Decision Making and Problem-Solving

When waking up every day, we are faced with many decisions, like about breakfast: Should I eat breakfast today? What should I eat? Should I choose something I crave or something nutritious? Am I too tired to make breakfast, or am I running late and should buy it instead? While this may seem like a simple decision for many, it highlights the various approaches we can take in making choices. The following chapter will explore these different approaches in depth!

Just as we encounter daily decisions, we also face numerous problems that require solutions. These problems range from small to significant, from logical to emotional. We are natural problem solvers, but how effective are we? This chapter will examine how we make decisions and solve problems, why we sometimes make the wrong choices, and strategies to improve our decision-making and problem-solving skills.

Humans are not perfect decision-makers nor problem solvers. Not only are we not perfect, but we depart from perfection or rationality in systematic and predictable ways. The understanding of these systematic and predictable departures is core to the field of decision making and problem solving. By understanding these limitations, we can also identify strategies for making better and more effective decisions.

What is Decision-making?

Thinking enables us to solve problems and make decisions. Every day you have the opportunity to make countless decisions: should you eat dessert, cheat on a test, or attend a sports event with your friends? If you reflect on your history of choices you will realize that they vary in quality; some are rational and some are not. Decision-making is when we have to select the best option based on several possibilities. Problem-solving is when we have to find a way around an obstacle to reach our goal.

Suppose you were planning a trip for your summer break. You visit a travel agent and they present two different options that suit your budget; the first is a backpacking tour around Italy,  and the second is a stay at an all-inclusive resort in Hawaii. You must now decide based on the available options. But how?

Ideally, when we make any decision or attempt to solve any problem, we want to deliberate and make sure that we use the proper steps to get a satisfactory result.

We can engage in systemic decision-making eliminating unwanted options to reach the best solution. In our previous example, we can do our research between Italy and Hawaii, create a list of pros and cons, and start systemically weighing each negative against each positive.

We can also engage in rational decision making for other types of problems we encounter by taking different steps outlined by Bazerman and Moore (2013).  Imagine that during your senior year in college, you apply to a number of doctoral programs, law schools, or business schools (or another set of programs in whatever field most interests you). The good news is that you receive many acceptance letters. So, how should you decide where to go? Here are the six steps that you should take to make a rational decision: (1) define the problem (i.e., selecting the right graduate program), (2) identify the criteria necessary to judge the multiple options (location, prestige, faculty, etc.), (3) weight the criteria (rank them in terms of importance to you), (4) generate alternatives (the schools that admitted you), (5) rate each alternative on each criterion (rate each school on each criteria that you identified, and (6) compute the optimal decision. Acting rationally would require that you follow these six steps in a fully rational manner.

Emotions and decision making:

Suppose you are perusing the food court for your snack and you get a craving for French fries. You might just buy some and eat them, without putting much if any rational thought into your decision. For a long time, decisions such as this troubled rational decision-making theorists, because such choices are not based on logical reasons. Because of the work of psychologists such as Danny Kahneman, however, we now know that decision making often involves irrational processes that can be driven by our emotions. In fact, people often rely heavily on their emotions, or “gut instinct, rather than pure reason to make decisions. Decisions made in business and organizations can be quite costly.

The involvement of emotions in decision-making makes predicting human behaviour very difficult. There are individual differences in emotional reactions, and many of these are driven by developmental experience and temperament. Even our day-to-day moods can affect our decision-making. Research suggests, for example, that when we are in a positive mood, we tend to make more efficient decisions with less rational consideration of the alternatives. We also tend to be content with those choices (Lerner, Li, Valdesolo, & Kassam, 2015).

Researchers have discovered a few situations in which our emotions are likely to influence decisions somewhat predictably. One of these is when we try to estimate risks in anticipating the consequences of our decisions. For example, if you buy the wrong new phone, you risk being unhappy with it or needing to take it in for lots of repairs. Research suggests that we base our decisions, at least in part, on our anticipation of how we will feel if we make a bad choice (Kahneman & Tversky, 1979; Mellers, Fincher, Drummond, & Bigony, 2013), and that, in general, we try hard to avoid making decisions we will regret later (Van Dijk & Zeelenberg, 2005). For many of us, “bad” outweighs “good” in our anticipation, so we might make less than optimal choices just to avoid the risk of feeling bad later. Given the option to receive 10 cents of a shared (with one other person) dollar, for example, most people will opt out altogether, taking nothing instead of the 10 cents, because they would feel they had been treated unfairly by having to share the dollar. This is irrational behaviour, since 10 cents is clearly better than nothing at all.

Understanding how emotions can shift the likelihood of a purchase is of particular interest to advertisers. If the context that produces positive emotion can be identified in all situations, it can be used effectively to persuade consumers to buy. In many cases, language can play a role in producing this context by framing choices in positive or negative ways. We are more likely to buy a food that is labelled “75 percent fat-free” than one that is described as “25 percent fat,” for example (Sanford, Fay, Stewart, & Moxey, 2002; Hohle & Teigen, 2018). The first statement frames the product in terms of “fat-free”, and as such is preferred to the second statement, even though the product is exactly the same

Framing & Anchoring effects

However, we can be prone to specific biases –mistakes that can impair our judgment.

