The Psychology of Decision-Making
Introduction
Every day, we make thousands of decisions — what to wear, what to eat, how to respond to an email, or whether to take a new job offer. While some decisions are automatic and require little thought, others shape our careers, relationships, and long-term well-being. The way we make decisions is influenced by cognitive biases, external pressures, and even the way we process our thoughts. Understanding the psychological mechanisms behind decision-making can help us make better choices, avoid common pitfalls, and gain confidence in our judgements.
Invisible forces
While we often believe we are rational decision-makers, research shows that biases play a significant role in how we perceive information and make choices. For instance, the framing effect influences our decisions based on how options are presented. A study at the University of Michigan demonstrated that participants who wrote about their choices before making them were more confident and made less biased decisions compared to those who did not [1]. This suggests that our decision-making improves when we take time to externalise our thoughts rather than react impulsively.
Similarly, the sunk cost fallacy — a bias where people continue investing in a failing endeavor due to previously spent resources — can cloud judgement. If you’ve ever sat through a terrible movie simply because you paid for the ticket, you’ve experienced this firsthand. When we recognise these biases, we can pause and question whether our decisions are being driven by rational evaluation or emotional attachment.
Cognitive load
The sheer number of decisions we make daily is staggering. Studies estimate that adults make anywhere from 33,000 to 35,000 decisions each day, most of them unconsciously [2]. With so many micro-decisions happening simultaneously, our brains rely on cognitive shortcuts to function efficiently. However, when faced with complex decisions — such as negotiating a salary, choosing an investment, or responding to an ethical dilemma — this reliance on mental shortcuts can backfire.
One significant issue is decision fatigue, a psychological phenomenon where the quality of our decisions deteriorates after prolonged decision-making. Research has shown that judges are more likely to grant parole early in the morning than later in the day, suggesting that as mental resources deplete, people resort to default choices [3]. To mitigate decision fatigue, strategies like automating routine choices (such as meal prepping or wearing a signature outfit) can free up mental bandwidth for more important decisions.
Another challenge is choice overload. When presented with too many options, people often become paralysed and either delay decisions or make impulsive ones. Studies have shown that consumers presented with six options were more likely to make a purchase than those given 24 options [4]. This suggests that simplifying choices, whether in business or personal life, can lead to more decisive and satisfying outcomes.
The role of emotion
Contrary to the belief that emotions hinder decision-making, they actually play a crucial role in helping us weigh outcomes and assign value to different choices. However, unchecked emotions can lead to reactive and impulsive decisions. One effective way to counteract this is by creating psychological distance from the decision. Studies show that when people imagine making a decision on behalf of someone else, they tend to think more rationally and strategically, reducing emotional biases [5].
For example, a manager dealing with a workplace dispute might feel compelled to side with a long-time employee due to personal rapport, but if they step back and ask, “What would I advise a friend in this situation?” they are more likely to arrive at a fairer resolution. Techniques like taking a break before making a high-stakes decision or writing down concerns can also help create this necessary distance.
Additionally, the concept of temporal distance plays a role in how we evaluate decisions. Research suggests that when people consider the long-term consequences of a choice rather than focusing on immediate gratification, they tend to make better decisions [6]. This is particularly relevant in financial and career decisions, where the benefits of patience and delayed gratification are well-documented.
The power of reflection
One of the most effective tools for improving decision-making is structured reflection, particularly through writing. Julia Cameron’s concept of “morning pages” — three pages of stream-of-consciousness journaling first thing in the morning — has been widely adopted beyond creative circles as a way to clarify thoughts and enhance decision-making [7].
A personal account highlights this well: An employee facing uncertainty in a toxic work environment used morning pages to process their fears before a crucial HR meeting. By preemptively deciding how to present themselves — calmly, confidently, and without excessive justification — they navigated the conversation with clarity rather than emotional reactivity [8]. Writing allowed them to solidify their stance and avoid the common pitfalls of seeking approval or over-explaining.
