Posted: January 23rd, 2025

Decision Making Pitfalls

Overview

It is impossible to remove bias from the decision making processes. The science of the decision making is to recognise that biases exist, and to ensure that the halo-effect is not operating, which could lead to poor and regrettable decisions. The effective decision maker will be aware of the bias operating in any scenario/situation, and take steps to ensure that the bias is factored into the decision. Since biases are unavoidable, it is the skill of the decision maker and the degree of self-reflection possible by that decision maker that determine whether adaptive or mal-adaptive use of bias occurs

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Learning Objectives

At the completion of this module, you should be able to:

• • Explain the psychology of decision making
  • Enhance existing communication and interpersonal effectiveness, teamwork and problem solving skills
  • Demonstrate understanding of various strategic decision making models and various factors essential to decision making process.

 

Decision Making

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The decision making process is undertaken by individuals, or groups of individuals, to arrive at a satisfactory choice between various alternatives.  Numerous psychological forces impact on the behaviour of decision makers as they proceed towards rational decisions. These occur at both the conscious level and the sub-conscious level.

 

The basic psychological force affecting a decision maker is their personality.  But what is personality?  Personality is characteristic traits, and patterns of a person, in their interrelationships with others and the environment.  There is a holistic concept of qualities, impulses, habits, interests and ideals.  Personality is an entire system of relatively permanent physical and mental tendencies that are distinctive of an individual.

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Personality can also be viewed as a pattern, or pre-disposed response, made by a person in the presence of general or specific stimuli.  Personality is what gives order and consistency to different types of behaviour and mediates the adjustment of the individual’s behaviour.  It is the essence of a person.

 

Sigmund Freud’s theory of behaviour emphasised the ideas of: internal conflict; subconscious motivation; and defence mechanisms.  He argued that that people are dominated by subconscious motives and emotions with the early stages of childhood forming the most important basis for adult personality.

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Freud contends that personality is made up of three components:

1. Id: Basic drives for pleasure and aggression or uncoordinated instincts
2. Ego: The rational part of the psychic system which tries to satisfy the desires of the Id within the limits of reality. It is organised and realistic
3. Superego: Plays the critical and moralising role.

 

The three components outlined above continually conflict with each other.

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• Personality Traits

A trait is a consistent pattern of action and reaction. The majority of theorists agree on four types of traits including:

 

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1. Common traits such as aggressiveness
2. Unique traits such as prudishness
3. Surface traits such as tact
4. Depth traits such as intellectual capacity.

 

The trait approach to personality views the individual as separate from the environment.

 

A large study undertaken by E.C. Brim in 1962 regarding decision making, constructed three variables:

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1. Personality variables: This includes abilities, beliefs, attitudes and motives of the individual
2. Situational variables: This is related to the external, observable situation
3. Interaction variables: This is resulting from the interaction of a specific situation and the individual’s personality.

 

The link between personality and decision making is not a simple cause and effect, or one-to-one relationship.  The decision making process transforms childhood experiences, disappointments, successes and memories into action. Managerial decision making represents a learned psychological process that is entangled with the decision maker’s personality.

 

Perception Process

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Litterer’s concept of the perception process consists of three elements:

 

1. Selectivity: Thresholds separate certain pieces of information for further consideration
2. Closure: Bits of information are compiled into a meaningful whole
3. Interpretation: Previous experiences aid in judging the information collected.

 

The above elements interact to create behaviour based on the perception of the individual.  Research into perception has been undertaken by controlling variables such as the:

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• Measurement devise
• Stimulus context
• Scenario
• Actual stimuli.

 

The results showed that the difference in decision outcomes are related to non-controllable variables such as:

• Familiarity with stimuli
• Personal values
• Personality
• Cultural background
• Physiological factors.

 

Stereotyping

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Sociologists believe mental categorizing is necessary and inescapable.  Categorizing is both subconscious and conscious where subconscious stereotyping is that which everyone does without noticing.

 

Subconscious stereotyping is quickly followed by a conscious check which permits time for any needed corrections.  Further, subconscious stereotyping is affected by conscious stereotyping because frequent conscious thoughts will quickly develop into subconscious stereotypes.  Studies show that women stereotype more negatively than men and read more into appearance.

 

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People stereotype because it is too difficult to take in all of the complexities of other people as individuals.  It is inexact and is an efficient way to mentally organise large blocks of information.  Categorisation is an essential human capability because it enables us to simplify, predict, and organise our world.  Once everyone is organised into tidy categories, there is a human tendency to avoid processing new information about each individual.  Assigning general group characteristics to members of that group saves time and satisfies the need to predict the social world in a general sense.

