PSYCHOLOGY OF CHOICE: DECISION MAKING AS A COMPONENT OF THE MANAGEMENT PROCESS

Abstract

Choice is an integral and the most complex part of decision-making in the management process. In modern conditions, the effectiveness of management depends on the quality of information, motivation and communication (vertical and horizontal), defining the organization's goal and choice alternatives, selecting one of the options, and controlling the implementation of the choice. Choice characterizes every stage of the management decision-making process: from identifying the problem that needs to be solved and determining priorities based on the organization's goals to searching, analyzing, and interpreting information related to the problem and the range of its solutions, evaluating, and choosing. A separate stage is the implementation of the chosen option (one of the choice alternatives) and control over the implementation of the decision and its consequences. Among the applied choice methods in the process of decision-making in management activities, expert assessment, brainstorming, game theory, decomposition method, trial and error method, checklist method, etc., should be noted. The psychology of choice substantiates the factors of decision-making in conditions of uncertainty: the impossibility of quantitative measurement of indicators, the analysis of complex management tasks and challenges, limited resources, etc. In all decision-making methods and models, the psychology of choice complements rational behavior, which is a sign of the “economic man” model. The psychology of decision-making choice as a component of the management process focuses on situations of uncertainty and “bounded rationality”. Psychological factors of management activity are decisive at all stages of decision-making. The psychology of choice plays a crucial role both in “weighing” benefits and costs and for methods of expert assessment, brainstorming, and decomposition. Decision-making in conditions of uncertainty requires taking into account “bounded rationality” and the lack of basic resources – time and finance. This is fully manifested in the administrative (behavioral) model of decision-making. The classical model is criticized in modern conditions, but the development of artificial intelligence and communication networks allows predicting the emergence of new management models.