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Critical Thinking and Decision Making

Updated: Oct 3, 2018



The word critical is derived from the Greek and means to question, to discuss, to choose, to evaluate, to make judgment

Greek kritein-to choose, to decide

Greek krites- judge

English criterion-a standard, rule, or method

Critical thinking examines assumptions, discerns hidden values, evaluates evidence, and assesses a conclusion.

"Critical" as used in the expression "critical thinking" connotes the importance or centrality of the thinking to an issue, question or problem of concern. "Critical" in this context does not mean "disapproved" or "negative." There are many positive and useful uses of critical thinking, for example formulating a workable solution to a complex personal problem, deliberating as a group about what course of action to take, or analyzing the assumptions and the quality of the methods used in scientifically arriving at a reasonable level of confidence about a given hypothesis. Using strong critical thinking we might evaluate an argument, for example, as worthy of acceptance because it is valid and based on true premises. Upon reflection, a speaker may be evaluated as a credible source of knowledge on a given topic.


Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action.

In its exemplary form, it is based on universal intellectual values that transcend subject matter divisions: clarity, accuracy, precision, consistency, relevance, sound evidence, good reasons, depth, breadth, and fairness. It entails the examination of those structures or elements of thought implicit in all reasoning: purpose, problem, or question-at-issue, assumptions, concepts, empirical grounding; reasoning leading to conclusions, implications and consequences, objections from alternative viewpoints, and frame of reference.

Critical thinking - in being responsive to variable subject matter, issues, and purposes – is incorporated in a family of interwoven modes of thinking, among them: scientific thinking, mathematical thinking, historical thinking, anthropological thinking, economic thinking, moral thinking, and philosophical thinking.

Michael Scriven and Richard Paul

Critical thinking has two components:

1. a set of skills to process and generate information and beliefs, and

2. the habit, based on intellectual commitment, of using those skills to guide behavior.

It is thus to be contrasted with:

1. the mere acquisition and retention of information alone, (because it involves a particular way in which information is sought and treated,)

2. the mere possession of a set of skills, (because it involves the continual use of them,) and

3. the mere use of those skills ("as an exercise") without acceptance of their results.


* It is a multi-dimensional cognitive process.

* It requires a skill full application of knowledge and experience for the sophisticated judgment and evaluation needed in complex situations.

* It is interactive –individual with interpretations made of the word

* It is a process oriented

* It uses structure as a means rather than an end

* It is a frame work within which to interpret knowledge, challenge assumptions, generate contradictory hypothesis, and develop modifications

* It is effective learning, including moral reasoning and development of values guiding decisions and activities

* It is awareness of self as the basis for building relationships with a client: conscious awareness of feelings, beliefs, values and attitudes

* It is empathy and empowerment

* It includes social learning theory

* It is an important outcome of professional socialization

* It involves cognitive skills of comprehension, application, analysis, synthesis, and evaluation

* It is an attitude of critical inquiry that enhances professionalism

* It is fallible (imperfect)

* It may lead to bad decisions and errors in judgment

* It will consistently lead to superior decisions but is sometimes imperfect

* It includes feelings, images, and intuition prompts

* It employs psychological as well as logical or linear patterns


First as stated above, critical thinking is an active rather than a passive process. It involves individuals and groups raising questions themselves. Sometimes just asking basic questions such as ‘Why?’, ‘How?’ and ‘What?’ can prompt us to think much more carefully. However, our questions are not neutral. In the work of people centered advocacy, two other more fundamental questions can help us probe what is happening in our contexts and inform our advocacy. Asking who is benefiting and who is losing in a given situation allows us to sort out major questions of power and privilege.


The importance of critical thinking can be seen in its role in promoting effective planning, reflection, action and learning.

It helps us interpret information. An important skill for activists and advocates includes the ability to critically analyze newspapers, television, radio, speeches, actions and even body language.

It enables us to recognize propaganda or misinformation and to become active citizens rather than always accepting information from those in power.

It assists us in making better decisions about our actions.

It helps us see what is not so evident and obvious at first glance, e.g. how forces of socialization and ideology can prevent people from participating in change; and how real power often does not lie in formal decision-making structures.

It encourages us to think about our own prejudices, so we can be more aware of when we are reproducing the negative power relations that we are trying to challenge.

It challenges prevailing social, political, cultural and technical ways of thinking and acting

It encourages us to go beyond rationality, using our creativity to go outside the traditional boxes of knowledge and understanding.

