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How to Make Better Decisions

2011 March 13

Making decisions is probably the most important thing that we do.   If we are in a position of responsibility, our choices will determine not only our own fate, but those of others as well.

So it’s frustrating that we make almost all of our important decisions under some kind of duress.  We rarely have enough time or information.  We want to go with our gut, but at the same time feel the great weight of responsibility telling us to be rational.

Fortunately, over the past few decades researchers have gained insight into how our decision process works, what can go wrong and how we can make better decisions.

The Emotional Brain

Antonio Damasio is one of the world’s top neuroscientists.  In Descartes Error, he describes a patient, “Elliot,” a successful businessman who had a small brain lesion that affected his ability to feel emotion.  Although he suffered no loss of intelligence, Elliot could no longer make decisions.

This research formed the basis for Damasio’s somatic marker hypothesis, which posits that our bodies store information about past experiences that guide our decision making.  When we “go with our gut” we are really relying knowledge gained in past encounters with similar situations.

Another researcher, Joseph Ledoux, had similar findings.  He pointed out that our body reacts much faster than our mind, as when we jump out of the way of an oncoming object and only seconds later realize what happened.  He also found that when we experience emotions, chemicals are released that promote memory and learning (a good reason for advertisers to incite emotional reactions in advertising).

Both scientists have been at the forefront of a paradigm shift in how we think about making good decisions.  Since the time of Plato, it has been assumed that our choices are best informed by our rationality.  In many cases, however, the opposite is true.

Rational Thinking

Emotions, however, can sometimes lead us astray.  Jonah Lehrer, in his bestselling How We Decide, spends two whole chapters chronicling dozens of examples when our gut feelings can get it wrong.

For instance, we tend to weigh losses heavier than gains, a penchant that hampers the performance of Wall Street traders.  Moreover, anybody who has gambled in a casino is familiar with our habit of seeing patterns, whether they are really there or not.  Early in the 20th Century, economist John Maynard Keynes insisted that booms and busts were driven by “animal spirits” more than reality.

In Predictably Irrational, behavioral economist Dan Ariely devotes an entire book to how our emotional circuitry  can lead us to do all sorts of foolish things.

One of the most common is called anchoring, the tendency to process new information according to a previous context.  For instance, when asked to write down the last two digits of their social security number, research subjects with higher values will bid more in a subsequent auction.

In many stressful, high stakes occupations, like flying airplanes and Wall Street trading, training focuses on ignoring emotions.  Successful practitioners are able to bypass the signals their body is sending them and focus on more objective measures, which is why both professions have very elaborate screens full of indicators in front of them at all times.

Learned Irrationality

With funding from the US Military, Gary Klein set out to find out how people actually make decisions under pressure and whether the process can be improved upon.  He was initially shocked at what he found: People who make life or death choices often do so with seemingly no process at all.

One example he gives in his book, Sources of Power, is that of a fireman who responded to a routine kitchen fire.  While they were spraying water on the fire, the lieutenant got a bad feeling and ordered everybody out.  Seconds later the floor collapsed.  If not for his order they would have been killed, or at least very seriously injured.

The fireman attributed his life saving “gut” decision to a natural “6th sense” he had about fires.  However, during subsequent interviews, some cues became apparent.  It was too hot for a kitchen fire, wasn’t responding to the water hose and was too quiet – all of these things were out of place and indeed the fire was emanating from the basement, not the kitchen.

Something felt wrong because the situation violated the fireman’s conception of what was normal based on his experience with previous kitchen fires.  His”6th Sense” wasn’t innate, it was learned.

Guidelines for Better Decisions

Good decision making is a confusing mix of emotions, rationality and instinct gained through experience.  While much of the evidence can seem contradictory, there are a some good rules of thumb emerging from the research.

Trust your instincts within your sphere of competency: Joseph Ledoux’s research shows that as we build experiences, we build synapses.  These are pathways in the brain that automatically kick in whenever we encounter a situation and why athletes train the same motions over and over again in order to build “muscle memory.”

If you are making a decision within your area of expertise, it’s best to trust your gut.  Chances are that you are subconsciously taking in a lot more into account than your rational brain realizes.

Think about new problems: In unfamiliar situations, however, it’s best to think things through.  The impulse to run from danger has no relevance on a trading floor or in an airline cockpit.  Successful professionals in such areas have learned to ignore those signals and act on their rationally.

When we are put into the position of making a decision for which we have no experience, our instincts are more likely than not to steer us wrong.  Therefore, it’s best to look for objective indications about the best course to take.

Re-examine your assumptions: We make our biggest blunders not when we are uncertain, but when we are completely sure of ourselves.  That’s when we tend to throw caution to the wind and run the risk of getting ourselves in deep trouble.