Additionally, research suggests that writing about decisions before making them engages both the logical and creative sides of the brain, leading to more balanced choices. It also helps break down complex decisions into manageable components, making you less likely to feel overwhelmed. If you’ve ever made a pros-and-cons list but still felt unclear, taking it a step further by free-writing about your deeper motivations and fears can reveal hidden insights.
The benefits of experience
Experience is often touted as the key to making better decisions, but it can also create a false sense of confidence. The Dunning-Kruger effect describes how people with low expertise tend to overestimate their competence, while experts are more likely to doubt themselves [9]. This paradox can be dangerous in high-stakes environments like business or medicine, where overconfidence can lead to risky decisions.
One way to combat this bias is to actively seek feedback and challenge assumptions. Surrounding ourselves with diverse perspectives, asking critical questions, and engaging in self-reflection can help counteract the blind spots created by overconfidence. Additionally, having a decision-making framework — such as considering worst-case scenarios, seeking a devil’s advocate, or writing through the decision — can prevent knee-jerk reactions based on perceived expertise alone.
In the workplace
Workplace culture significantly influences how decisions are made. In some organisations, hierarchical structures discourage employees from questioning authority, leading to poor collective decision-making. In contrast, environments that encourage psychological safety — where team members feel comfortable expressing dissenting views — tend to produce better outcomes [10].
One effective approach is fostering a culture of “pre-mortems,” where teams imagine a future where a decision has failed and work backward to identify potential pitfalls. This method reduces groupthink and forces individuals to critically examine their assumptions before finalising a decision. Additionally, organisations that normalise writing-based reflection, such as encouraging employees to document their reasoning for major choices, can create a more thoughtful and transparent decision-making culture [11].
Practical takeaways for better decision-making
In sum, to improve decision-making, try to be aware of cognitive biases like the framing effect and sunk cost fallacy, which can skew judgement. Simplify your daily routines to conserve mental energy and prevent choice overload. Try to create psychological distance by imagining that you’re advising a friend or by journaling to cultivate deeper self-reflection. Seek diverse perspectives to challenge assumptions and uncover blind spots, and use pre-mortems or scenario planning to provide clarity in complex decisions. These strategies collectively foster a more deliberate, rational approach to making choices.
The psychology of decision-making
Decision-making is not just a logical process — it is deeply influenced by biases, cognitive load, emotions, and reflection. By understanding the psychological forces at play, we can make more confident, rational, and intentional choices. Whether through structured reflection, reducing decision fatigue, or fostering an open decision-making culture, we have the tools to improve our ability to navigate life’s countless choices. The key is not to strive for perfection, but to cultivate awareness and adopt strategies that help us make decisions with greater clarity and confidence.
More on Decision-Making
Mastering Decisions: The Strategic Edge of Red Teaming in a Biased World
Beyond Bias: Refining Our Decisions with Nuala Walsh – Podcast
Sources
[1] https://hbr.org/2023/12/a-simple-way-to-make-better-decisions
[2] https://hbr.org/2023/12/a-simple-way-to-make-better-decisions
[3] https://hbr.org/1998/09/the-hidden-traps-in-decision-making-2
[4] https://globalbanking.ac.uk/blog/how-psychology-can-enhance-your-business-decision-making-skills/
[5] https://globalbanking.ac.uk/blog/how-psychology-can-enhance-your-business-decision-making-skills/
[6] https://www.accidentalpm.online/blog/the-psychology-of-decision-making-how-to-make-better-choices
[7] https://hbr.org/2023/12/a-simple-way-to-make-better-decisions
[8] https://hbr.org/2023/12/a-simple-way-to-make-better-decisions
[9] https://www.accidentalpm.online/blog/the-psychology-of-decision-making-how-to-make-better-choices
[10] https://hbr.org/1998/09/the-hidden-traps-in-decision-making-2
[11] https://hbr.org/2023/12/a-simple-way-to-make-better-decisions
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