It helps us to critique, reject or adapt tools and methods.


During broader planning and learning processes as well as specific reviews but, critical thinking needs to be part of everyday life and action and not relegated to particular moments of organized reflection.


Do not believe in anything simply because you have heard it…

Do not believe in anything simply because it is found written in your religious books.

Do not believe in anything merely on the authority of your teachers and elders.

Do not believe in traditions because they have been handed down for many generations.

But after observation and analysis, when you find that anything agrees with reason and is conducive to the good… of one and all, then accept it and live up to it.

(Siddhartha, founder of Buddhism, 563-483 B.C.)

The list of core critical thinking skills includes observation, interpretation, analysis, inference, evaluation, explanation and meta-cognition.

There is a reasonable level of consensus among experts that an individual or group engaged in strong critical thinking gives due consideration to:

  • Evidence through observation

  • Context of judgment

  • Relevant criteria for making the judgment well

  • Applicable methods or techniques for forming the judgment

  • Applicable theoretical constructs for understanding the problem and the question at hand

In addition to possessing strong critical thinking skills, one must be disposed to engage problems and decisions using those skills. Critical thinking employs not only logic but broad intellectual criteria such as clarity, credibility, accuracy, precision, relevance, depth, breadth, significance and fairness.

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Critical thinking calls for the ability to:

Recognize problems, to find workable means for meeting those problems

Gather and organize pertinent (relevant) information

Recognize unstated assumptions and values

Comprehend and use language with accuracy, clarity, and discrimination

Interpret data, to appraise evidence and evaluate arguments

Recognize the existence (or non-existence) of logical relationships between propositions

Draw warranted conclusions and generalizations

Put to test the conclusions and generalizations at which one arrives

Reconstruct one's patterns of beliefs based on wider experience

Render accurate judgments about specific things and qualities in everyday life

In sum:

"A persistent effort to examine any belief or supposed form of knowledge in the light of the evidence that supports it and the further conclusions to which it tends."


There are several ways in which groups can work to develop their individual and collective skills in critical thinking. These include:

Strengthening capacities to question and challenge assumptions in a constructive way - asking ourselves questions about our work and assumptions, challenging each other respectfully and seeking out others who have developed and fine-tuned such skills to assist us

Carrying out action research efforts where the group consciously sets out to learn and draw lessons from its work by reflecting on its actions

Participating in program reviews and reflections

Engaging in exchanges, activities and debates where people share and discuss lessons, questions and challenges they face

Encouraging an atmosphere of debate, learning and support in the organization.


We reproduce exploitative and negative behaviors that we see in society around us. Here is an example: Assuming all men will take leadership roles.

We accept without questioning justifications, demands and requirements given by organizations and leaders example for very detailed information that requires enormous amounts of time to collect, but that is unlikely to be used.

We use frameworks, tools and concepts assuming they ought to be useful just because they are in books or presented by an ‘expert’. If they prove unhelpful in practice we assume the problem lies with our inability to use them, not their inappropriateness for the situation

We believe without questioning news reports, propaganda or political commercials without examining issues of who controls the media or what their agenda might be

We believe without questioning what we read in books

We accept that if our organization does something it must be right.


There are various constraints to critical thinking that we can try to overcome or minimize

· Lack of motivation

· Lack of experience and support to deal with ideas critically

· Lack of available information

· Power and trust dynamics within the group

· Lack of time or culture of reflection


Decision making

Decision making can be regarded as the mental processes (cognitive process) resulting in the selection of a course of action among several alternatives. Every decision making process produces a final choice. The output can be an action or an opinion of choice.


Human performance in decision making terms has been the subject of active research from several perspectives. From a psychological perspective, it is necessary to examine individual decisions in the context of a set of needs, preferences an individual has and values they seek. From a cognitive perspective, the decision-making process must be regarded as a continuous process integrated in the interaction with the environment. From a normative perspective, the analysis of individual decisions is concerned with the logic of decision making and rationality and the invariant choice it leads to.

Problem Analysis vs. Decision Making

It's important to differentiate between problem analysis and decision making. The concepts are separate from one another. Problem analysis must be done first, then the information gathered in that process may be used towards decision making.

