Decision-making processes

Definition

Decision-making processes refer to the steps individuals take to gather information, evaluate options, and choose among alternatives. These processes can be influenced by cognitive biases, emotions, social pressures, and personal values.

Related terms

Heuristics:

Mental shortcuts or rules-of-thumb that simplify decision-making but may lead to errors or biases. An example is using availability heuristic where we judge the likelihood of an event based on how easily examples come to mind.

Anchoring Effect: This bias occurs when individuals rely too heavily on an initial piece of information (the anchor) when making decisions. For instance, if you're buying a car and see an expensive model first, it might influence your perception of what's considered affordable later.

Prospect Theory: This theory suggests that people's decisions are influenced by how they frame potential gains and losses. It proposes that people are more sensitive to losses than gains and often take greater risks to avoid losses than they would for equivalent gains.