The Science of Decision Making

Ryan Hamilton is an Associate Professor of Marketing at Emory University’s Goizueta Business School. He joined The Goizueta Effect Podcast to discuss the science of decision making.

It's estimated that the average adult makes more than 35,000 decisions each day. They can be small like where to grab your next cup of coffee or big like who to pick for president. As individuals, how can we make better decisions for ourselves, families, and communities? As business leaders and managers, how can our understanding of the human mind and key motivators help us position our products, services, and teams for growth?

Ryan’s work centers on consumer psychology, pricing, branding, and effectively managing customer experiences. He has been featured in the Harvard Business Review, New York Times, Wall Street Journal, and CNN Headline News. He also cohosts the podcast – The Intuitive Customer.

Why Decision Making 

All human behavior can be boiled down to decision making; the behaviors of customers, employees, and family are all just a series of decisions. When you model how others make decisions, that model is either informed by the science of decision making or it's not. Researchers who explore the human decision-making process are contributing to the body of knowledge around this complex topic and hoping to provide better insight so individuals can anticipate the actions of others and understand themselves better.

Grounding Tenets: The 4R’s of Decision Making 

Ryan Hamilton developed the 4Rs framework after teaching decision making to students and business executives. With so much research on decision-making and new studies constantly being published, this framework gives people a starting point to approach decision making in our own lives and in business.  

1. Reference Points - People evaluate things by comparing them to a reference point. If you want to understand how people make decisions, you need to understand their options. These are not always direct competitors. In business, often, customers compare you to things in a completely different category.  
2. Resources– When talking about resources with decision making, we’re focused on cognitive resources – the amount of time and energy we have available to devote to a decision. In marketing, organizations often assume that customers are fully engaged, but in reality, they almost never care as much as the company. When customers are in a low-resource environment where they're distracted, overwhelmed, or just don't care, it affects how they make decisions.  
3. Reasons - Choice justification is a huge research topic. When people generate reasons to justify their decisions to themselves or others, it changes their choices and evaluations. Some reasons might be subconscious or difficult to articulate. From a business standpoint, do companies know the reasons why people choose their products and services and are they accidentally giving people a reason not to choose them? 
4. Replacements - Many times, people face evaluations that are too difficult for them to make. Instead of giving up, people often replace that decision with an easier one. For example, we may replace difficult questions like “Who should I vote for president?” with easier questions like “Which candidate is more likable?” These replacement evaluations guide our choices.  

How Cognitive Resources Impact the Decision-Making Process

Our minds consume fuel in the form of attention and cognitive energy. When we have a lot of fuel on hand and apply that