Mojza Blog

The Psychology of Decision Making

by Muhammad Ali Kalim | 3 Dec 2023

Have you ever pondered on the idea of what mechanisms are in control of the decisions we make? Why do we make choices differently based on the circumstances that we have been provided?

Factors Affecting Decision-Making

There are several principles that govern the decision-making process. It controls our ability to reach conclusions and formulate ideas on the basis of which we choose the path of our concern. For example, a case study of the State University of Gorontalo, Indonesia highlighted key aspects regarding decision-making, and after deep analysis and scrutinization, the following factors were identified to have influenced the university leaders and administrators:

The internal condition of the organisation
Availability of information
The external condition of the organisation
Personality and skill of the decision-maker
Other diverse factors

These results provided a 75.78% impact of the internal condition of the organisation on decision-making pertaining to the institutional culture and norms that the university had. However, to attain a broader analysis of the factors involved, we require a more generalised overview of the situation. Ruben Ugarte, a Data Strategist, outlined three major reasons behind the type of decisions a person may make. Firstly, emotions have a role to play towards the possible conclusions that we reach. For example, when choosing your desired college, or the subject choices you have to make, all require a rational analysis independent of personal interests, social pressures, and environmental factors to reach a logical conclusion while keeping all facts and figures under consideration. This, however, has the risk of being influenced by emotions such as fear of not opting for a college with a low acceptance rate, or excitement towards taking a subject that has recently gained your interest. If you often find yourself anxious due to studies, then our guide on crushing academic stress is tailor-made for you. Another factor is the lack of information, the classic example of which is COVID-19 in which governments had to enforce lockdowns and shut down economies without suitable knowledge about what the virus was capable of or its possible limitations. Finally, the lack of practice and the little training given towards building the decision-making muscle, which can easily influence one’s decision-making. When this happens, smaller decisions, such as the type of food to eat at a restaurant or what movie to watch, become a struggle. Therefore, the need to immerse yourself in the decision-making process is imperative to develop the capability to make bigger decisions where more risk is involved, and greater things are at stake.

The Use of Heuristics

When we encounter a situation where expeditious decisions are to be made, cognitive limitations become more evident, forcing us to opt for mental shortcuts and apply the rule of thumb to reach the best possible solution. However, this may be accompanied by biased conclusions or poor decision-making based on the limited data provided and time constraints making it difficult to opt for the most apt choice. Moreover, Professor Sean Rife at Murray State University concluded that life would be exhausting if we had to deliberate over every choice that we made, so to ensure efficiency and precision, we make use of these cognitive tools that provide us with a general idea of the type of decisions we need to make. It is also seen as a means to make simplifying assumptions and to reduce the complexity of decision-making. For example, you’re stuck in traffic and decide to divert your path and take another route which you are not quite familiar with, but in regard to the critical situation, this seems to be the most plausible option. Although a useful tool, it can lead to inaccuracy and error of judgement, especially concerning business or economic decisions where the ramifications of using heuristics can be costly. Furthermore, such circumstances can also lead to self-doubt, completely destroying our self-esteem. Ever wonder how to not let the matter at hand get the better of you? Check out our blog on developing self-esteem.

Decision-Making Skills

What does it take to make informed, pragmatic decisions? Firstly, a good intuition. A variety of past experiences that have accumulated over the years to transform you into a rational thinker who analyses the situation from a critical standpoint before reaching a reasonable conclusion. Let’s assume you have tried a variety of cereals from different companies, so you have a general perception of which cereal grabs your interest the most. In this particular scenario, you have developed the capability to reach decisions with a higher probability of achieving more accurate results with less chance of it being distasteful. Furthermore, good decisions require creative approaches. When a person broadens the horizon of their conscious mind and thinks differently, there is a higher likelihood of reaching more unique solutions. However, it is important to note that analytical skills usually outweigh others and complement well with decision-making. In fact, fact-based interpretations where data and statistics are involved help to make better life choices that are more sustainable and where fewer repercussions are involved.



Author: Muhammad Ali Kalim
Proofreaders: Syed Muhammad Shaheer Ali and Haseeb Yousuf


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Published: 3 December 2023
Last Updated: 3 December 2023
Written by Muhammad Ali Kalim