Rational Factors in Decision Making

Video Transcription

Hi I'm Julie Tietz. And welcome to Conflict Resolution, Putting the Pieces Together. Today we're going to go over rational factors in decision making. So why don't we start off with our key terms? Decision-- a choice between two or more items or options. Cost benefit analysis-- an assessment of the benefits gained versus effort or resources expended, associated with a particular option in a decision.

When we make our decisions, we do this through a cost-benefit analysis. And this is kind of a mental checklist on weighing our options and whether or not we're going to make a particular decision. Or how we're actually going to make the decision.

So let's use the example of what's for breakfast. Our first option is this bowl of oatmeal. It's going to be heart-healthy, and help us maintain our weight, and fulfill our goals of having a healthy lifestyle. Or we could have this bacon, and eggs, and hash brown breakfast that is not going to fulfill our heart-healthy lifestyle that we are trying to achieve, but sure does taste good. And we like to have a hearty breakfast that tastes good like some bacon, and eggs, and hash browns.

And so we're going to go through our mind and decide whether or not it's going to benefit us or if the costs in eating this unhealthy breakfast are going to outweigh the benefits that we're going to gain in eating healthy breakfast. And if we decide that it's really not that big of a deal to us, we may go with our losses and eat the bacon and eggs.

But as our decisions become bigger, the more and more significance we put on the outcomes of the decision. So let's use a big decision such as buying a car. So we have a lot to think about when we buy a car. How first of all, what kind of car do we need to have? How much can we afford? Are we going to have a stable job to afford the monthly payments of the car? Are we going to have enough money to make the down payment? All of these things, we give a lot more weight to, because the significance of the outcome is bigger in our minds or bigger in our lives than, let's say, what we're going to have for breakfast.

And so when we make our decisions, we take into account certain factors. And some of those include physical factors. Let's say you decide you're going to buy a fancy sports car or you're thinking about buying a fancy sport car. You found one that you really like. And some of the physical factors you're going to possibly look at is the cost. This car costs a lot more than, let's say, your average sedan. And so is this going to be something that you can have feasibly in your budget, in your income?

Or maybe you're going to take into consideration, such as use. Let's say you live in a state that has a pretty cold climate most of the year, with harsh winters that have snow and ice. How much you use are you really going to get out of this fancy sports car? Is it practical for you?

We also may take into consideration emotional factors, such as, is this sports car going to fulfill my happiness? I feel good when I'm driving this. I'm having fun. And this is something that's really important to me. And so I'm taking those considerations into factor and account when I'm going to make the decision about buying this car.

I also will take into consideration other people's perceptions of me in this car. Are they going to think I'm too frivolous with my spending? Are they going to think I'm too impractical because we do have harsh winters here where we live? Or maybe I have kids and I can't fit their car seats into this car. How are people going to perceive me and look at me if I make this decision?

So now we've covered rational factors and decision making. Let's go over our key points. When we make our decisions, we go through a cost-benefit analysis. And this is assessing the benefits gained over the effort or resources given when we make a decision.

And the more, or the larger our decisions are, or the bigger they are, we give more attention to the costs and the benefits in making this decision. And we used the example of buying a car as a big decision. And we take in physical and emotional factors when we make these decisions.

Thank you for taking the time out to listen to the rational factors and decision-making tutorial. I hope you learned something. And I can't wait to catch you again next time.