Intuition and decision-making

Last updated

Intuition in the context of decision-making is defined as a "non-sequential information-processing mode." [1] It is distinct from insight (a much more protracted process) and can be contrasted with the deliberative style of decision-making. Intuition can influence judgment through either emotion or cognition, and there has been some suggestion that it may be a means of bridging the two. [1] Individuals use intuition and more deliberative decision-making styles interchangeably, but there has been some evidence that people tend to gravitate to one or the other style more naturally. [2] People in a good mood gravitate toward intuitive styles, while people in a bad mood tend to become more deliberative. [2] The specific ways in which intuition actually influences decisions remain poorly understood.

Contents

Intuitive decision-making can be described as the process by which information acquired through associated learning and stored in long-term memory is accessed unconsciously to form the basis of a judgment or decision. [3] This information can be transferred through effects induced by exposure to available options, or through unconscious cognition. Intuition is based on the implicit knowledge available to the decision-maker. For example, owning a dog as a child imbues someone with implicit knowledge about canine behavior, which may then be channeled into a decision-making process as the emotion of fear or anxiety before taking a certain kind of action around an angry dog. Intuition is the mechanism by which this implicit knowledge is brought to the forefront of the decision-making process. Some definitions of intuition in the context of decision-making point to the importance of recognizing cues and patterns in one's environment and then using them to improve one's problem solving abilities. [4] Intuition in decision-making has been connected by two assumptions: 1) Tacit decision - previous decisions are affecting and 2) Explicit decision - emotions are affecting. [5]

Intuition's effect on decision-making is distinct from insight, which requires time to mature. A month spent pondering a math problem may lead to a gradual understanding of the answer, even if one does not know where that understanding came from. Intuition, in contrast, is a more instantaneous, immediate understanding upon first being confronted with the math problem. Intuition is also distinct from implicit knowledge and learning, which inform intuition but are separate concepts. Intuition is the mechanism by which implicit knowledge is made available during an instance of decision-making.

Channels of intuitive influence

Heuristics

Traditional research often points to the role of heuristics in helping people make "intuitive" decisions. [6] Those following the heuristics-and-biases school of thought developed by Amos Tversky and Daniel Kahneman believe that intuitive judgments are derived from an "informal and unstructured mode of reasoning" that ultimately does not include any methodical calculation. Tversky and Kahneman identify availability, representativeness, and anchoring/adjustment as three heuristics that influence many intuitive judgments made under uncertain conditions.

The heuristics-and-biases approach looks at patterns of biased judgments to distinguish heuristics from normative reasoning processes. Early studies supporting this approach associated each heuristic with a set of biases. These biases were "departures from the normative rational theory" and helped identify the underlying heuristics. [7] Use of the availability heuristic, for example, leads to error whenever the memory retrieved is a biased recollection of actual frequency. This can be attributed to an individual's tendency to remember dramatic cases. Heuristic processes are quick intuitive responses to basic questions such as frequency.

Affect

Some researchers point to intuition as a purely affective phenomenon that demonstrates the ability of emotions to influence decision-making without cognitive mediation. This supports the dual processing theory of affect and cognition, under which conscious thought is not required for emotions to be experienced, but nevertheless positive conscious thoughts towards person's will have positive emotional affects on them. In studies comparing affect and cognition, some researchers have found that positive mood is associated with reliance on affective signals while negative mood is associated with more deliberative thought processes. [2] Mood is thus considered a moderator in the strategic decisions people carry out. In a series of three studies, the authors confirmed that people in a positive mood faced with a card-based gambling task utilized intuition to perform better at higher-risk stages than people who were in a negative mood. Other theories propose that intuition has both cognitive and affective elements, bridging the gap between these two fundamentally different kinds of human information processing. [1]

