Intuition and decision-making

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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. Snap judgments made possible by heuristics are sometimes identified as intuition.

Definition and related terms[edit]

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 affect 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.[4]

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[edit]

Heuristics[edit]

Traditional research often points to the role of heuristics in helping people make “intuitive” decisions.[5] 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.[6] 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[edit]

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]

Comparison to other decision-making styles[edit]

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.[7] 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[edit]

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[edit]

Management[edit]

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.”[8] The efficacy of intuitive decision-making in the management environment is largely dependent on the decision context and decision maker’s expertise.

Finance[edit]

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.[9]

High-risk situations[edit]

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.[10] 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.

Sources[edit]

  1. ^ a b c Sinclair, M. (2005). "Intuition: Myth or a Decision-making Tool?". Management Learning. 36 (3): 353–370. doi:10.1177/1350507605055351. ISSN 1350-5076. 
  2. ^ a b c d e 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. ISSN 0269-9931. 
  3. ^ Betsch, Cornelia (2008). Intuition in judgment and decision making. New York: Lawrence Erlbaum Associates. ISBN 0805857419. 
  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. 
  5. ^ Kahneman, Daniel (1982). Judgment under uncertainty : heuristics and biases. Cambridge New York: Cambridge University Press. ISBN 0521284147. 
  6. ^ Gilovich, Thomas (2002). Heuristics and biases : the psychology of intuitive judgement. Cambridge, U.K. New York: Cambridge University Press. ISBN 0521792606. 
  7. ^ Dienes, Zoltan; Perner, Josef (1999). "A theory of implicit and explicit knowledge". Behavioral and Brain Sciences. 22 (05). doi:10.1017/S0140525X99002186. ISSN 0140-525X. 
  8. ^ Hodgkinson, Gerard (2008). The Oxford handbook of organizational decision making. Oxford New York: Oxford University Press. ISBN 9780199290468. 
  9. ^ 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". Journal of Organizational Behavior. 32 (8): 1044–1061. doi:10.1002/job.720. ISSN 0894-3796. 
  10. ^ LastName, FirstName (2008). Intuition in judgment and decision making. New York: Lawrence Erlbaum Associates. ISBN 0805857419.