Why Decision Making Is Always Personal

Both the Decision and Psychological Contexts influence every decision we make.

A previous version of this post was published on Psychology Today.

Photo by pine watt on Unsplash

Is the latest iPhone a good value? Should you accept that promotion you’ve been offered? Should you pay to have someone come and fix your leaky toilet or fix it yourself? Although we might delude ourselves into believing there’s an objective way to approach these decisions (and many others), such objectivity isn’t truly possible. That’s because the decisions we make are shaped not just by the options available but also by how we interpret them—a process heavily influenced by our psychological and decision-making contexts. These contexts form the frame of reference for that decision.

Our frames of reference are extremely important for making decisions that are consistent with our values, aligned with our preferences, and relevant to our past experiences. They are helpful in making decisions that work for us, but that also means they add subjectivity to those decisions. This isn’t necessarily a bad thing, unless we forget about that subjectivity and erroneously conclude that others are or should be applying the same frames of reference as we are. That’s when we run into problems.

Frames of Reference

A frame of reference is the context within which we interpret the world, evaluate various decision options, and reach conclusions. Although it might sound rather simplistic, we can parse the frame of reference into two key elements when it comes to decision making.

The first is the decision context. This refers to the specifics of the decision situation, elements that would be exactly the same no matter who was in that particular decision situation. For example, in the question I posed above about the latest iPhone, in the year 2025, the version of the iPhone under consideration and the absolute cost of that phone would be the same no matter who was making the decision.

The second element is the psychological context. This refers to the decision maker’s interpretations of the decision situation, which is influenced by the person’s attitudes, beliefs, and prior experiences. In the iPhone example, this would relate to factors such as the decision maker’s attitudes about iPhones (and smart phones in general), experience with them, and knowledge of the latest version’s capabilities; the length of time since the person’s last phone purchase; and his/her current financial situation.

The psychological context isn’t static. It can be influenced by new information, changes in circumstances, or even how options are framed to us¹. So, while the question itself has only two options (yes or no), how people derive whichever conclusion they reach may be premised on different justifications. For example, an Android user with a very negative attitude about iPhones might automatically conclude the answer is no, but so might an iPhone user who recently bought a phone and finds the price of the new iPhone to be too steep.

Decision making ends up being a result of the interplay between the decision context and the psychological context. But changing elements of the decision context can also alter the psychological context. For example, someone deciding on the iPhone question might reach one conclusion in 2010 but a different conclusion in 2025.

Smets (2021) used prior research to provide a terrific example of how changing the decision context can elicit a different psychological context when he discussed the issue of mental accounting:

In the first version, as you arrive at the theatre, you notice you have lost $10: will you still pay $10 for a ticket? 88% of their participants said they would do so. In the second version, you have bought the ticket in advance, but upon arriving you notice you lost it. In this case, only 46% of their respondents would buy a new ticket.

The actual loss is exactly the same in both cases, yet the reaction is very different. We act as if we have multiple budgets, alongside unallocated cash. In the second case, we already depleted the theatre budget, and so we may not be able to justify buying a second ticket; in the first case, we have lost unallocated cash, so we would still only be buying the one ticket. (para. 3-4)

The above illustrates how changes to the decision context can also alter the psychological context that shapes our decision making. Such changes can affect the heuristics we use to make decisions and how we employ them. It should also illustrate the dangers of evaluating the decisions made by other people. It can be quite easy to make accusations about others’ decision making if we fail to consider that person’s frame of reference.

Frames of Reference and Biases

The decision and psychological contexts form the frame of reference within which we make decisions, with the psychological context being influenced by our beliefs, attitudes, preferences, values, and past experiences. Biases—our predispositions to favor certain conclusions² —are a central part of the psychological context. The stronger the biases at play, the more likely those biases will dictate the frame of reference for that decision.

Our biases also influence how we perceive and evaluate decision contexts by influencing what information we prioritize or dismiss. This selective attention often narrows the psychological frame of reference, focusing on details that align with our existing preferences. For instance, in familiar contexts like choosing a smartphone, a strong bias—such as a preference for Android phones—might lead someone to highlight flaws in the iPhone or emphasize advantages of Android devices. Similarly, initial impressions or anchors—like the iPhone's price—can impact how we evaluate its value compared to other smartphones. These biases can create frames of reference that feel logical but are subtly skewed by selective attention to specific details.

Returning to our iPhone example, an Android user’s biases may cause that person to evaluate the iPhone’s value through a lens favoring Android devices, leading to consistent conclusions that no iPhone would ever be worth purchasing. However, someone with weaker biases might consider factors like the iPhone’s features or cost and be much less likely to outright reject the purchase of an iPhone.

Strongly held biases can also explain why people apply consistent frames of reference even when decision contexts vary. For example, people strongly biased to follow traffic laws may rarely find themselves justifying speeding³. In such cases, only significant situational factors are likely to override the bias.

In other situations, our frames of reference may depend less on strongly held biases and more on aspects of the psychological context specific to that decision. In the iPhone example, this might mean being influenced more by factors such as age of one’s current smartphone, satisfaction with one’s current brand of cellphone, and the whether the cost of the new iPhone aligns with expectations for smartphone pricing⁴. These influences can shift the psychological frame of reference and lead to different conclusions, even for similar decisions.

So What?

Because frames of reference play a large role in our decision making, recognizing how changes to a frame of reference can alter the conclusions we reach can help us better understand not only our own decision making but also the decision making of others. It is not uncommon, for example, for us to apply our own frame of reference when assessing the decisions made by others.

This is not necessarily problematic, but it can lead to a judgment about others’ behavior that is devoid of nuance, erroneous, or misleading. We see this, for example, when people apply a modern frame of reference to evaluate the decisions made by prior generations or rush to judge someone based on incomplete or ambiguous information. In the former example, we apply a frame of reference that may be far removed from the frame of reference that would have been most reasonable to apply. In the latter example, the frame of reference we apply is often incomplete, relying on assumptions we make about that situation, which may cause us to ignore some of the currently unknown pieces of information that could alter the frame of reference.

In both cases, perhaps it would be wise to be more discerning regarding the frame of reference we are applying and recognize that there may be alternative explanations that could be reasonable. Reflecting on the biases and heuristics that shape our psychological context can also help us identify potential blind spots. Asking questions like, “What assumptions am I making?” or “How might someone with different experiences view this situation?” can help us broaden our perspective. Ultimately, understanding frames of reference allows us to approach decisions—and evaluations of others’ decisions—with greater empathy, nuance, and critical thinking.

1. Research on decision framing has shown that subtle shifts in how information is presented can profoundly alter preferences—even if the actual options remain the same. Kahneman and Tversky (1981) largely began the exploration of studies in this domain.

2. As I discussed in my post on heuristics and biases.

3. This does not mean such situations are nonexistent. Rather, there must be a strong motivation necessary to override the bias.

4. By no means is this an exhaustive list.