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Decision Criteria

Explanations > Decisions > Decision Criteria

Value factors | Personality factors | Situational factors | Weighting | So what

When people make decisions, they base their choice on a number of factors, some logical and some personal.

Sometimes this is deliberately done, with careful consideration of the criteria used, but often (and even in 'logical' situations), we subconsciously take other factors into consideration.

Common factors and the weighting process are discussed below.

Value factors

The basic logic of decisions is to assess the costs and compare these with the benefits to get a 'return on investment' (ROI). Both cost and benefit can be significantly affected by time as both immediate and future effects are considered.

Cost

'Cost' is a generic term for all items that give reason to go against a decision, to disagree or not be persuaded.

Cost factors include:

• Price: The money that will be spent.
• Time: The time that will be taken, both in terms of total time invested and the overall duration.
• Effort: The amount of physical or mental effort required.
• Stress: The hassle and discomfort that will be caused.
• Loss: What else be lost if this choice is made, such as reducing ability to meet goals.
• Opportunity cost: Effects based on how time and money may have been spent elsewhere.

Benefit

'Benefit' is the opposite of cost in that it a general term for why a decision should be taken.

• Money: Amount that will saved.
• Time: Time that will be saved.
• Effort: Physical or mental effort that will be gained.
• Stress: Stress that will be reduced.
• Potential: The ability to do things.
• Personal gain: What's in it for me.
• Group gain: What's in it for us.

Personality factors

Costs and benefits are assessed and weighted differently by different people, especially for things which can only be assessed subjectively. These may be found by understanding personality and consequent preferences, such as:

• Self vs. Others: Value for me vs value for others.
• Attraction vs. Avoidance: Tendency to seek benefits vs avoiding costs.
• Risk Bias: Ability to accept risks.
• Thinking vs. Feeling: Logical vs. emotional decision making.

Personality factors also appear in various forms of bias, including socially unacceptable versions where bias appears against other people.

Situational factors

Other factors may contribute to the decision, affecting both factors to be considered and the weighting that may be applied.

Alternatives available

When things are plentiful, decisions may be make about them at any time, allowing for 'not now' choices. However, when things are scarce, the choice is 'now or never', a factor that sharpens the decision. This can be amplified by the competitive instinct that is triggered by the thought that others may get the scarce item instead of you.

This factor can be mitigated by deliberate action to create alternatives, such as developing a walk-away in negotiation.

Social situations

Much of our decision-making takes into account what others will think and the consequent social impact on us. Particularly when we are in groups, we consider group norms and related social pressures.

We also think about individual relationships and wider society, even altruistically seeking to do the right thing when we have nothing personal to gain.

Threat

We are programmed to constantly seek out threats, which are typically near-term risks, and this attention can distract us from other factors as well as weighting.

Weighting

Not all criteria are equal and each may have different influence, or 'weight' over the decision. This weighting is often done unconsciously, though it may be made explicit and used in a simple formula.

Pros and Cons

In weighing up the 'pros and cons', each criterion can be something that can be for or against. This equates to costs and benefits as described above. Pros and cons may be shown as positive and negative.

Discounting

Time has a distinct effect on how we weight future events. Typically, we 'discount' things that may happen in the future, giving them a lower present value. The more distant the event, the greater the discount, so events a year or more out may hardly be counted, even if they will be significant when they occur.

Weighting formula

Weighting can be turned into a simple mathematical formula. There are various ways of doing this. Cost and benefit weights for each factor are typically separately summed to give an overall cost and benefit. These may then either be subtracted or divided to identify overall value.

Subtraction: V = (B1 + B2  + B3) - (C1 + C2 + C3)

V = overall value

Bn = Weight for benefit 'n'

Cm = Weight for cost 'm'

Subtraction is like a balancing see-saw method, with benefits on one side and costs on another, and is hence easy to conceptualize and discuss. When cost is higher than benefit, the value number becomes negative.

Division:  V = (B1 + B2  + B3) / (C1 + C2 + C3)

Division uses the 'return on investment' idea and divides benefits by costs. A perfect choice has infinite value (ie. zero cost) whereas a terrible choice has close to zero value. When cost is greater than benefit, the value number becomes a fraction.

Both these methods give a 'magic number' for value which is most useful when comparing the value of one possible choice against other options.

This is a clear and explicit approach and is useful for gaining consensus in groups. It can be easily calculated with a spreadsheet, where 'what if' games of tweaking weights can be played.

So what?

When decisions are being made, look for the criteria that are being used, including the less obvious ones. Make these explicit and guide people towards more sensible criteria.

You can also discuss weighting, even if you do not go explicitly down a numerical route. A number-based system can be helpful when facilitating group decisions, where for example you can use a weight based on an average of the preference for each person in the group.

See also

Decisional Balance, Fair Criteria, Easy Decisions