Decision-Making in Psychology

There are two ways that people make decisions on a daily basis. They can either make decisions based on their gut reaction, or they can make decisions by analyzing and weighing the outcomes. [8] It is easier to make a careful and thought-out decision if there are fewer factors to consider. On the other hand, it may be easier to make decisions with a gut reaction if there are too many factors that need to be considered. [8] In order for a gut reaction to be accurate, one must be well-versed in the subject. Some of the knowledge on a certain subject will be consciously learned, but some of the knowledge is also accrued subconsciously. [8] You can learn this knowledge through experiences. We don't know that we have this knowledge, and we can use it without knowing that we are using it. [8] Although it is commonly believed that unconscious thought provides an advantage in decision-making, there have been studies disproving this theory. In a study done in 2008, researchers found that there was little correlation between conscious thought and good decision-making. [9]

Comparison to other decision-making styles

Intuitive decision-making can be contrasted with deliberative decision-making, which is based on cognitive factors like beliefs, arguments, and reasons, commonly referred to as one's explicit knowledge. [10] Intuitive decision-making is based on implicit knowledge relayed to the conscious mind at the point of decision through affect or unconscious cognition. Some studies also suggest that intuitive decision-making relies more on the mind's parallel processing functions, while deliberative decision-making relies more on sequential processing.

Prevalence of intuitive judgment and measurement of use

Although people use intuitive and deliberative decision-making modes interchangeably, individuals value the decisions they make more when they are allowed to make them using their preferred style. [2] This specific kind of regulatory fit is referred to as decisional fit. The emotions people experience after a decision is made tend to be more pleasant when the preferred style is used, regardless of the decision outcome. Some studies suggest that the mood with which the subject enters the decision-making process can also affect the style they choose to employ: sad people tend to be more deliberative, while people in a happy mood rely more on intuition. [2]

The Preference for Intuition and Deliberation Scale developed by Coralie Bestch in 2004 measures propensity toward intuitiveness. The scale defines preference for intuition as tendency to use affect ("gut-feel") as a basis for decision-making instead of cognition. The Myers-Briggs Type Indicator is also sometimes used.

Intuitive decision-making in specific environments

Management and decision-making

Researchers have also explored the efficacy of intuitive judgments and the debate on the function of intuition versus analysis in decisions that require specific expertise, as in management of organizations. In this context, intuition is interpreted as an "unconscious expertise" rather than a traditionally purely heuristic response. Research suggests that this kind of intuition is based on a "broad constellation of past experiences, knowledge, skills, perceptions and feelings." [11] The efficacy of intuitive decision-making in the management environment is largely dependent on the decision context and decision maker's expertise.

The expertise-based intuition increases over time when the employee gets more experience regarding the organization worked for and by gathering domain-specific knowledge. In this context the so-called intuition is not just series of random guesses, but rather a process of combining expertise and know-how with the employee's instincts. [12] Intuitions can, however be difficult to prove to be right in terms of decision-making. It is in most situations likely, that decisions based on intuition are harder to justify than those that are based in rational analysis. Especially in the context of business and organizational decision-making, one should be able to justify their decisions, thus making them purely intuitively is often not possible. [13] It is debated upon whether intuition is accurate, but evidence has been shown that under aforementioned conditions it can. The organizations should not base their decisions on just intuitive or rational analysis. The effective organizations need both rational and intuitive decision-making processes and combination of those. When it comes to the decision maker him/herself, mainly two factors affect the effectiveness of intuitive decision-making. These factors have been found to be the amount of expertise the person has and the individuals processing style. [12]

Finance

A study of traders from the four largest investment banks in London looked at the role that emotion and expert intuition play in financial trading decisions. This study reported on the differences between how higher and lower performing traders incorporate intuition in their decision strategy, and attributed the success of some higher performing traders to their great disposition to reflect critically about their intuitions. This propensity to think critically about intuition and the source of those hunches served as a distinguishing factor between the higher and lower performing traders included in the study. While successful traders were more open to this critical introspection, lower performing traders were reported to rely on their feelings alone rather than further explore the affective influences for their decisions. Reflection on the origin of feelings by expert traders may be particularly salient given affect-as-information model, which holds that the impact of emotions on behavior is reduced or even disappears when the relevance of those emotions is explicitly called into question. [14] It has been noted in a research, that intuition is used as a method of decision-making in the banking industry. Record shows that intuition is used in combination with pre-existing solution models and previous experiences. Participants of the research also reported to analyse their intuitive decisions afterwards and possibly altering them. [13]