Problem Analysis • Analyze performance, what should the results be against what they actually are • Problems are merely deviations from performance standards • Problem must be precisely identified and described • Problems are caused by some change from a distinctive feature • Something can always be used to distinguish between what has and hasn't been effected by a cause • Causes to problems can be deducted from relevant changes found in analyzing the problem • Most likely cause to a problem is the one that exactly explains all the facts

Decision Making • Objectives must first be established • Objectives must be classified and placed in order of importance • Alternative actions must be developed • The alternative must be evaluated against all the objectives • The alternative that is able to achieve all the objectives is the tentative decision • The tentative decision is evaluated for more possible consequences • The decisive actions are taken, and additional actions are taken to prevent any adverse consequences from becoming problems and starting both systems (problem analysis and decision making) all over again



1.Identify the problem

Defining the problem

2.Gather data to analyze the causes and consequences of the problem

Analyze the problem

3.Explore alternative solutions

Alternative course of action

4.Evaluate the alternatives

Evaluate the alternatives

5. Select the appropriate solutions


6.Implement the solutions


7.Evaluate the solutions

Taking decision and follow up


It is a process of selecting the best from among the alternatives available

It involves the evolution of various alternative available

It is the final product because it is preceded by discussions and deliberations

Decision making is aimed to achieve organizational goals


Some of the decision-making techniques people use in everyday life include:

Pros and Cons: Listing the advantages and disadvantages of each option, popularized by Plato and Benjamin Franklin

Simple Prioritization: Choosing the alternative with the highest probability-weighted utility for each alternative (see Decision Analysis) or derivative or possibilities: Acting on choices so as not to preclude alternative understandings of equal probability, including active exploration of novel possibilities and emphasis on the necessity of holding multiple positions at once if there is no available data to privilege one over the others.

Satisfying: Accepting the first option that seems like it might achieve the desired result

Acquiesce to a person in authority or an "expert" just following orders

Flipism: Flipping a coin, cutting a deck of playing cards, and other random or coincidence methods

Prayer, tarot cards, astrology, augurs, revelation, or other forms of divination


Developed by B. Aubrey Fisher, there are four stages that should be involved in all group decision making. These stages, or sometimes called phases, is important for the decision-making process to begin

Orientation stage- This phase is where members meet for the first time and start to get to know each other.

Conflict stage- Once group members become familiar with each other, disputes, little fights and arguments occur. Group members eventually work it out.

Emergence stage- The group begins to clear up ambiguity in opinions is talked about.

Reinforcement stage- Members finally decide, while justifying themselves that it was the right decision.


When in an organization and faced with a difficult decision, there are several steps one can take to ensure the best possible solutions will be decided. These steps are put into seven effective ways to go about this decision-making process (McMahon 2007).

The first step- Outline your goal and outcome. This will able decision makers to see exactly what they are trying to accomplish and keep them on a specific path.

The second step- Gather data. This will help decision makers have actual evidence to help them come up with a solution.

The third step-Brainstorm to develop alternatives. Coming up with more than one solution able you to see which one can work.

The fourth step-List pros and cons of each alternative. With the list of pros and cons, you can eliminate the solutions that have more cons then pros, making your decision easier.

The fifth step - Make the decision. Once you analyze each solution, you should pick the one that has many pros, and the one that everyone agrees with.

The sixth step-Immediately take-action. Once the decision is picked, you should implement it right away.

The seventh step - Learn from and reflect on the decision making. This step allows you to see what you did right and wrong when coming up and putting the decision to use.


All of us must make decisions every day. Some decisions are relatively straightforward and simple: Is this report ready to send to my boss now? Others are quite complex:

Which of these candidates should I select for the job?

Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like these:

Uncertainty - Many facts may not be known.

Complexity - You must consider many interrelated factors.

High-risk consequences - The impact of the decision may be significant.

Alternatives - Each has its own set of uncertainties and consequences.

Interpersonal issues - It can be difficult to predict how other people will react.

With these difficulties in mind, the best way to make a complex decision is to use an effective process. Clear processes usually lead to consistent, high-quality results, and they can improve the quality of almost everything we do. In this article, we outline a process that will help improve the quality of your decisions.


A logical and systematic decision-making process helps you address the critical elements that result in a good decision. By taking an organized approach, you're less likely to miss important factors, and you can build on the approach to make your decisions better and better.

There are six steps to making an effective decision:

Create a constructive environment.

Generate good alternatives.

Explore these alternatives.

Choose the best alternative.

Check your decision.

Communicate your decision and take-action.

Step 1: Create a constructive environment To create a constructive environment for successful decision making, make sure you do the following:

Establish the objective - Define what you want to achieve.

