All human decisions are guided by different models that become their choice due to a certain set of factors they take into consideration. There are many models that are enacted under different circumstances, and it appears at times that people cannot explain why they have committed this or that action. However, the majority of their actions can be explained by one of the models discussed in the present work.
The first activity depicts the situation of satisficing that people commit when facing the probability of winning a large sum of money. The sum of 1,000,000 is a considerable addition to anyone’s budget, no matter how rich the person is. So people decide to satisfy the majority of their needs by a smaller sum which they nevertheless will more surely get. Of course a sum of 2,500,000 is larger, but the probability of losing everything still exists, though it is small. This is why people choose the lesser but the more credible sum. However, I would choose the second variant – if the opportunity exists, I would take the risk and try to get more money. I am a risky person.
However, the second situation does not involve my being risky – here I would not accept the terms of the new insurance program. Property insurance is a too serious thing to make jokes with, so I would also choose the certainty effect model which would make me feel more secure. I would act the same way in the case with the coin game – I would not pay much money for it because I trust the chance and I would be happy to win, but I like to test my fortune on little sums of money that would not seem the senseless spending of my budget. In this case the regret theory is applied – I would risk such a little sum of money that would not make me regret it in case of loss.
In activity four I would choose to get $5 than to try to win $5,000 – here I am under the influence of certainty effect. Five dollars is surely a very small sum, but it is something palpable, in contrast with the $5,000 that I am unlikely to win anyway. As for situation five, here comes a rational thinking model – choosing the direct vote between Schmoe and Doe causes their failure and success of my plan.
Judging from the activities I have taken part in, it is possible to say that people mostly act rationally and try to gain the most profit and the least losses from their decision. All types of decisions applied in activities: satisficing, certainty effect, regret theory etc. are aimed at finding the solution and reducing potential losses in the situation of uncertainty (Miner 53). All in all, these theories are based on rational decision-making that implies that “individuals are seen as motivated by the wants or goals that express their ‘preferences” (Scott). However, it is not always so – there are more complicated cases in which people have to think about the alternative of losing some money. In their pursuit of profit people may forget fear of risk at times, but this is a rare occasion.
If one judges from the point of view of rational decision-making, it is surely the best variant of conducting one’s affairs and making decisions in the most profitable and beneficial way. Nonetheless, it is necessary to remember that people are not always rational because they have weak sides such as their family, beloved people or pets – so they are likely to act irrationally in crisis situations concerning their dear people, creatures or things. There are also risky people who do not have the feeling of common sense and like to tempt the fortune in hope of gaining more than they have lost. People in despair also seize to appreciate what they have and may make irrational decisions.
Many people are also likely to rely on intuition, which is still considered “unlikely coincidences, lucky guesses, or some kind of new-age hocus-pocus” (Decision Making Models). Anyway, it really seems that people nowadays are more inclined to make irrational decisions because of the multitude of factors affecting their choice. This fact is especially true for the business world because of the high level of uncertainty being evident up to date.
Decision Making Models, 2009.
Miner, B. John. Organizational Behavior. Vol. 2. M.E. Sharpe, 2006.
Scott, John. Rational Choice Theory. From G. Browning, A. Halcli, and F. Webster, eds. Understanding Contemporary Society: Theories of The Present. Web.