High-risk situations

Traditional literature attributes the role of judgment processes in risk perception and decision-making to cognition rather than emotion. However, more recent studies suggest a link between emotion and cognition as it relates to decision-making in high-risk environments. Studies of decision-making in high-risk environments suggest that individuals who self-identify as intuitive decision-makers tend to make faster decisions that imply greater deviation from risk neutrality than those who prefer the deliberative style. [15] For example, risk-averse intuitive decision-makers will choose to not participate in a dangerous event more quickly than deliberative decision-makers, but will choose not to participate in more instances than their deliberative counterparts.

Strategic decisions

Strategic decisions are usually made by the top management in the organizations. Usually strategic decisions also effect on the future of the organization. Rationality has been the guideline and also justified way to make decisions because they are based on facts. Intuition in strategic decision making is less examined and for example can be depending on a case be described as managers know-how, expertise or just a gut feeling, hunch. [16]

See also

Sources

  1. 1 2 3 Sinclair, M. (2005). "Intuition: Myth or a Decision-making Tool?" (PDF). Management Learning. 36 (3): 353–370. doi:10.1177/1350507605055351. hdl: 10072/4512 . ISSN   1350-5076. S2CID   220432531.
  2. 1 2 3 4 5 de Vries, Marieke; Holland, Rob W.; Witteman, Cilia L. M. (2008). "Fitting decisions: Mood and intuitive versus deliberative decision strategies". Cognition & Emotion. 22 (5): 931–943. doi:10.1080/02699930701552580. hdl: 2066/55063 . ISSN   0269-9931. S2CID   54583328.
  3. ↑ Betsch, Cornelia (2008). Intuition in judgment and decision making. New York: Lawrence Erlbaum Associates. ISBN   978-0805857412.
  4. ↑ Hodgkinson, Gerard P.; Langan-Fox, Janice; Sadler-Smith, Eugene (2008). "Intuition: A fundamental bridging construct in the behavioural sciences". British Journal of Psychology. 99 (1): 1–27. doi:10.1348/000712607X216666. ISSN   0007-1269. PMID   17559716. S2CID   10208043.
  5. ↑ Zander, Thea; Horr, Ninja K.; Bolte, Annette; Volz, Kirsten G. (January 2016). "Intuitive decision making as a gradual process: investigating semantic intuition-based and priming-based decisions with fMRI". Brain and Behavior. 6 (1): e00420. doi:10.1002/brb3.420. ISSN   2162-3279. PMC   4834943 . PMID   27110441.
  6. ↑ Kahneman, Daniel (1982). Judgment under uncertainty : heuristics and biases. Cambridge New York: Cambridge University Press. ISBN   978-0521284141.
  7. ↑ Gilovich, Thomas (2002). Heuristics and biases : the psychology of intuitive judgement. Cambridge, U.K. New York: Cambridge University Press. ISBN   978-0521792608.
  8. 1 2 3 4 Dumitru, O. (n.d.). NYU: Introduction to psychology spring 2019. Noba. Retrieved May 4, 2023, from https://nobaproject.com/textbooks/marjorie-rhodes-new-textbook
  9. ↑ Acker, Felix. "New Findings on Unconscious versus Conscious Thought in Decision Making: Additional Empirical Data and Meta-Analysis." Judgment and Decision Making, vol. 3, no. 4, 2008, pp. 292–303., doi:10.1017/S1930297500000863.
  10. ↑ Dienes, Zoltan; Perner, Josef (1999). "A theory of implicit and explicit knowledge". Behavioral and Brain Sciences. 22 (5): 735–808. doi:10.1017/S0140525X99002186. ISSN   0140-525X. PMID   11301570. S2CID   2181741.
  11. ↑ Hodgkinson, Gerard (2008). The Oxford handbook of organizational decision making. Oxford New York: Oxford University Press. ISBN   9780199290468.
  12. 1 2 Salas, Eduardo; Rosen, Michael A.; DiazGranados, Deborah (2010). "Expertise-Based Intuition and Decision Making in Organizations". Journal of Management. 36 (4): 941–973. doi:10.1177/0149206309350084. S2CID   145283864.
  13. 1 2 Hensman, Ann; Sadler-Smith, Eugene (2011). "Intuitive decision making in banking and finance". European Management Journal. 29: 51–66. doi:10.1016/j.emj.2010.08.006.
  14. ↑ Fenton-O'Creevy, Mark; Soane, Emma; Nicholson, Nigel; Willman, Paul (2011). "Thinking, feeling and deciding: The influence of emotions on the decision making and performance of traders" (PDF). Journal of Organizational Behavior. 32 (8): 1044–1061. doi: 10.1002/job.720 . ISSN   0894-3796.
  15. ↑ LastName, FirstName (2008). Intuition in judgment and decision making. New York: Lawrence Erlbaum Associates. ISBN   978-0805857412.
  16. ↑ Elbanna, Said (6 April 2006). "Strategic decision-making: Process perspectives". International Journal of Management Reviews. 8 (1): 1–20. doi:10.1111/j.1468-2370.2006.00118.x. ISSN   1460-8545. S2CID   144702314.

