

RATIONALITY AND REALITY

ABSTRACT

Almost by definition decision-making is typical human activity, and therefore important psychological subject. The starting point of its classical conception within psychology could be traced back to economy and mathematic, with ideas of human as rational economic being, and conceptualising decision making as choice between two or more alternatives, and as such being a separate event in space and time. Already in fifties Herbert Simon challenged such a view with his concept of bounded rationality, emerging from the joint effect of internal limitations of the human mind, and the structure of external environments in which the mind operates. During the last decades with the shift to the real word situations where decisions are embedded in larger tasks, becoming so part of the study of action, the lost rational human appeared again as efficient creature in the complex environment. Gigerenzer showed how heuristics help in this process.

KEY WORDS

bounded rationality, decision making, heuristics, macro cognition, naturalistic decision making

INTRODUCTORY OVERVIEW

Decisions are regular part of human everyday life and they strongly influence either life of individuals, or even the lives of many others, depending on the position of decision maker. Understanding of the decision-making processes could help us in preventing bad decisions and in stimulating the good ones. Very soon it appeared that regarding the criteria of these models humans are very bad decision makers. But let us overview the main phases in the development of psychological views on decision-making. After Collyer and Malecki [7; p.6]

in the development of decision-making theories we could distinguish three periods:

• rational decision making models. Models based on rational choice and behaviour, (e.g. SEU, multiattribute utility theory, Bayesian inference models) prevailed during the period between 1955 and 1975. Within these approaches decision problems were decomposed into their elements so that the choices, the uncertainties and the outcomes were explicitly given,

• descriptive models. Stemming from the rational models descriptive ones argue that humans usually do not make decisions in this way and regarded deviations from the prescribed procedures as heuristics and deviations from the correct responses as biases. This approach was compelling during the period between 1965 and 1985. Herbert Simon [1] with his influential concept of bounded rationality was pioneer of this way of thinking,

• decision models in natural settings. This approach starting in 1980s is offering quite different emphasizes, and moved research from laboratory into dynamic natural settings, from naive to the expert decision makers and from the decision events to the real processes, to the greater tasks of which decisions are part. Decision-making is not devoted to itself but is serving achievement of a wider goal. Therefore studying decision-making means studying the activity and not studying the choice.

Also the contemporary findings about situation awareness (SA) as “the perception of the elements in the environment within a volume of time and space, the comprehension of their meaning and the projection of their status in the near future” [8; p.5] should be taken into account. All these approaches by their very nature emphasize the meaning of expertise. During the last years the field of naturalistic decision making and related concepts were classified under the concept of macro cognition [9], presenting a broader frame for macro operational situations characterised by the need for decision making during the tasks, like setting the goals, fault management, and planning, i.e. the role of cognition in real tasks, in interaction with the environment. As Schraagen et al. [9; p.9] believe, it is about ‘the study of cognitive adaptations to complexity’. And really, the failure of classical decision making models stem from their neglect of complexity on one side, and emphasize of abstract rationality on the other.

(Figure 1)

Figure 1. Hypothetical value function as proposed by Kahneman and Tversky prospect theory. Function is convex and relatively steep for losses and concave and gradual for gains (taken from http://en.wikipedia.org/wiki/File:Valuefun.jpg, after [13]). Value is similar to utility, only it is evaluated regarding the reference point.

NATURALISTIC DECISION MAKING

Main research work in the field of the so called naturalistic decision making was going on mainly in the frame of the crisis events and radically change the view of the nature of crisis decision making. It is not by chance, that US Army devoted a lot of resources and time to the

study of these questions, e.g. in the project TADMUS (Tactical Decision Making Under Stress). Researchers focused on the selection process of the best alternative. Involved participants were usually inexperienced, e.g. students. But then psychology went out of the laboratory in the real life, joined firemen, police officers, medical staff, etc. that is experienced participants. Quite different image of the decision making appeared. Classical decision-making models were not adequately describing the situation. Decision makers focused on the definition of the situation, and on the base of their experience in similar previous events, while taking into account constraints of the given situation, choose the most adequate response. Possible responses were assessed on the base of the projection of their possible consequences into the future and search for the possible unwanted effects. If unwanted effects were not predicted, the response was selected. This new approach differs at least in three ways from the classical one, which emphasizes simultaneous assessment of a number of alternatives, being based on analytical methods of values and probabilities connection, and was searching for the optimal solution [3]:

·           decision maker pays his attention mostly to situation assessment or to the discovering of the nature of the problem,

·           particular alternatives are judged successively with the help of mental simulation of outcomes, and

·           alternative is accepted if it is satisfying (not necessary optimal).