Agree on the process - Know how the final decision will be made, including whether it will be an individual or a team-based decision.

Involve the right people - Stakeholder Analysis is important in making an effective decision, and you'll want to ensure that you've consulted stakeholders appropriately even if you're making an individual decision. Where a group process is appropriate, the decision-making group - typically a team of five to seven people - should have a good representation of stakeholders.

Allow opinions to be heard - Encourage participants to contribute to the discussions, debates, and analysis without any fear of rejection from the group. This is one of the best ways to avoid groupthink The Stepladder Technique is a useful method for gradually introducing more and more people to the group discussion, and making sure everyone is heard. Also, recognize that the objective is to make the best decision under the circumstances: it's not a game in which people are competing to have their own preferred alternatives adopted.

Make sure you're asking the right question - Ask yourself whether this is really the true issue. The 5 Why's technique is a classic tool that helps you identify the real underlying problem that you face. Who, When, Why, Where, What, and How?

Use creativity tools from the start - The basis of creativity is thinking from a different perspective. Do this when you first set out the problem, and then continue it while generating alternatives.

Step 2: Generate Good Alternatives

This step is still critical to making an effective decision. The more good options you consider, the more comprehensive your final decision will be.

When you generate alternatives, you force yourself to dig deeper, and look at the problem from different angles. If you use the mindset ‘there must be other solutions out there,' you're more likely to make the best decision possible. If you don't have reasonable alternatives, then there's not much of a decision to make!

Here's a summary of some of the key tools and techniques to help you and your team develop good alternatives.


Brain storming is probably the most popular method of generating ideas.

Another approach, Reverse Brainstorming, works similarly. However, it starts by asking people to brainstorm how to achieve the opposite outcome from the one wanted, and then reversing these actions.

Use the Crawford Slip Writing Technique to generate ideas from many people. This is an extremely effective way to make sure that everyone's ideas are heard and given equal weight, irrespective of the person's position or power within the organization.


The Reframing Matrix uses 4 Ps (product, planning, potential, and people) as the basis for gathering different perspectives. You can also ask outsiders to join the discussion or ask existing participants to adopt different functional perspectives (for example, have a marketing person speak from the viewpoint of a financial manager).

If you have very few options, or an unsatisfactory alternative, use a Concept Fan to take a step back from the problem, and approach it from a wider perspective. This often helps when the people involved in the decision are too close to the problem.

Appreciative Inquiry forces you to look at the problem based on what's ‘going right,' rather than what's ‘going wrong.'

Organizing Ideas This is especially helpful when you have many ideas. Sometimes separate ideas can be combined into one comprehensive alternative.

Use Affinity Diagrams to organize ideas into common themes and groupings.

Step 3: Explore the Alternatives

When you're satisfied that you have a good selection of realistic alternatives, then you'll need to evaluate the feasibility, risks, and implications of each choice. Here, we discuss some of the most popular and effective analytical tools.

Risk In decision making, there's usually some degree of uncertainty, which inevitably leads to risk. By evaluating the risk involved with various options, you can determine whether the risk is manageable.

Risk Analysis helps you look at risks objectively. It uses a structured approach for assessing threats, and for evaluating the probability of events occurring - and what they might cost to manage.

Implications Another way to look at your options is by considering the potential consequences of each.

Six Thinking Hats helps you evaluate the consequences of a decision by looking at the alternatives from six different perspectives.

Impact-Analysis is a useful technique for brainstorming the ‘unexpected' consequences that may arise from a decision.

Validation Determine if resources are adequate, if the solution matches your objectives, and if the decision is likely to work in the long term.

Star bursting helps you think about the questions you should ask to evaluate an alternative properly.

To assess pros and cons of each option, use Force Field Analysis, or use the Plus-Minus-Interesting approach.

Cost-Benefit Analysis looks at the financial feasibility of an alternative.

Step 4: Choose the Best Alternative

After you have evaluated the alternatives, the next step is to choose between them. The choice may be obvious. However, if it isn't, these tools will help:

Grid Analysis, also known as a decision matrix, is a key tool for this type of evaluation. It's invaluable because it helps you bring disparate factors into your decision-making process in a reliable and rigorous way.

Use Paired Comparison Analysis to determine the relative importance of various factors. This helps you compare unlike factors and decide which ones should carry the most weight in your decision.

Decision Trees are also useful in choosing between options. These help you lay out the different options open to you and bring the likelihood of project success or failure into the decision-making process.

