Social Functionalist Approach

The Psychological study of decision making began after theories were introduced in order to understand an individual’s thought process when faced with decisions. The aim of these theories was to examine whether or not humans are rational decision makers by introducing probabilities and the evaluation of risk. This essay will evaluate The Expected Utility Theory, The Prospect Theory and other potential influences to decision making. As well as state both the strengths and weaknesses of them, in order to determine how they have contributed to the understanding of human thought and decision making.

The Expected Utility Theory has been the framework for evaluating an individual’s decision making in cases of risk and uncertainty for the last
Due to this, it is also important to consider other potential decision making influences. The Social Functionalist Approach is used in order to analyse the decision making structure (Leinhardt, 1977). This approach was introduced by Tetlock in 2002, In order to identify the importance of social factors during the decision making process. (Michael W. Eysenck, Mark T. Kean, DATE?). In 1992 a study was conducted by Simonson and Staw, on the Sunk Cost Effect, during this study they analysed the effects of accountability in decision making. Some of the students that participated in this experiment were informed that their answers may be shared with instructors and other students, this was known as the high accountability condition. Other students were informed that their answers would be kept confidential, this was known as the low accountability condition. The participants that had the high accountability condition were more likely to continue with their decision even if it was not effective, as they felt the need to justify their decision to the other individuals. This shows that individuals are likely to feel more pressure if they are presented with a decision which other individuals may be aware
The first major Theory was The Expected Utility Theory, which indicates that individuals are likely to choose the decision that is the most valuable, but although this is true, this theory can account for unnecessary risk taking, which in turn can cause an unwanted outcome. The Prospect theory on the other hand accounts for certain biases within decision making however this does not take into account other aspects of decision making, such as the probability and other potential influences. The Social Functionalist Approach also shows that individuals are likely to feel pressured to make certain decisions, this may indicate that they are not making a decision based on what they believe, but rather what other people perceive as the correct decision. The Expected Utility Theory and Prospect Theory do show that although humans do appear to be rational decision makers in some sense, although this is not always the case, as there can be many things that can influence an individual’s decision, and due to this it is not possible to determine whether or not humans are indeed rational decision makers based entirely on