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Word Count: 962
Decision making is a part of almost everybodys everyday life No matter how small or mundane the decision to be made there is an underlying cognitive process and many influences that affect both how the decision is made and what the decision is It is these influences that affect how the decision is made in which this paper is interested specifically what influences the decision making process There are several options to explore including a persons rationality the influence of long term memory and a persons emotions In their chapter entitled Decision Making Shafir and Tversky 1995 define two approaches to decision making the normative and the descriptive approaches The normative approach is defined as the ideal assuming a rational decision maker who has well defined preferences that do not depend on a particular description of the options or on the specific methods for eliciting preference Shafir Tversky 1995 In short this is the ideal decision maker who makes decisions based completely on logic and whose decision is not changed based on the way the choices are presented The second approach the descriptive approach is based on how people actually make decisions This article discusses several rationally-based mental processes that influence the decision making process including the evaluation of gains versus losses the impact of alternative descriptions of choices and the effect that adding alternative choices has on the decision making process Shafir and Tversky 1995 name two basic factors in evaluating the potential gain versus loss of a situation The first risk aversion is the preference for a sure outcome over a risky prospect that has higher or equal expected value as losses generally emerge larger than gains Risk seeking is just the opposite opting for the risky prospect or gamble Shafir Tversky 1995 These factors are the main components of the Prospect Theory which states that people look at outcomes in terms of gains and losses not in terms of total
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