 

Stereotyping can be described as “a simple picture in our head”, which tells us all about an individual or group of people.  Stereotypes are standardised and simplified conceptions of groups based on some prior assumptions.

 

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The effects of stereotyping can fluctuate, but for the most part they are negative.  They are inaccurate opinions of people and scapegoating.  Distress associated with stereotyping reminds those being judged of how society views them. The effects of stereotyping are also erroneous judgments or compromised decisions.

 

Watch the following video that gives a very simple snapshot of the psychology of stereotyping:

http://abcnews.go.com/2020/video?id=2448988

 

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  Reciprocation Bias

Reciprocation bias is a basic societal norm which is rooted in societal rules that one person must try to repay in kind, and in the future, what another person has provided in the present. We are socialised from childhood to abide by the reciprocation rule or suffer social disapproval and a feeling of personal guilt. Reciprocation leads to concession making and allows different individual's initial, incompatible demands to become compromised, so that they finally work together toward common goals.

 

Commitment and Consistency Bias

Commitment is a state of being in which an individual becomes bound to their actions and, through these, to their beliefs. It represents a visible indicator of what we are and what we intend doing. Behaviour leads to an expectation about what we will do in the future. These expectations then shape our behaviour and constrain us to act within them.

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Social Proof Bias

Social proof bias refers to people deciding what to believe or how to act in a situation, by looking at what others believe and do.  In situations of uncertainty and ambiguity, they observe and follow others, especially those they perceive to be most similar to them.  Similarity is defined in terms of:

• Status
• Social background
• Dress
• Manner

Research indicates that approximately 95% of people are imitators and only 5% are initiators.

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Liking Bias

Liking bias can influence decision making with a person’s desire to be liked encouraging their compliance to your requests. People generally prefer to be liked rather than disliked and prefer to say yes to those whom they like. Conversely, people sometimes like to say no to people they dislike. The liking bias is so powerful that the person concerned does not even have to be present for it to be activated. Often, just the mention of a friends’ or mutual acquaintance’s name will be sufficient.

 

Authority Bias

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Most people have a deep-seated duty to authority and will tend to comply when requested by an authority figure. The accepted system of authority allows the development of sophisticated structures for social control. Since the opposite is anarchy, we are all trained from birth to believe that obedience to authority is right. When we comply with authority in an automatic fashion, we may be reacting to the symbols of authority and not to its substance. Each of us possesses stored patterns for responding to authority which is activated by specific external signs.

 

Scarcity Bias

Scarcity bias is opportunities or things that are difficult to obtain are more valued. We use information about an item's availability as a short cut to deciding quickly on its quality. As things become less available we lose freedoms and because most people do not like to be dictated to in this way, we react against it. We want these things more than before. Scarcity bias operates under two opposing conditions:

• Scarce items are heightened in value when they are newly scarce
• Competition for a scarce item increases their value.

 

Ease of Recall Bias

We are biased towards events that we can recall and imagine more easily. The two features that make recall easy are how recent and vivid the event was. A recent event is recalled more easily than one which took place long ago while a vivid event can be recalled very easily because it impressed us emotionally.

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Relationship Bias

Relationship bias is where the individual considers the simultaneous presence of two normally associated facts to be more probable than either of the facts occurring separately. Once a person becomes convinced of such a positive correlation, however illusionary it is shown to be, they are likely to find new confirmations and justifications as to why their correlation is correct.

 

Over-confidence Bias

Over-confidence bias is the tendency for people to be more confident than correct. They fail to collect key factual information because they are too sure of their assumptions and opinions. Over-confidence is greatest in a person's areas of ignorance, exactly where it can do the most damage in decision-making.

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Hindsight Bias

Individuals tend to over-estimate the degree to which they would have predicted the correct outcome once the result is known. We tend to distort our beliefs about what we knew beforehand on the basis of what we found out later. The same phenomenon occurs when people look back on the judgements of others.

 

Status Quo Bias

People prefer the status quo because of the perceived disadvantages of changing appear greater than the advantages. When something is designated or identified as being the status quo people will prefer it and the attractiveness of the status quo increases as the number of available alternatives increases.

 

Sunk Cost Bias

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Various researchers have observed that individuals will often demand much more to give up an object that they currently own than they would be willing to pay to acquire it. Sunk cost bias leads to escalating commitment and entrapment of the decision-maker. Decisions can often take much longer to be made and is linked to the leadership and change agendas.

