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Decision-making

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Women in Economic Decision-making Overview.

Decision-making can be regarded as the cognitive process resulting in the selection of a belief or a course of action among several alternative possibilities. Every decision-making process produces a final choice[1] that may or may not prompt action.


CONTENT : A - F , G - L , M - R , S - Z , See also , External links

Quotes

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Quotes are arranged alphabetically by author

A - F

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  • The type of rationality we assume in economics — perfect, logical, deductive rationality — is extremely useful in generating solutions to theoretical problems. But it demands much of human behavior — much more in fact than it can usually deliver. If we were to imagine the vast collection of decision problems economic agents might conceivably deal with as a sea or an ocean, with the easier problems on top and more complicated ones at increasing depth, then deductive rationality would describe human behavior accurately only within a few feet of the surface. For example, the game Tic-Tac-Toe is simple, and we can readily find a perfectly rational, minimax solution to it. But we do not find rational “solutions” at the depth of Checkers; and certainly not at the still modest depths of Chess and Go.
  • The fine art of executive decision consists in not deciding questions that are not now pertinent, in not deciding prematurely, in not making decision that cannot be made effective, and in not making decisions that others should make. Not to decide questions that are not pertinent at the time is uncommon good sense, though to raise them may be uncommon perspicacity. Not to decide questions prematurely is to refuse commitment of attitude or the development of prejudice. Not to make decisions that cannot be made effective is to refrain from destroying authority. Not to make decisions that others should make is to preserve morale, to develop competence, to fix responsibility, and to preserve authority.
From this it may be seen that decisions fall into two major classes, positive decisions - to do something, to direct action, to cease action, to prevent action; and negative decisions, which are decisions not to decide. Both are inescapable; but the negative decisions are often largely unconscious, relatively nonlogical, "instinctive," "good sense." It is because of the rejections that the selection is good.
  • The dictionary defines "economics" as "a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services." Here is another definition of economics which I think is more helpful in explaining how economics relates to software engineering.
Economics is the study of how people make decisions in resource-limited situations.
This definition of economics fits the major branches of classical economics very well.
Macroeconomics is the study of how people make decisions in resource-limited situations on a national or global scale. It deals with the effects of decisions that national leaders make on such issues as tax rates, interest rates, foreign and trade policy.
Microeconomics is the study of how people make decisions in resource-limited situations on a more personal scale. It deals with the decisions that individuals and organizations make on such issues such as how much insurance to buy, which word processor to buy, or what prices to charge for their products or services.
  • Barry Boehm "Software engineering economics." Software Engineering, IEEE Transactions on 1 (1984): 4-21. p. 4.
  • If you obsess over whether you are making the right decision, you are basically assuming that the universe will reward you for one thing and punish you for another.
The universe has no fixed agenda. Once you make any decision, it works around that decision. There is no right or wrong, only a series of possibilities that shift with each thought, feeling, and action that you experience.
If this sounds too mystical, refer again to the body. Every significant vital sign- body temperature, heart rate, oxygen consumption, hormone level, brain activity, and so on- alters the moment you decide to do anything… decisions are signals telling your body, mind, and environment to move in a certain direction.”
  • Deepak Chopra, The Book of Secrets: Unlocking the Hidden Dimensions of Your Life, 2004
  • In recent years there has been increased interest in the effects of internal communication on decision processes. A number of hypotheses relating the bias in information to the final decision have been proposed. In this paper we discuss two laboratory experiments which were designed to test two such hypotheses. The first experiment tests the hypothesis that cost and sales estimations are made with the implicit assumption that a biased pay-off structure exists. The second experiment tests explicitly the effects of biased and unbiased pay-off structures on estimation within an organization. An analysis of the data for the two experiments is made and some implications for further research are drawn from the results.
  • Early states had a hereditary leader with a title equivalent to king, like a super paramount chief and exercising an even greater monopoly of information, decision making, and power. Even in democracies today, crucial knowledge is available to only a few individuals, who control the flow of information to the rest of the government and consequently control decisions. For instance, in the Cuban Missile Crisis of 1963, information and discussions that determined whether nuclear war would engulf half a billion people were initially confined by President Kennedy to a ten-member executive committee of the National Security Council that he himself appointed; then he limited final decisions to a four-member group consisting of himself and three of his cabinet ministers.

G - L

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  • No decision in business provides greater potential for the creation of wealth (or its destruction, come to think of it) than the choice of which innovation to back.
    • Robert Heller (1989) The Decision Makers. Ch. 5. The Innovators’
  • Optimism is normal, but some fortunate people are more optimistic than the rest of us. If you are genetically endowed with an optimistic bias, you hardly need to be told that you are a lucky person -- you already feel fortunate. Optimistic people play a disproportionate role in shaping our lives. Their decisions make a difference; they are inventors, entrepreneurs, political and military leaders -- not average people. They got to where they are by seeking challenges and taking risks. They are talented and they have been lucky, almost certainly luckier than they acknowledge.
  • Children learn how to make good decisions by making decisions, not by following directions

M - R

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  • Because people face trade-offs, making decisions requires comparing the costs and benefits of alternative courses of action. In many cases, however, the cost of an action is not as obvious as it might first appear. […] The opportunity cost of an item is what you give up to get that item. When making any decision, decision makers should be aware of the opportunity costs that accompany each possible action. In fact, they usually are. College athletes who can earn millions if they drop out of school and play professional sports are well aware that their opportunity cost of college is very high. It is not surprising that they often decide that the benefit of a college education is not worth the cost.
    • N. Gregory Mankiw, Principle of Economics (6th ed., 2012), Ch. 1. Ten Principles of Economics.
  • Which eyes should I look for to find the ultimate unreasoned answer?
  • Without asking anybody’s advice, I turned myself insane.

S - Z

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  • Decisions made against the will of the heart never bring good to anyone. Refusing may bring pain for a while, just for a moment, but agreeing to something merely to please someone aches forever and hurts everyone.
  • The central economic issues go beyond the traditional three questions posed at the beginning of every introductory text: What is to be produced? How is it to be produced? And for whom is it to be produced? Among the broader set of questions are: How should these resource allocation decisions be made? Who should make these decisions? How can those who are responsible for making these decisions be induced to make the right decisions? How are they to know what and how much information to acquire before making the decisions? How can the separate decisions of the millions of actors decision makers in the economy be coordinated?
  • Within image theory (e.g., Beach, 1990; Mitchell & Beach, 1990), it is suggested that important components of decision-making processes are the different “images” that a person may use to evaluate choice options. Images may represent a person's principles, goals, or plans. Decision options may then match or not match these images and be adopted, rejected, considered further, depending on circumstances.
    • Deborah J. Terry, Michael A. Hogg. Attitudes, Behavior, and Social Context: The Role of Norms and Group Membership. 1999

See also

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