Fundamental difference lie in the fact that in everyday situations decisions are the part of the larger tasks, which decision maker try to accomplish. In the laboratories decision-making was going on outside the meaningful connections, while in reality it is the mean of achieving the wider goals. Decisions are the part of the broader tasks consisting of the problem definition, understanding of meaningful solutions, acting for goals achievement, and effects assessments. As one of the researchers said [2], studying decision-making in dynamic, real time context changes it into the part of the study of action, and not study of choice. Decision making is the matter of guiding and maintaining the continuous flow of behaviour directed toward the set of goals and not the set of separated events of choice dilemmas. Decision-making in reality is a joint function of two factors [3]:

·           task characteristics, and

·           individual’s knowledge and experience relevant for the task.

Decision-making is often going on in stressful conditions. Stress is caused mainly by the

following characteristics of the situations, called stressors [14]:

·            multiple information sources,

·           incomplete, conflicting information,

·           rapidly changing, evolving scenarios,

·           requirements for team coordination,

·           adverse physical conditions,

·           performance pressure,

·           time pressure,

·           high work/information load,

·           auditory overload/interference,

·           threat.

They represent important factors and conditions in decision-making, which often determine the nature of decision, consequent behaviours and their outcomes.

SITUATION AWARENESS (SA)

Mica Endsley [15], leading expert in planning, developing and assessing systems in support

of SA and decision-making, is discovering new ways and understanding of human decision-making and action. Evidently field has SA and decision-making in natural environments complement and stimulate each other. Behind their development stand also Herbert Simon’s conceptions of bounded rationality, heuristics, etc.

Need for the solution of practical decision problems leads to this development. Contemporary

systems should not only provide needed information but it must be cognitively and physically

usable. SA simply means that we know what is going on around us, and are able to select important information from the surrounding, what enable somebody to make decisions. SA depends on tasks and goals demanded by certain work or activity. Mica Endsley [8] believe that elements of SA differ depending on the field, but its nature and mechanisms could be described generically.

INTUITION: MIRACLE OR EXPERTISE

The term intuition (from lat. intueri, meaning to look inside or to contemplate) is quite often used in everyday life, but the majority of people would hardly define it precisely. We know something and believe that it is correct, that the consequential decision will be the right one, but we do not know neither why nor how. Corsini’s [16] psychological dictionary define intuition as ‘Immediate insight or perception as contrasted with reasoning or reflection. Intuitions appear to be products of feeling, minimal sense impressions, or unconscious forces rather than deliberate judgment.’ Herbert Simon [1] uses the term in the sense of a belief, judgment or decision arrived at by the process of recognizing cues in the surrounding situation, and using them to access information already stored in long-term memory. It permits problem solving without awareness or with incomplete awareness of the solution process. Also contemporary considerations go in this direction. Without doubt intuition is mental process. Input into this process is given by the knowledge stored in the long-term memory, acquired mainly with associative learning. Input is processed automatically and unconsciously. Output of the process is the feeling, that could serve as the basis for the judgment and decision making [17]. Klein [4] too, is linking intuition with experience that enables humans’ recognition of situation (judgment) and necessary reactions (decision making). Therefore decisions are fast and without conscious effort.

Opinion :

The starting point of its classical conception within psychology could be traced back to economy and mathematic, with ideas of human as rational economic being, and conceptualising decision making as choice between two or more alternatives, and as such being a separate event in space and time.

This article was taken from:

http://www.google.co.id/url?sa=t&rct=j&q=the+reality+of+decision+making&source=web&cd=3&ved=0CDMQFjAC&url=http%3A%2F%2Fhrcak.srce.hr%2Ffile%2F114040&ei=fCaBT4WjEsPWrQfSx4CGBg&usg=AFQjCNFS6GEEz-L8fAQR4qjbaBOJkxlbEA