Related Research Articles

<span class="mw-page-title-main">Cognitive bias</span> Systematic pattern of deviation from norm or rationality in judgment

A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. Individuals create their own "subjective reality" from their perception of the input. An individual's construction of reality, not the objective input, may dictate their behavior in the world. Thus, cognitive biases may sometimes lead to perceptual distortion, inaccurate judgment, illogical interpretation, and irrationality.

A heuristic or heuristic technique is any approach to problem solving that employs a pragmatic method that is not fully optimized, perfected, or rationalized, but is nevertheless "good enough" as an approximation or attribute substitution. Where finding an optimal solution is impossible or impractical, heuristic methods can be used to speed up the process of finding a satisfactory solution. Heuristics can be mental shortcuts that ease the cognitive load of making a decision.

Heuristic reasoning is often based on induction, or on analogy ... Induction is the process of discovering general laws  ... Induction tries to find regularity and coherence ... Its most conspicuous instruments are generalization, specialization, analogy. [...] Heuristic discusses human behavior in the face of problems [... that have been] preserved in the wisdom of proverbs.

<span class="mw-page-title-main">Intuition</span> Ability to acquire knowledge without conscious reasoning

Intuition is the ability to acquire knowledge, without recourse to conscious reasoning or needing an explanation. Different fields use the word "intuition" in very different ways, including but not limited to: direct access to unconscious knowledge; unconscious cognition; gut feelings; inner sensing; inner insight to unconscious pattern-recognition; and the ability to understand something instinctively, without any need for conscious reasoning. Intuitive knowledge tends to be approximate.

According to the APA Dictionary of Psychology, a feeling is "a self-contained phenomenal experience"; and feelings are "subjective, evaluative, and independent of the sensations, thoughts, or images evoking them". The term feeling is closely related to, but not the same as, emotion. Feeling may for instance refer to the conscious subjective experience of emotions. The study of subjective experiences is called phenomenology. Psychotherapy generally involves a therapist helping a client understand, articulate, and learn to effectively regulate the client's own feelings, and ultimately to take responsibility for the client's experience of the world. Feelings are sometimes held to be characteristic of embodied consciousness.