The framing effect is a type of bias that occurs when the way that our options are presented affect the way we perceive them. Things can be “framed” to sound more positive or sound more negative. The most famous example of this is a glass filled halfway with water – do you see the glass as half-empty or half-full? One of those options definitely sounds more positive than the other.

In the case of our example, let’s say you come across an ad that says that a flight to Hawaii has now been reduced from $2000 to $1000. This information can be framed in two different ways, which may affect your decision. It can be framed based on cost – a ticket to Hawaii costs $1000. However, it can also be framed based on savings – you can now save $1000 on your trip to Hawaii!

Although the information is correct in both statements, one may seem more appealing than the other, thus the framing effect.

Another type of bias that may affect our decision making is the anchoring effect. This is when we focus on a single arbitrary factor that magnifies the importance of that factor, which affects how we compare it to others. Typically, we tend to anchor on the first piece of information that we are presented with, which affects our subsequent comparisons.

In our previous example, suppose you were presented with the $1000 you would save on a trip to Hawaii. You come across another ad that states that a trip to Italy costs $600 – no sales, no price change. Based on the prices presented to you, which

would you choose?

Some may rationalize the cost and consider that the Italy flight costs $600 whereas the Hawaii flight costs $1000. But – some may reason out and say, “but hey, the Hawaii flight is a better deal! It’s a sale price! It’s just way better value!” This might be an example of the anchoring effect – when a person has anchored and focused on a single piece of information that may not have been important prior in the decision-making process. In this case, the person would be anchoring to the concept of “savings”.

Heuristics:

While, ideally, people would engage in systemic and rational decision-making and consider all the relevant factors, sometimes, time is not on our side. When we have to make quick decisions, we often rely on heuristics –mental “rules of thumb” that are typically derived from experience. They help us make quick decisions but can be susceptible to errors. For example, have you ever had a hard time trying to decide on a book to buy, then you see one ranked highly on a book review website? Although selecting a book to purchase can be a complicated decision, you might rely on the “rule of thumb” that a recommendation from a credible source is likely a safe bet—so you buy it.

Availability Heuristic:

The availability heuristic relies on speed, where our decision is based on how quickly we can recall a similar event. For example, do you think more words begin with “k,” or more that have “k” as the third letter? To figure this out, you would probably make a list of words that start with “k” and compare it to a list of words with “k” as the third letter. Though such a quick test may lead you to believe more words begin with “k,” the truth is that there are 3 times as many words that have “k” as the third letter (Schwarz et al., 1991). In this case, words beginning with “k” are more readily available to memory (i.e., more accessible), so they seem to be more numerous. Another example is the very common fear of flying: dying in a plane crash is extremely rare, but people often overestimate the probability of it occurring because plane crashes tend to be highly memorable and publicized.

Representativeness heuristic:

Another heuristic we often use in quick decision-making is the representativeness heuristic. In this mental shortcut, we base on our judgement on how similar an event is to a prototype that we hold about that event. In other words, we make our decision based on how closely it resembles our “ideal”.

Suppose you flip a fair coin six times. Which of the following outcomes would be more likely: six heads in a row, or tails, tails, heads, tail, heads, heads, tails.

At first glance, most people would think that option a would be quite unlikely. This may be true, but in reality, both options are equally unlikely. In order to get the exact pattern as stated in option b, we would have the same probability as option a.

But why do we think that option b is more likely to occur? This is because of the representativeness heuristic. Option B looks more “random”, making it more “ideal” when it comes to six consecutive coin flips. In many situations, an object’s similarity to a category is a good indicator of its membership in that category, and an individual using the representativeness heuristic will arrive at a correct judgment. However, when base-rate conflicts with representativeness information, the use of this heuristic is less appropriate. For example, if asked to judge whether a quiet, thin man who likes to read poetry is a classics professor at a prestigious university or a truck driver, the representativeness heuristic might lead one to guess he’s a professor. However, considering the base-rates, we know there are far fewer university classics professors than truck drivers. Therefore, although the man fits the mental image of a professor, the actual probability of him being one (considering the number of professors out there) is lower than that of being a truck driver.

What is Problem-Solving?

Much like decision-making, there are also factors that affect our problem-solving. We engage in problem-solving when the solutions are not immediately clear to us, and there are no clearly defined options, which may lead to multiple possibilities. We must figure out how to get from our current state of affairs, which is in some way unsatisfactory, to our desired end state (Bourne, Dominowski, & Loftus, 1979; Güss, 2019). We use problem-solving skills in many avenues of life, from the formal mathematics problems we have all solved in school, to informal day-to-day problems, such as how to get along with a roommate.

Defining The Problems

The first step in solving a problem is to figure out exactly what your problem is—to develop a representation of the problem.

