Decisions are very essential in being able to move on with a certain situation or carry out a particular action. People make decisions on just about anything that has something to do with their life – political choices, personal choices, career decisions, financial decisions, medical decisions, and relationship decisions.
Many theories have been coined to explain how people come up with decisions, its components, and what factors affect them to decide for the present and future actions. A decision made is rooted from several factors and it composes elements as well. This article will identify and explain the various factors and components of decision making.
Factors in Decision Making
The presence of factors in making a choice creates a huge impact on the kind of decision the person will arrive at. The outcome of decisions are also brought about by the factors that played a huge role in the decision making process. These are the following factors in decision making:
a. Past Experiences
A person’s past experiences can affect future decisions. If the past decision has turned out to be positive and beneficial, it will follow that individuals are bound to make similar decisions in a similar situation. On the contrary, past mistakes serve as learning experiences, so people tend not to repeat the same decision that turned out to be a failure.
b. Cognitive Biases
Cognitive biases are the individual’s thinking patterns rooted from observations and conclusions that sometimes lead to false assumptions, wrong judgments, and faulty reasoning. Cognitive biases include:
- Belief bias – making decisions based on a stock knowledge
- Hindsight bias – tendency to see events as inevitable once it occurs
- Omission bias – information that is deemed risky is eliminated
- Confirmation bias – examining what is expected from observations
c. Individual Differences
Some of these individual differences that affect a decision are:
- Socioeconomic status
- Educational background
- Cognitive abilities
d. Belief in Personal Relevance
This means that people make decisions on something that they strongly believe in.
e. Escalation of Commitment
A decision is influenced by allotting a huge amount of time, money and effort into a decision where people feel committed to.
Components of Decision Making
Apart from the factors mentioned above, there are other concepts involved in decision making, and these are:
This refers to details and knowledge about a decision including the impacts of each alternative, the probability of the choices, and other things.
These are the choices or options that an individual can select from. Alternatives may be identified and determined or it can be developed.
These are the requirements from the available alternatives. The option that meets the criteria is usually selected for the decision.
Goals have to be identified before arriving at a decision.
This pertains to the desirability of the decision outcome that provides satisfaction and contentment to the decision maker.
These are the individual beliefs and commitments of the person. It also means the personal values that dictate individual preferences.
• Decision Quality
It is an evaluation of whether a decision is desirable or not.
Acceptance is a critical ingredient in decision making. Decision makers must accept the chosen alternative wholeheartedly.
A decision is achieved within a decision environment which presents all the possible information, alternatives, values and preferences during the decision making process. Yet, time and effort constrain these possibilities and components in the environment. Time constraint means that a decision has to be made at a given timeframe.
For example, when searching for a job, you cannot just leave your deadline open. There has to be a specific deadline for you to land up with a job considering that age is increasing and competencies are not getting stronger each time. Effort constraint limits availability of money, resources, priorities and manpower. For instance, when trying to choose your ideal company, you would not want to be spending money in applying for more companies when there are already employers available who are ready to hire you.
Although delaying a decision can somehow be beneficial, it still poses some risks and negative effects on the decision maker’s actions.