Decision Making

In life, we make decisions all the time. A decision is a selection of an action from among many available options. Some decisions have minor impact (selecting an ice cream flavor), while others can have life changing consequences (choosing a life partner), and everything in between. 

We make a decision to achieve a desired consequence. For decisions whose impact is expected to be significant, we want to invest significant resources to select the right option. However, the actual consequences of our decision may or may not be what we desired. Sometimes, decisions which seemed insignificant may have a major impact, and at other times, the reverse may be true. Nevertheless, a better decision making process can help us meet our expectations more often than not.

Types of decisions

Broadly speaking, there are three types of decisions where the expected impact is significant--Intuitive, Immediate, and Deliberative, as described below. In this blog, my focus will be mainly on deliberative decisions. 

1. Intuitive: These decisions are ones we make when we have a repeatable and practiced situation. Examples include shot selection in tennis, cops handling a heist scene, etc. In these cases, the decision makers have practiced extensively in similar situations, and act instinctively. In this case, the resources in making the decision have been invested beforehand in anticipation that the decision will be impactful.
2. Immediate: These decisions are ones that we need to make in a hurry, and do not have much time to think. Examples are helping a injured person in a car crash, taking a picture of once in a lifetime event, etc. In this case, we spend minimal resources and hope for the best.
3. Deliberative: These decisions are made after due consideration, and the impact is significant, and generally long-term in nature. These decisions require careful analysis and multiple inputs. Often (but not always), the decisions can also be adjusted over time as we learn more, or as the environment changes.

Overview of Deliberative Decision Making Process

Deliberative decisions have a significant impact, and require a choice from many options. Therefore, we must take our time, and evaluate the decision in multiple ways to ensure optimal results. As a first step, we should determine if we have the time and resources to make a high-quality decision. If not, mark a more suitable time on the calendar, and revisit it later.

If we have the time, then we should engage in a process that systematically allows us to arrive at an optimal decision. Note that the future is unpredictable, and we have neither all necessary information, nor the capacity to process it, and therefore we can only come to a decision that has a high probability of being good under the best of circumstances.

While deliberating over the decisions, we must beware of multiple traps that can lure us into sub-optimal decisions. We should avoid getting swayed by our emotions, and various biases that can affect our decisions. It is also important to follow a well-defined process that is accepted by all concerned parties to avoid later disagreements.

The process we describe here is named by its initials as WRAP[1]. It consists of four major stages:

• Widen your options.
• Reality Check
• Attain Distance.
• Prepare for the future.

In the rest of this blog, we go over these in more detail.

Biases to Avoid

There are many biases that can effect our decision making. By being conscious of these biases, we can make an effort to stay clear of them and carry out a more rational analysis.

Confirmation Bias

There is a tendency to place greater emphasis on factors that confirm our opinions, and discount factors which negate them. Confirming our opinions gives us greater pleasure, and negating them is uncomfortable. To make a better decision, it is important to focus on the facts as they are, whether they confirm of negate our long-held views.

To overcome confirmation bias, one should seek out opinions of people who hold different opinions, and examine them carefully. What are the rationales for the different opinions, what data exists to support each position, and how can we reconcile this information to form better opinions.

Analogy Bias

We may analyze a situation by comparing it to another situation which is similar in some respects. This can be a powerful technique to make decisions quickly in difficult situations. However, no two situations are exactly alike. We must carefully examine if the similarities are relevant to the current situation, and more importantly, if there are crucial differences which make the analogical reasoning faulty.

Overcoming this bias requires careful analysis of similarities and differences between the two situations. Used correctly, this can be a powerful technique to arrive at good decisions, and even to realize the need to make a decision. But incorrect application can be disastrous.

Availability Bias

Information that is more recent, or more readily available, tends to occupy a greater slice of our attention than older or more distant information. For example, watching a news report of a plane crash might make people more afraid of flying, even though one is much more likely to die in a car crash.

To overcome this bias, one should objectively examine all evidence, not just the readily available one.

Expectation Bias

When we perceive data that we expect, even when there is no such data, we suffer from expectation bias. 

Analogy Trap

When we base our decision on similarity with another situation, ignoring differences that are important, we fall into the analogy trap.

A Process to Make Good Decisions

There are several steps to making a good decision. 

Widen Your Options. 

This step of the process allows you to expand the choice of options available. This will make it more likely that the best option will be found. How to widen the options? Here are some strategies to generate more options than found at first.

• Opportunity Cost. For each option, consider the opportunity cost of the option. What are we giving up in selecting the option. This will help identify other possibilities that may lie hidden. 

• Remove Option. What if the option was not available? What will we do then? Brainstorming this can lead to discovering other choices that may not be apparent at first.

• Multi-tracking. Have multiple people or teams independently construct lists of options without interacting with each other. This leverages the different experiences of different people without influencing each other. 

• Copy Others. Investigate if others have encountered the same problem before, and how they solved it. Their solution may be applicable to your problem, possibly with some suitable modifications. 

Reality Check

Once you have narrowed down the list of options to one or two attractive ones, it is time to validate them. 

• Consider the Opposite. 
• Seek out evidence that disconfirms the choice. Are we making the decision by ignoring uncomfortable facts? 
• Appoint a Devil's Advocate. Should question the assumptions and the choices. Can we defend the decision?
• What will have to be true for the option to be feasible.
• Zoom out and in. Look at the broader context of the problem. Then look closer to examine in detail. Ensure that all angles are covered.
  
• Tip the toes. If possible, try on a smaller scale first. A pilot project can help identify any gaps and missed factors in the decision.
  

Attain Distance

Once the distance has been made, it is important to look at it from the outside. This helps in staying away from emotional decision-making.

• Apply the 10/10/10 rule. How will I feel 10 hours from now about the decision? How about after 10 days? After 10 months? Am I making the decision in excitement, and will regret later? Here, 10 is not a magic number. It is a short-hand to remember to consider short-term, medium-term, and long-term consequences. Use the time interval that is appropriate for each decision.
  
• Think as if giving advice to someone else. We are more objective when advising others than when thinking for ourselves. To avoid falling in this trap, imagine that you are giving advice to a third party. That will help get a more objective analysis of the situation.
  

Plan for Failure

No matter how well you thought through the decision, there is always the possibility that it will not work out as planned. Prepare contingency plans if it fails.

• Bookend the future. Imagine the best and worst case scenarios. Be realistic. Then see where the decision falls in this spectrum. Ideally, the decision should fall closer to the worst case than the best case. This way, you are more likely to have an upside than a downside from the decision.
  
• Set a tripwire. Often, the situation deteriorates gradually, and we slide into it without realizing when to hit the brakes. To avoid this, set up a tripwire--a condition which will warn of the decline, and prompt you to change the direction.

Trust the Process.

Above all, have faith that the process will help make better decisions--more often good ones than bad ones. Follow the steps and choose as dictated. That is not to say that the decisions will always be the best, but over time, as practice makes perfect, the quality will improve.

Action Plan

Of course, making the decision is only the first step. One needs to make an action plan, and execute to carry through the decision. Without this step, the decision will not make any difference.

Postmortem

Just as important as the action plan, after the results are in, we must evaluate the decision against the actual results, and extract any learnings, whether from success or failure.

References

[1] Decisive : how to make better choices in life and work / Chip Heath and Dan Heath.