Step 5: Check Your Decision

With all the effort and hard work that goes into evaluating alternatives, and deciding the best way forward, it's easy to forget to ‘sense check' your decisions. This is where you look at the decision you're about to make dispassionately, to make sure that your process has been thorough, and to ensure that common errors haven't crept into the decision-making process. After all, we can all now see the catastrophic consequences that over-confidence, groupthink, and other decision-making errors have wrought on the world economy.

The first part of this is an intuitive step, which involves quietly and methodically testing the assumptions and the decisions you've made against your own experience, and thoroughly reviewing and exploring any doubts you might have.

A second part involves using a technique like Blindspot Analysis (member only) to review whether common decision-making problems like over-confidence, escalating commitment, or groupthink (member only) may have undermined the decision-making process.

A third part involves using a technique like the Ladder of Inference (member only) to check through the logical structure of the decision with a view to ensuring that a well-founded and consistent decision emerges at the end of the decision-making process.

Step 6: Communicate Your Decision and Move to Action!

Once you've made your decision, it's important to explain it to those affected by it and involved in implementing it. Talk about why you chose the alternative you did. The more information you provide about risks and projected benefits, the more likely people are to support the decision.

I.D.E.A.L Decision-Making Model

I--Identify the problem.

D- Describe all the possible solutions to the problem.

E- Evaluate each solution (pros and cons about each solution).

A-Act on the best solution (choose the best solution and try it).


9 Step Decision Making Model

The 9-step decision making model is proposed by David Welsh in his book 'Decisions, Decisions'.

He calls it a subjective expected utility maximization process. A utility, he explains, is a technical term used by economists and philosophers to indicate happiness, pleasure or satisfaction. Subjective indicates that it's your pleasure and expected because it is satisfaction or pleasure that you don't yet have but hope to get.


Step 1 - Identify your objective

What is it you wish to achieve?

Step 2 - Do a preliminary survey of your options

Besides the most obvious choices available to you, what other kinds of options can you think of?

Step 3 - Identify the implicated values

What values are at stake here? If it's an easy or unimportant decision you may not necessarily do this step. But if the decision has a major impact on your wealth, your health or self-respect, then it's useful to be aware of it.

Step 4 - Assess the importance of the decision

The importance of the decision will determine how much you invest in it in terms of time, energy and money. The importance is determined by examining the implicated values. You may also have to consider the context here as well; a different situation or environment can mean that a decision that is often not very important can become very significant.

Step 5 - Budget your time and energy

Having identified the main alternatives and the values, now decide on which time and energy to spend making the decision itself. More important decisions are given more time and energy. He suggests that busy people and nervous wrecks made worse decisions than other people.

Step 6 - Choose a decision-making strategy

This step of the 9-step decision making model involves making another decision. The time and energy you plan to devote will affect the strategy you choose.

And because the strategy you choose may profoundly affect your decision it's important to choose an appropriate one.

Step 7 - Identify your options

When you examine your options in more detail you may discover other options with different implicated values. He points out that occasionally you may have to go back to step three to five and make revisions.

Step 8 - Evaluate your options

This is where you compare the options available to you. Again, he suggests that seeking advice from an expert is often easier than making the decision on your own.

Step 9 - Make your choice - on time, on budget

When you're finished doing the evaluation (only as much as it requires!), you make your choice. He notes that people may still have difficulty at this stage because they fear the consequences of making a bad decision.


There are many types of decision making and these can be easily categorized into the following 4 groups: Main types

1) Rational

2) Intuitive

3) Recognition primed decision making

4) The ultimate decision-making model

1) Rational

Rational decision making is the commonest of the types of decision making that is taught and learned when people consider that they want to improve their decision making. These are logical, sequential models where the emphasis is on listing many potential options and then working out which is the best. Often the pros and cons of each option are also listed and scored in order of importance.

The rational aspect indicates that there is considerable reasoning and thinking done to select the optimum choice. Because we put such a heavy emphasis on thinking and getting it right in our society, there are many of these models and they are very popular. People like to know what the steps are and many of these models have steps that are done in order.

People would love to know what the future holds, which makes these models popular. Because the reasoning and rationale behind the various steps here, is that if you do x, then y should happen. However, most people have personal experience that the world usually doesn't operate that way!

2) Intuitive

The second of the types of decision making are the intuitive models. The idea here is that there may be absolutely no reason or logic to the decision-making process. Instead, there is an inner knowing, or intuition, or sense of what the right thing to do is.