Decision Making in Health

Many medical decisions involve uncertainty. Normative expected utility theory suggests that decision outcomes should be weighted by probability of occurrence. However, decision outcomes are weighted towards:

• Zero risk: We are willing to pay more to reduce risk even when the probability is already very low
• Certainty: Treatment A with certainty of 18 years of normal life (65%). Treatment B with 20% chance of imminent death and 80% chance of 30 years of normal life (35%).

 

Many medical decisions also involve decisions that occur at different points of time such as:

• Immediate surgery with risk of mortality and complications: This involves an immediate decision and outcome.
• Long term preventive health behaviour such as quitting smoking: This involves a benefit that accrues over time. More weight is placed on immediate outcomes rather than future outcomes. For example, it is difficult to adopt preventative health behaviors as the benefit or outcome is not immediate.

 

 

 

Module 6: Decision Making, Politics and Power

Top of Form

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Bottom of Form

• Overview

In this module we will introduce the intimate relationship between power, politics and the decision making process. The first thing to understand is how power and politics operate at both the micro and macro levels in society. As health service managers it is also important to understand the dynamics of politics and power both internally and externally to the health care organisations within which we work.

• Learning Objectives

 

At the completion of this module, you should be able to:

• Define power and identify the various types of power
• Explain how power and leadership work in an organisation
• Discuss leading with power and the impact of the loss of power
• Demonstrate critical thinking and analysis

  Defining Power

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Power can be defined as “a relation among social actors in which one actor A, can get another social actor B, to do something that B would not otherwise have done”.  Power is recognised as "the ability of those who possess power to bring about the outcomes they desire" Edwards, P., and Wajcman, J., 2005

 

French and Raven’s work on power discuss key elements of:

• Legitimate: People have the formal right to make demands and to expect compliance and obedience from others
• Reward: Results from one person's ability to compensate another for compliance
• Expert: Based on a person's superior skill and knowledge
• Referent: From a person's perceived attractiveness, worthiness, and right to respect from others
• Coercive: A belief that a person can punish others for noncompliance.

 

This was then later extended by Raven to include:

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• Informational influence – the provision of information to affect change

  Soft and Hard Power

Leadership and power are inextricably intertwined. Broadly speaking, power is the ability to affect the behaviour of others to get the outcomes you want, and there are three basic ways to do that:

• Coerce them with threats
• Induce them with payments
• Attract and co-opt them

Hard and soft power are related because they are both aspects of the ability to achieve one’s purpose by affecting the behaviour of others.  Sometimes people are attracted to others with command power by myths of invincibility.  Sometimes great intimidators have a vision and reputation for success that attracts others despite their bullying behaviour.  Soft power rests on the ability to shape the preferences of others.  The table below provides examples of soft and hard power.

 

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Type of Power	Behaviour	Sources	Examples
Soft	Attract and co-opt	Inherent qualities Communications	Charisma Persuasion
Hard	Threaten and induce	Threats, intimidation Payment rewards	Hire, fire, demote Promotions, compensation

  Customer focused organisations

Buckman contends that if the organisations objective is to be client focused and do a better in closing the gap with the customer then it seemed logical to put the customer on top of the organizational pyramid by inverting the organization.  One result of inverting the organizational pyramid, those on the front line become the most important people in the organization. They are the interface with the customer and will determine the directions for the rest of the organisation.

 

The diagrams below represent Buckman’s inverted organisational structures.

Types of Power

Management literature identifies two types of power:

 

1. Formal Power

This is based in the position held by the person. Formal power can be divided into four types including:

• Coercive Power: Power based on dependency, punishment and fear
• Reward Power: Power based on the ability to distribute rewards that are viewed as valuable.
• Legitimate Power: Power inherent in the position
• Information Power: Power that comes from access to and control over information.

 

2. Personal Power

This is derived from the individual’s unique set of characteristics. Personal power can be divided into three types including:

• Expert Power: Power based in special skills and knowledge
• Referent Power: Power based on the possession of desirable personal traits or access to resources
• Charismatic Power: An extension of referent power relating to individual style and personality.

Organisational Politics

Politics can be defined as who gets what, when and how. If power involves the employment of stored influence by which events, actions and behaviours are affected then politics involves the exercise of power to get something done, as well as to enhance and protect the vested interests of individuals or groups. The use of organisational politics suggests political activity is used to overcome resistance and there is a conscious effort to organise activity to challenge opposition in a priority decision situation.

  Frames of Reference

Bolman and Deal describe four "frames" for viewing the world:

1. Structural
2. Human resources
3. Political

The political frame can be used for examining the concept of organisational politics.  Within the political frame there are five assumptions about organisations and what motivates both their actions and the actions of their decision makers.

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