Competence: Why And How Decision Quality Depends on Competence

The ability to make effective decisions is closely linked to an individual’s expertise, cognitive abilities, and confidence in their knowledge. Various psychological and cognitive mechanisms explain how competence influences decision-making, including self-efficacy, cognitive load management, heuristics and biases, risk perception, and metacognitive awareness. Understanding the relationship of competence and behavior in decision-making helps design decision governance to ensure that decision authority is given to the individuals with competence relevant for the decisions to make.

This text is part of the series on decision governance. Decision Governance is concerned with how to improve the quality of decisions by changing the context, process, data, and tools (including AI) used to make decisions. Understanding decision governance empowers decision makers and decision stakeholders to improve how they make decisions with others. Start with “What is Decision Governance?” and find all texts on decision governance here.

1. Self-Efficacy and Decision-Making Confidence

Self-efficacy, a concept developed by Bandura (1997), refers to an individual’s belief in their ability to successfully execute tasks. High competence often leads to higher self-efficacy, which directly influences decision-making behavior.

• Competence → Self-Efficacy (Expertise increases confidence in one’s ability to make decisions.)
• Self-Efficacy → Decisiveness (Higher self-efficacy leads to greater confidence in making choices and reduces hesitation.)
• Decisiveness → Efficient Decision-Making (Confidence allows for faster and more effective decision execution.)
• Example: A financial analyst with extensive knowledge in risk assessment is more likely to make confident investment decisions compared to a novice.

2. Cognitive Load Management and Processing Efficiency

Cognitive load theory (Sweller, 1988) suggests that an individual’s ability to manage information effectively is influenced by their level of competence. High competence enables individuals to allocate cognitive resources efficiently, enhancing decision-making quality.

• Competence → Cognitive Load Reduction (Expertise allows for automatic processing and reduces cognitive strain.)
• Cognitive Load Reduction → Faster Decision-Making (Less cognitive strain results in quicker information processing.)
• Faster Decision-Making → Improved Accuracy (Efficient processing enhances the quality of decisions.)
• Example: A seasoned emergency physician can diagnose and treat a patient faster and more accurately than a medical intern due to lower cognitive strain.

3. Heuristics and Biases: Expertise as a Moderator

Decision-making is often influenced by heuristics—mental shortcuts that simplify choices (Tversky & Kahneman, 1974). While heuristics can introduce biases, competence helps mitigate their negative effects.

• Competence → Reduced Susceptibility to Cognitive Biases (Experts recognize when heuristics lead to errors.)
• Reduced Biases → Rational Decision-Making (Mitigating biases leads to more objective and logical choices.)
• Rational Decision-Making → Higher Decision Quality (Better reasoning improves outcomes.)
• Example: A seasoned negotiator is less likely to fall prey to anchoring bias when assessing an initial price offer compared to an inexperienced counterpart.

4. Risk Perception and Decision Framing

Competence influences how individuals perceive and assess risks, which in turn affects decision-making behavior (Slovic, 1987).

• Competence → Accurate Risk Perception (Experts assess risks more precisely.)
• Accurate Risk Perception → Balanced Risk-Taking (Realistic assessments lead to calculated risks rather than avoidance or recklessness.)
• Balanced Risk-Taking → Strategic Decision-Making (Optimized risk-taking improves long-term success.)
• Example: A professional investor understands market volatility better than an amateur and thus makes more calculated investment decisions.

5. Metacognitive Awareness and Decision Evaluation

Metacognition refers to an individual’s ability to reflect on their thought processes (Flavell, 1979). High competence enhances metacognitive awareness, leading to better decision evaluations.

• Competence → Metacognitive Awareness (Experts are more aware of their cognitive strengths and limitations.)
• Metacognitive Awareness → Improved Decision Monitoring (Ongoing evaluation enhances decision accuracy.)
• Improved Decision Monitoring → Adaptive Decision-Making (Continuous learning leads to refined strategies over time.)
• Example: A seasoned chess player critically evaluates their previous moves and adjusts strategies for future games.

6. Experience-Driven Pattern Recognition and Intuition

Experienced professionals develop an ability to recognize patterns based on past decisions, leading to intuitive decision-making (Klein, 1998).

• Competence → Pattern Recognition (Exposure to repeated decision-making scenarios enhances pattern recognition.)
• Pattern Recognition → Intuitive Decision-Making (Recognizing patterns allows for rapid, experience-based decisions.)
• Intuitive Decision-Making → Effective Real-Time Choices (Experience-driven intuition leads to better spontaneous decisions.)
• Example: An air traffic controller can quickly resolve navigation conflicts based on past experiences and pattern recognition.

7. Emotional Regulation and Stress Resilience

Competence contributes to better emotional regulation, reducing stress and enhancing decision-making under pressure (Gross, 2015).

• Competence → Emotional Regulation (Experts handle stress better than novices.)
• Emotional Regulation → Clear Thinking Under Pressure (Lower stress improves cognitive functioning.)
• Clear Thinking → High-Quality Decision-Making (Rationality improves outcomes in high-stakes situations.)
• Example: An experienced firefighter remains composed and makes quick, effective decisions in emergencies.

8. Social Influence and Decision Authority

Individuals with high competence are often granted greater authority in decision-making contexts, influencing group decisions (French & Raven, 1959).

• Competence → Perceived Authority (Expertise increases others’ trust in decision-making.)
• Perceived Authority → Influence Over Group Decisions (Experts shape collective choices.)
• Influence → Organizational Decision Outcomes (Competence-driven influence leads to optimized group decisions.)
• Example: A senior scientist’s recommendations in a research committee carry more weight than those of a junior researcher.

Summary of the Mechanisms

The diagram below visualizes the mechanisms through variables and labeled edges reflecting the rules used to describe each mechanism. Labels match section numbers above.

References

• Bandura, A. (1997). Self-efficacy: The exercise of control. Freeman.
• Flavell, J. H. (1979). Metacognition and cognitive monitoring: A new area of cognitive-developmental inquiry. American Psychologist, 34(10), 906-911.
• French, J. R., & Raven, B. (1959). The bases of social power. In D. Cartwright (Ed.), Studies in Social Power. University of Michigan Press.
• Gross, J. J. (2015). Emotion regulation: Current status and future directions. Psychological Inquiry, 26(1), 1-26.
• Klein, G. (1998). Sources of power: How people make decisions. MIT Press.
• Slovic, P. (1987). Perception of risk. Science, 236(4799), 280-285.
• Sweller, J. (1988). Cognitive load during problem-solving: Effects on learning. Cognitive Science, 12(2), 257-285.
• Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131.