Goals: How Goals Shape Decisions

Goals shape how decisions are made by influencing information processing, risk preferences, decision complexity, strategy adaptation, and trade-offs between short-term and long-term objectives. If we understand how that can happen, we can design decision governance which helps stabilize or destabilize individual goals, align or misalign them with organizational priorities, as well as influence, among others, what information decision makers focus on, and thus, how they frame the choice they need 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.

Goals Shape Attention and Information Processing

Decision-makers tend to focus on information that is most relevant to their goals, a phenomenon known as goal-directed attention (Shah, Friedman, & Kruglanski, 2002). Goals influence the depth and breadth of information search. When decision-makers pursue well-defined goals, they often engage in narrow, heuristic-driven processing. Conversely, uncertain or conflicting goals lead to broader and more analytical information processing (Larrick, 2016). This principle is evident in various decision-making environments, where a targeted approach to gathering and evaluating information can lead to increased efficiency and improved outcomes. Over time, this focused approach can facilitate innovation by emphasizing the most relevant factors while minimizing distractions.

Goals Affect Risk Preferences

The relationship between goals and risk-taking is well-documented. According to Prospect Theory (Kahneman & Tversky, 1979), decision-makers tend to be risk-averse when pursuing gains but more willing to take risks when trying to avoid losses. Aspiration levels also influence risk-taking. Research by March and Shapira (1992) found that decision-makers take higher risks when their goals seem unattainable through conservative strategies. The commitment to a goal can push individuals toward unconventional or high-risk strategies, particularly when conventional methods appear insufficient to achieve their desired outcome. This suggests that goal-driven decision-making is inherently linked to how risks are assessed and managed.

Goal Conflict Leads to Decision Complexity

When decision-makers face multiple, conflicting goals, they may experience cognitive overload and resort to satisficing—choosing an acceptable rather than optimal solution (Simon, 1955). Goal conflict can also trigger decision inertia, where decision-makers delay action due to uncertainty about which goal to prioritize (Luce, 1998). Situations where individuals or organizations must balance competing priorities often require complex trade-offs, leading to hesitation or shifts in decision-making approaches. The presence of multiple stakeholders, ethical considerations, or external pressures can further exacerbate goal conflicts, making the decision process more intricate and requiring a more structured evaluation of alternatives.

Dynamic and Evolving Goals Alter Decision Strategies

Decision-makers often revise their goals in response to feedback and changing environments (Powell, Lovallo, & Fox, 2011). In escalation of commitment, individuals continue investing in failing decisions due to a strong attachment to original goals (Staw, 1976). Goal adaptation is also a topic in corporate strategy, where organizations adjust performance targets based on competitor benchmarks and past performance (Greve, 2003). As circumstances change, the ability to reassess and modify goals becomes a key competency in decision-making.

Short-Term vs. Long-Term Goals Influence Trade-offs

Short-term financial pressures can lead managers to prioritize immediate gains over long-term strategic benefits, a tendency known as myopic decision-making (Laverty, 1996). Organizations that set explicit long-term goals encourage decision-makers to consider sustainability, innovation, and stakeholder impact rather than just short-term profitability (Bansal & DesJardine, 2014). Effective decision-making requires a balance between addressing immediate concerns and maintaining a broader vision for future stability.

Ethical and Social Goals Modify Decision-Making Heuristics

When goals include very clear and significant ethical considerations, decision-makers tend to adopt deontological (rule-based) reasoning rather than utilitarian (outcome-based) reasoning (Bazerman & Tenbrunsel, 2011). Social responsibility goals lead organizations to weigh stakeholder interests more heavily, altering cost-benefit calculations and influencing corporate strategy (Aguilera et al., 2007). Ethical considerations introduce an additional layer of complexity, as decisions are no longer based solely on economic or operational efficiency but also on broader societal impacts.

References

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• Bansal, P., & DesJardine, M. R. (2014). Business sustainability: It is about time. Strategic Organization, 12(1), 70-78.
• Bazerman, M. H., & Tenbrunsel, A. E. (2011). Blind spots: Why we fail to do what’s right and what to do about it. Princeton University Press.
• Greve, H. R. (2003). Organizational learning from performance feedback: A behavioral perspective on innovation and change. Cambridge University Press.
• Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-292.
• Larrick, R. P. (2016). The social context of decisions. Annual Review of Organizational Psychology and Organizational Behavior, 3, 441-467.
• Laverty, K. J. (1996). Economic “short-termism”: The debate, the unresolved issues, and the implications for management practice and research. Academy of Management Review, 21(3), 825-860.
• Luce, M. F. (1998). Choosing to avoid: Coping with negatively emotion-laden consumer decisions. Journal of Consumer Research, 24(4), 409-433.
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• Shah, J. Y., Friedman, R., & Kruglanski, A. W. (2002). Forgetting all else: On the antecedents and consequences of goal shielding. Journal of Personality and Social Psychology, 83(6), 1261-1280.
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• Staw, B. M. (1976). Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action. Organizational Behavior and Human Performance, 16(1), 27-44.