1 Making decisions

1.1 Introducing decision-making

A vast literature on decision making stretches back over several centuries and encompasses a wide range of academic disciplines – from history and literature through to mathematics. This course is not a comprehensive survey of this field. Rather, we have chosen a few key topics that will help you to think in broader ways about how you and others take decisions; we shall also introduce you to some themes in social science which have direct relevance to managerial decision making. In particular, we have chosen topics that illustrate how attention to the psychology of decision making and the social context in which decisions are made can improve our understanding of decision making in organisations.

Many books on decision making are normative: they tell you how you should make decisions. The approach of this course is different; our approach is mostly descriptive: rather than prescribing how you should make decisions we look at frameworks that will help you to understand how decisions are actually made. So rather than provide recipes for effective decisions, our approach is that your decision making will be enhanced though greater insight into how you and others decide. Since many decisions are strongly influenced by our perceptions of risk, we also take some time to explore different approaches to understanding risk.

How will this enable you to make a difference? First, by developing greater insight into your own decision-making processes you should be more aware of – and able to avoid – some of the traps that face you. Second, by developing greater insight into how others make decisions you should be better equipped to influence their decisions. Third, and finally, we hope that to the extent you find these ideas of practical use, you will be equipped to explore them further beyond the confines of this course.