The recognition heuristic, originally termed the recognition principle, has been used as a model in the psychology of judgment and decision making and as a heuristic in artificial intelligence. The goal is to make inferences about a criterion that is not directly accessible to the decision maker, based on recognition retrieved from memory. This is possible if recognition of alternatives has relevance to the criterion. For two alternatives, the heuristic is defined as:

If one of two objects is recognized and the other is not, then infer that the recognized object has the higher value with respect to the criterion.

<span class="mw-page-title-main">Gerd Gigerenzer</span> German cognitive psychologist

Gerd Gigerenzer is a German psychologist who has studied the use of bounded rationality and heuristics in decision making. Gigerenzer is director emeritus of the Center for Adaptive Behavior and Cognition (ABC) at the Max Planck Institute for Human Development, Berlin, director of the Harding Center for Risk Literacy, University of Potsdam, and vice president of the European Research Council (ERC).

<i>Blink: The Power of Thinking Without Thinking</i> 2005 book by Malcolm Gladwell

Blink: The Power of Thinking Without Thinking (2005) is Malcolm Gladwell's second book. It presents in popular science format research from psychology and behavioral economics on the adaptive unconscious: mental processes that work rapidly and automatically from relatively little information. It considers both the strengths of the adaptive unconscious, for example in expert judgment, and its pitfalls, such as prejudice and stereotypes.

In moral psychology, social intuitionism is a model that proposes that moral positions are often non-verbal and behavioral. Often such social intuitionism is based on "moral dumbfounding" where people have strong moral reactions but fail to establish any kind of rational principle to explain their reaction.

The adaptive unconscious, first coined by social psychologist Daniel Wegner in 2002, is described as a set of mental processes that is able to affect judgement and decision-making, but is out of reach of the conscious mind. It is thought to be adaptive as it helps to keep the organism alive. Architecturally, the adaptive unconscious is said to be unreachable because it is buried in an unknown part of the brain. This type of thinking evolved earlier than the conscious mind, enabling the mind to transform information and think in ways that enhance an organism's survival. It can be described as a quick sizing up of the world which interprets information and decides how to act very quickly and outside the conscious view. The adaptive unconscious is active in everyday activities such as learning new material, detecting patterns, and filtering information. It is also characterized by being unconscious, unintentional, uncontrollable, and efficient without requiring cognitive tools. Lacking the need for cognitive tools does not make the adaptive unconscious any less useful than the conscious mind as the adaptive unconscious allows for processes like memory formation, physical balancing, language, learning, and some emotional and personalities processes that includes judgement, decision making, impression formation, evaluations, and goal pursuing. Despite being useful, the series of processes of the adaptive unconscious will not always result in accurate or correct decisions by the organism. The adaptive unconscious is affected by things like emotional reaction, estimations, and experience and is thus inclined to stereotyping and schema which can lead to inaccuracy in decision making. The adaptive conscious does however help decision making to eliminate cognitive biases such as prejudice because of its lack of cognitive tools.

The affect heuristic is a heuristic, a mental shortcut that allows people to make decisions and solve problems quickly and efficiently, in which current emotion—fear, pleasure, surprise, etc.—influences decisions. In other words, it is a type of heuristic in which emotional response, or "affect" in psychological terms, plays a lead role. It is a subconscious process that shortens the decision-making process and allows people to function without having to complete an extensive search for information. It is shorter in duration than a mood, occurring rapidly and involuntarily in response to a stimulus. Reading the words "lung cancer" usually generates an affect of dread, while reading the words "mother's love" usually generates a feeling of affection and comfort. The affect heuristic is typically used while judging the risks and benefits of something, depending on the positive or negative feelings that people associate with a stimulus. It is the equivalent of "going with your gut". If their feelings towards an activity are positive, then people are more likely to judge the risks as low and the benefits high. On the other hand, if their feelings towards an activity are negative, they are more likely to perceive the risks as high and benefits low.