And there are probably as many intuitive types of decision making as there are people. People can feel it in their heart, or in their bones, or in their gut and so on. There are also a variety of ways for people to receive information, either in pictures or words or voices.

People talk about extra sensory perception as well. However, they are still actually picking up the information through their five senses. Clairsentience is where people feel things, clairaudience is hearing things and clairvoyance is seeing things.

And of course, we have phrases such as 'I smell a rat', ' it smells fishy' and 'I can taste success ahead'.

Other types of decision making in the intuitive category might include tossing a coin, throwing dice, tarot cards, astrology, and so on.

3) Recognition primed...

Gary Klein has spent considerable time studying human decision making and his results are very interesting. He believes that we make 90 to 95% of our decisions in a pattern recognition way. He suggests that what we do is gather information from our environment in relation to the decision we want to make. We then pick an option that we think will work. We rehearse it mentally and if we still think it will work, we go ahead.

If it does not work mentally, we choose another option and run that through in our head instead. If that seems to work, we go with that one. We pick scenarios one by one, mentally check them out, and as soon as we find one that works, we choose it.

He also points out that as we get more experience, we can recognize more patterns, and we make better choices more quickly.

Of interest here is that the military in many countries have adapted his methods because they are considerably more effective than either of the types of decision making we've discussed already. In fact, you could say that his model is a combination of the above two types of decision making.

4) The ultimate...

Firstly, before you even decide, you establish how and who you want to be. You obviously want to be in a good state so that you can make good decisions. But you also want to be true to yourself, and that means knowing who 'yourself' is.

Once you learn how to be solid and centered, then and only then, do you make decisions. And the decisions are always organized around staying true to yourself and doing things that are good for and aligned who you are. Doing things that are on your own path, and that allow you to become even more solid and centered...

(ACCORDING TO Ken Shah & Prof. Param J. Shah)

Irreversible This are those type of decisions, which, if made once cannot be unmade. Whatever is decided would then have its repercussions for a long time to come. It commits one irrevocably when there is no other satisfactory option to the chosen course. A manager should never use it as an all-or-nothing instant escape from general indecision.

Reversible This are the decisions that can be changed completely, either before, during or after the agreed action begins. Such types of decisions allow one to acknowledge a mistake early in the process rather than perpetuate it. It can be effectively used for changing circumstances where reversal is necessary.

Experimental These types of decisions are not final until the first results appear and prove themselves to be satisfactory. It requires positive feedback before one can decide on a course of action. It is useful and effective when correct move is unclear but there is a clarity regarding general direction of action.

Trial and Error In this type of decisions, knowledge is derived out of past mistakes. A certain course of action is selected and is tried out, if the results are positive, the action is carried further, if the results appear negative, another course is adopted and so on and so forth a trial is made and an error is occurred. Till the night combination this continues. It allows the manager to adopt and adjust plans continuously before the full and final commitment. It uses both, the positive and negative feedback before selecting one course of action.

Made in Stages Here the decisions are made in steps until the whole action is completed. It allows close monitoring of risks as one accumulates the evidence of out- comes and obstacles at every stage. It permits feedback and further discussion before the next stage of the decision is made.

Cautious It allows time for contingencies and problems that may crop up later at the time of implementation. The decision-makers hedge their best of efforts to adopt the night course. It helps to limit the risks that are inherent to decision- making. Although this may also limit the final gains. It allows one to scale down those projects which look too risky in the first instance.

Conditional Such types of decisions can be altered if certain foreseen circumstances arise. It is an ‘either / or’ kind of decision with all options kept open. It prepares one to react if the competition makes a new move or if the game plan changes radically. It enables one to react quickly to the ever-changing circumstances of competitive markets.

Delayed Such decisions are put on hold till the decision–makers feel that the time is right. A go-ahead is given only when required elements are in place. It prevents one from deciding at the wrong time or before all the facts are known. It may, at times result into forgoing of opportunities in the market that needs fast action.

According to Peter Ducker

Organizational and personal decisions

When a person takes a decision in the organization as an executive it will be an organizational decision. This decision will have impact on the working of the organization. The power to take organizational decisions can be delegated from a superior to the subordinate. It is known as an organizational decision.

