TABLE OF CONTENT Decision making process................................................................................................................1 REFERENCES...............................................................................................................................2
Decision making process As perTversky & Kahneman, (1974), judgments formulated on the basis of mental operations or heuristics influences the consequences as well as effectiveness of decision making process. Though heuristics provides an economic, quick and effective way to make decisions but they can also lead to predictable and systematic errors. In the situations of uncertainty people use heuristics for making judgements which can also leads to bias. The heuristics used for decision making process may be in the form of representativeness, anchoring and adjustments and availability. The cognitive illusions also act as perceptual illusions which further leads to cognitive biases. Thus in order to make decisions probability or logical concepts are embedded with the judgmental description of the problem as well as with the intuitive judgement of the people. The individuals can judge the probability of an event on various criteria such as on the basis of its resembles or similarity with other event or on the basis of ease with which it is recalled or remembered by people. However it can generate bias in decisions in the form of misconceptions, illusion of validity, insensitivity, illusory correlation and restricted imagination. Further on the basis of these judgements people calculate estimations and then adjust to some extent for making their decisions. The adjustment from the initial point is accomplished mainly when making numerical predictions and a specific or relevant value is given. The use of heuristics in these stages assist in making decisions but is also enhances the probability of bias and inaccuracy in decisions. 1
REFERENCES Books and Journals Tversky,A.,&Kahneman,D.(1974).Judgmentunderuncertainty:Heuristicsand biases.Science.185(4157). 1124-1131. 2