Decision-making under Uncertainty: A Cognitive Approach

Abstract

Conventional economics believes that individuals are rational in their decisions based on five factors such as: considering all known options; using the maximum amount of available information; determining the precise weight -albeit subjective- of the costs and potential benefits of each option; accurate calculation -albeit subjective- of the various possible consequences; and the maximum amount of common sense considering all factors; are seeking to make sensible decisions. However, these factors have not always been fully established, perhaps even Individuals may be exposed to the uncertainty that jeopardizes decision-making. This is an applied and developmental research, with the type of library study and using the new findings of cognitive science, he explains how to make decisions under uncertainty. The findings of this study indicate the role of OPFC in decision-making, especially in the face of emotional factors and complex decisions that are all made by the PFC. In the face of risks of uncertainty, both of VPFC and VS sectors are active. The striatum is associated with loss aversion of people. Also, the role of the striatum in learning and habit formation can also be mentioned; so that information about uncertainty transmits through the striatum to the PFC section, and because the striatum transmits information to the brain via dopamine neurons, so by repeating behavior and receiving a reward, that behavior has become a habit, then belief Systems and mental models have been formed. Repeating uncertainty ultimately disrupts an individual's cognitive system, creates irrational beliefs, and increases people's uncertainty.