Routine and strategic decision

Routine decisions are made repetitively following certain established rules, procedures, policy matters and need the development and analysis of alternatives. These decisions are basic and have long term effects

Programmed and non-programmed decisions

Programmed decision are routine nature and taken within the specified procedures. These decisions have short term effect and are taken at lower level management

Non-programmed are on the other hand non-repetitive decisions. The need for such decisions arise due to specific circumstances. These decisions are taken up at top level management.

Individual and group decisions

This type of decision is based on the number of persons involved in the decision making. If the decision is taken by one person, it is known as individual decisions

Group decisions are taken by a group of persons. The decisions of board of directors or committees come under this category. These decisions are made at top level management.

Policy and operative decisions

Policy: policy decisions determine the basic polices of the organizations and are taken at top level management. The policies at the top become the basis for operative decisions

Operative decisions: these decisions are taken in the light of policies decided by the top management. Operative decisions are less important and are related with day to day operation of the business


Marginal theory

This theory stress on profit maximization. this theory focused on increases profit from the decision. It related to health care cost and patient outcome

Psychological theory

The trust of this theory is on the maximization of customer satisfaction (patient). The manager acts as an administrative man rather than economic man

Mathematic theory

This theory is based on the use of models. This is also known as operational research theory. The techniques generally used include linear programming. Theory of probability stimulation models etc.

Classical decision theory

Views the decision maker as acting world of complete certainty

Classical decision making faces a clearly defined problem. Knows all possible action alternative and their consequences


Behavioral decision theory

Accepts a world with bounded rationality and views the decision maker as acting only in terms of what he/she perceive about a given situation

The behavior decision maker faces a problem that is not clearly defined. Has limited knowledge of possible action alternatives and their consequences

One example shows a structure for deciding guilt in a criminal trial:

Actual condition


Not guilty


Verdict of 'guilty'

True Positive

False Positive (i.e. guilt reported unfairly) Type I error

Verdict of 'not guilty'

False Negative (i.e. guilt not detected) Type II error

True Negative

Statistical decision theory

Several statistical tools and methods are available to organize evidence, evaluate risks, and aid in decision making. The risks of Type I and type II errors can be quantified (estimated probability, cost, expected value, etc.) and rational decision making is improved.

Cognitive and personal biases in decision making

Biases can creep into our decision-making processes. Many different people have decided about the same question (e.g. "Should I have a doctor look at this troubling breast cancer symptom I've discovered?" "Why did I ignore the evidence that the project was going over budget?") and then craft potential cognitive interventions aimed at improving decision making outcomes.

Below is a list of some of the more commonly debated cognitive biases.

Selective search for evidence (a.k.a. Confirmation bias in psychology) (Scott Plous,1993)

We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions. Individuals who are highly defensive in this manner show significantly greater left prefrontal cortex activity as measured by EEG than do less defensive individuals.[5]

Premature termination of search for evidence – We tend to accept the first alternative that looks like it might work.

Inertia – Unwillingness to change thought patterns that we have used in the past in the face of new circumstances.

Selective perception – We actively screen-out information that we do not think is important. (See prejudice.) In one demonstration of this effect, discounting of arguments with which one disagrees (by judging them as untrue or irrelevant) was decreased by selective activation of right prefrontal cortex.[6]

Wishful thinking or optimism bias – We tend to want to see things in a positive light and this can distort our perception and thinking.[7]

Choice-supportive bias occurs when we distort our memories of chosen and rejected options to make the chosen options seem more attractive.

Recency – We tend to place more attention on more recent information and either ignore or forget more distant information. (See semantic priming.) The opposite effect in the first set of data or other information is termed Primacy effect (Plous, 1993).

Repetition bias – A willingness to believe what we have been told most often and by the greatest number of different sources.

Anchoring and adjustment – Decisions are unduly influenced by initial information that shapes our view of subsequent information.

Group thinkPeer pressure to conform to the opinions held by the group.

Source credibility bias – We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.

Incremental decision making and escalating commitment – We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.

Attribution asymmetry – We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.

Role fulfillment (Self Fulfilling Prophecy) – We conform to the decision-making expectations that others have of someone in our position.

Underestimating uncertainty and the illusion of control – We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do. We believe we have control to minimize potential problems in our decisions.


An organized and systematic decision-making process usually leads to better decisions. Without a well-defined process, you risk making decisions that are based on insufficient information and analysis. Many variables affect the final impact of your decision. However, if you establish strong foundations for decision making, generate good alternatives, evaluate these alternatives rigorously, and then check your decision-making process, you will improve the quality of your decisions.

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