Individual Decision-Making:
- Involves choices made by a single person based on their preferences, goals, and available resources.
- The individual weighs costs and benefits to arrive at a decision that maximizes personal utility.
- Example: A person deciding how to spend their salary between saving and leisure activities.
Collective Decision-Making:
- Involves choices made by a group or society, often through mechanisms like voting, consensus, or representation.
- Requires aggregating diverse preferences into a single decision, balancing individual interests and societal welfare.
- Example: A city council deciding whether to allocate funds for public parks or road infrastructure.
Key Differences:
- Preferences: Individual decisions are based on personal preferences, while collective decisions must reconcile diverse, and often conflicting, preferences.
- Complexity: Collective decisions involve coordination, negotiation, and compromise.
- Outcome: Individual decisions directly impact the decision-maker, whereas collective decisions affect a broader group.