When you make a decision, you can’t check every fact.  However, it is a good idea to do a quick review of your assumptions and imagine the consequences if those conjectures are wrong.  If the repercussions of a false premise are grave, and time allows, you might want to do some more checking or at least hedge your bets.

Understand your own thinking: One of the most important aspects of decision making is understanding the choices you make.  Examining your own thinking will not only improve your results, it will allow you to learn from your inevitable mistakes.

Avoid consistency for consistency’s sake: It is natural to feel committed after making a decision, even a bad one.  Yet there is no reason to double down on a bad bet.  If it is within your power to make a decision, it is also within your power to change it.

Make Decisions, Make Mistakes and Engage in Deliberate Practice: Like anything else, good decision making takes practice.  The more decisions you make, the better you get at it. The worst thing you can do is make no decision at all.

Inevitably, this will mean that you will make mistakes.  However, that is how you learn.  Anders Ericsson, one of the world’s top experts on performance and expertise, emphasizes the importance of deliberate practice (pdf) which focuses on weak areas.  In a similar vein, the US Military puts a heavy emphasis on after action reviews, to improve the choices that commanders make.

Perhaps most of all, you have to make peace with the fact that having responsibility means that you have to make decisions and that some of those decisions will be wrong.  Fortunately, it is rare that any one decision will determine your fate.  A mistake can always be corrected.

A good decision doesn’t have to be perfect, it only needs to get the job done.

- Greg

11 Responses leave one →
  1. March 13, 2011

    Hi Greg,

    So many really great points in this post. Your final paragraph is really important. I think so many people are afraid to make the wrong choice and end up making no choice at all. This of course leads nowhere except to procrastination and is totally ineffective. Yes, we will all make mistakes, it is part of living, but if we learn from our mistakes and don’t keep making the same ones over and over again, they were not for naught. Great point about how if we know we have made a bad decision, we need to make another decision to reverse it and do something about it. It is not always easy to accept that fact that we did something really dumb – and undo it. I have been known to do that on more than one occasion. You know the times when you know full well that you really need to get yourself out of a situation made by a bad decision, but being stubborn or thinking you can change things to make it “work”? Trying to minimize occurrences of this in my life :)

    Thanks for sharing your insights!

    [Reply]

    Greg Reply:

    Thanks, Julie. I think we all have made some pretty bad decisions, yet when I think back, most of my regrets have to do with not doing anything when I knew I should have. Problems don’t get any easier to deal with by waiting, they usually fester and get worse.

    btw. If you have a chance, read the Ericsson paper on deliberate practice that I linked to in the post. Excellent!

    - Greg

    [Reply]

  2. March 14, 2011

    And perhaps this “A good decision doesn’t have to be perfect, it only needs to get the job done” is the most poignant point in all of this article. An article, may I add, filled with mind-creaking (or indeed, heart-moving) insight.

    As ever, Greg, well shared.

    Ben

    P.s. Just done some business out in Poland. Is there anything of yours still live, public or existing that I should have spotted while I was out there? :-)

    [Reply]

    Greg Reply:

    Thanks Ben. I hope you enjoyed Poland. I spent some of the best years of my life there and still miss it.

    - Greg

    [Reply]

  3. April 6, 2011

    Greg,

    That Ericsson paper is nearly 50 tightly-packed pages long! I’ve taken the decision not to read it – I hope I don’t regret it!

    But another excellent post – thanks from one of your many silent but enthusiastic followers!

    Andrew

    [Reply]

    Greg Reply:

    Andrew,

    I think you can get the gist from the 10,000 hour rule, but some people like to read the original source. Gladwell’s “Outliers” and Geoffrey Colvin’s “Talent is Overrated” both cover it pretty well if you’re interested.

    Always glad to hear from enthusiastic readers, silent or otherwise!

    - Greg

    [Reply]

  4. September 30, 2011

    Greg,

    Great article! Too often, we get stuck in our own ruts, and we make un-engaged choices that either keep us stuck or throw us off to a wrong path. Getting out of our comfort zones to experience new things and gain new perspectives will facilitate better choices.

    Really enjoyed your article… thank you!

    Jon
    Jon M´s last blog post ..Is Your Soul Flow Open or Closed?

    [Reply]

    Greg Reply:

    Thanks, Jon!

    Have a great weekend!

    Greg

    [Reply]

  5. December 10, 2011

    Greg, thanks for the excellent post. It is very useful. I would recommend it.

    [Reply]

    Greg Reply:

    Thanks Stan.

    - Greg

    [Reply]

  6. August 8, 2012

    Hi, I read this article. Its really too good.

    [Reply]

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