On one end of the spectrum, we use formal problem-solving skills to solve math problems.

Our goal in arithmetic is usually straightforward: to move from not knowing the correct answer to knowing it. Researchers refer to problems with easy-to-discern beginning and end states, such as arithmetic, as well-defined problems. We often find it fairly easy to find a strategy for solving well-defined problems because we can easily define what outcome we want from the start (Funke, 2019).

On the other end of the problem-solving spectrum are ill-defined problems, such as how to deal with a messy roommate. Our goal in this case might be difficult to define in precise terms.

We may want to stop doing what we feel is an unfair share of housecleaning, but how will we know when we have reached that goal? As you might imagine, it’s often more difficult to find solution strategies for ill-defined problems than it is for well-defined ones, because it is hard to define the desired outcome (Chevallier, 2016).

Strategies for problem solving

There are several strategies we can use to solving problems. The first, and often most common strategy is trial and error. We can keep trying different solutions until we find one that eventually works. This process can be quite tedious and time-consuming.

We can also solve problems by systemically approaching the issue and determining the appropriate goals. Two ways to do this are through the use of backward search and means-ends analysis.

When applying backward search, we start with the end goal first, and then work our way backwards. It’s like writing a novel with the ending in mind, and then working our way to the beginning or solving a maze by working a maze from the end to the beginning of the maze. This type of strategy is more useful for well-defined problems.

When we use means ends analysis, we examine the distance between the beginning and the end, and then divide the problem into sub-goals that will eventually lead us to the final goal. Like our previous example, rather than writing a novel in one sitting, we can divide the novel into multiple parts and chapters, and focus on each part before moving on to the next. Or Another example that is a bit more specific is called the tower of Hanoi problem. Four disks of different diameters are stacked from largest up to smallest on the leftmost of three pegs. Your task is to shift the whole stack to the peg on the far right, but only by moving one disk at a time and by never having a larger disk set on top of a smaller disk. Note that the solution involves accomplishing a series of subgoals.

One other common way to attempt to solve problems is through the use of analogies. Analogical problem-solving is when we try to come up with a solution to a current problem by comparing it to another problem that has been solved in the past.

We are not always aware of using a method to solve a problem. Sometimes we seem to solve a problem quickly, without intensive effort or concentration, through a phenomenon known as insight. In fact, several groundbreaking scientific discoveries have been described as “eureka” moments of insight. George de Mestral took his dog for a walk in the woods and when he returned home, George noticed his pants were covered in burrs that were hard to remove. Curious, he looked at one under a microscope and saw the small hooks at the ends of the burr spines. He thought about it and, eureka, Velcro was invented (Freeman & Golden, 1997). Sometimes sudden solutions occur after an incubation period during which we have mentally “set aside” a problem that we’ve been working on. When we return to the problem after a period of time, the solution comes to mind without further conscious strategizing. Some studies suggest this type of problem solving is automatic (Bassok & Novick, 2012; Sio & Ormerod, 2009).

Problems in Problem Solving

Sometimes we fall into patterns of thinking that make it difficult to solve problems to which those patterns don’t apply. One common difficulty can happen early in representing the problem. We must define the problem using relevant information and ignore any irrelevant information. When deciding what movie to go and see, you might make your decision based on the number of times you have seen trailers of a movie, rather than looking at reviews or asking friends who may have seen it already. In fact, the number of trailers released may be a function of studio concerns about the quality of the movie.

There are certain impediments that we encounter when trying to solve problems. Have you ever tried to solve a problem but you seem to just be stuck and can’t find a way to move forward? You might be experiencing one of these impediments.

A mental set is when we get stuck at focusing only on what has worked in the past without exploring alternatives. This can hinder problem-solving because we can get stuck in the cycle of trial and error without exploring new ways of tackling the problem. Has this happened to you while studying for a math test and come across a problem that looks very similar to others you’ve done in the past, your first instinct might be to use the same steps to solve this one. Oups! It doesn’t work, but instead of getting creative and seeking out other ways to solve the problem, you are stuck on this specific solution type.

Much like being stuck on the same solution, we can also be stuck on the properties of an object and their function. Functional fixedness is the inability to view other possibilities in the use, function, or expression of an object or item. If you always use an object in a specific way, it becomes really difficult to imagine other ways to use it.
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Quick exercise: Take a look at this candle. We know that a candle can light up and omit heat. But what else can a candle be used for? What are some other functions of a candle?

Now consider the functions of the candle, and try to solve the following problem.

Does the solution surprise you? Were you impeded by a mental set or the functional fixedness of one or more of the objects?

Conclusion

 Our days are filled with decisions ranging from the small (what should I wear today?) to the important (should we get married?). Many have real-world consequences on our health, finances and relationships. Simon, Kahneman, and Tversky created a field that highlights the surprising and predictable deficiencies of the human mind when making decisions. As we understand more about our own biases and thinking shortcomings we can begin to take them into account or to avoid them. Only now have we reached the frontier of using this knowledge to help people make better decisions?