In psychology, a dual process theory provides an account of how thought can arise in two different ways, or as a result of two different processes. Often, the two processes consist of an implicit (automatic), unconscious process and an explicit (controlled), conscious process. Verbalized explicit processes or attitudes and actions may change with persuasion or education; though implicit process or attitudes usually take a long amount of time to change with the forming of new habits. Dual process theories can be found in social, personality, cognitive, and clinical psychology. It has also been linked with economics via prospect theory and behavioral economics, and increasingly in sociology through cultural analysis.

<span class="mw-page-title-main">Outline of thought</span> Overview of and topical guide to thought

The following outline is provided as an overview of and topical guide to thought (thinking):

One way of thinking holds that the mental process of decision-making is rational: a formal process based on optimizing utility. Rational thinking and decision-making does not leave much room for strong emotions. In fact, emotions are often considered irrational occurrences that may distort reasoning.

In psychology, the human mind is considered to be a cognitive miser due to the tendency of humans to think and solve problems in simpler and less effortful ways rather than in more sophisticated and effortful ways, regardless of intelligence. Just as a miser seeks to avoid spending money, the human mind often seeks to avoid spending cognitive effort. The cognitive miser theory is an umbrella theory of cognition that brings together previous research on heuristics and attributional biases to explain when and why people are cognitive misers.

The psychology of reasoning is the study of how people reason, often broadly defined as the process of drawing conclusions to inform how people solve problems and make decisions. It overlaps with psychology, philosophy, linguistics, cognitive science, artificial intelligence, logic, and probability theory.

Attribute substitution is a psychological process thought to underlie a number of cognitive biases and perceptual illusions. It occurs when an individual has to make a judgment that is computationally complex, and instead substitutes a more easily calculated heuristic attribute. This substitution is thought of as taking place in the automatic intuitive judgment system, rather than the more self-aware reflective system. Hence, when someone tries to answer a difficult question, they may actually answer a related but different question, without realizing that a substitution has taken place. This explains why individuals can be unaware of their own biases, and why biases persist even when the subject is made aware of them. It also explains why human judgments often fail to show regression toward the mean.

Heuristics is the process by which humans use mental shortcuts to arrive at decisions. Heuristics are simple strategies that humans, animals, organizations, and even machines use to quickly form judgments, make decisions, and find solutions to complex problems. Often this involves focusing on the most relevant aspects of a problem or situation to formulate a solution. While heuristic processes are used to find the answers and solutions that are most likely to work or be correct, they are not always right or the most accurate. Judgments and decisions based on heuristics are simply good enough to satisfy a pressing need in situations of uncertainty, where information is incomplete. In that sense they can differ from answers given by logic and probability.

Cognitive-experiential self-theory (CEST) is a dual-process model of perception developed by Seymour Epstein. CEST is based around the idea that people operate using two separate systems for information processing: analytical-rational and intuitive-experiential. The analytical-rational system is deliberate, slow, and logical. The intuitive-experiential system is fast, automatic, and emotionally driven. These are independent systems that operate in parallel and interact to produce behavior and conscious thought.

Social heuristics are simple decision making strategies that guide people's behavior and decisions in the social environment when time, information, or cognitive resources are scarce. Social environments tend to be characterised by complexity and uncertainty, and in order to simplify the decision-making process, people may use heuristics, which are decision making strategies that involve ignoring some information or relying on simple rules of thumb.

<span class="mw-page-title-main">Dual process theory (moral psychology)</span> Theory of human moral judgment

Dual process theory within moral psychology is an influential theory of human moral judgement that posits that human beings possess two distinct cognitive subsystems that compete in moral reasoning processes: one fast, intuitive and emotionally-driven, the other slow, requiring conscious deliberation and a higher cognitive load. Initially proposed by Joshua Greene along with Brian Sommerville, Leigh Nystrom, John Darley, Jonathan David Cohen and others, the theory can be seen as a domain-specific example of more general dual process accounts in psychology, such as Daniel Kahneman's "system1"/"system 2" distinction popularised in his book, Thinking, Fast and Slow. Greene has often emphasized the normative implications of the theory, which has started an extensive debate in ethics.

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.