We can certainly improve our decisions – Harvard Business Review
Click here to read the ORIGINAL ARTICLE: “3 Ways to Improve Your Decision Making.”
We can find out that there is a very short list of specific rules that will help us improve our decision-making processes.
By Walter Frick, dated January 22, 2018
As stated in the original article:
The first rule refers to how “certain” we pretend we are about our decisions
“Nobel-prize-winning psychologist Daniel Kahneman has said that overconfidence is the bias he’d eliminate first. It’s ubiquitous.”
Then, the author suggests that we can improve our decision-making by simply finding out how we can be brave and accept that it is impossible to be certain about our decisions. Overconfidence is sometimes a habit that can be controlled by simply revisiting the logic of our decisions.
A second rule suggests that we take an outside view
The author suggests we ask ourselves “How often does that typically happen?”
This is highly beneficial since sometimes we are overloaded with the specifics (our own close view) of the decision, which simply does not let us do a formal and solid analysis. Instead, we should consider similar cases, asking ourselves “how often does this happen?”.
Finally, we can think in terms of probability
That is, if we know the basic elements of probability, we can avoid common errors in logic.
Let us do a simple test: if we drop a coin, it can go down as face or tail. The simple question could be: what are the chances we get either? And a simple answer would be “50% face, and 50% having tails”.
Given that, if we are allowed two throws, then what is the probability of getting at least one face? The simple answer would be: 50% probability of getting face, twice = 100%, or 50 + 50% = 100%.
However, that is not the right answer. Unique probabilities should be multiplied. The probability of not getting face in each throw is 50%. The probability of not getting face twice in a row is 50% x 50% = 0.50 x 0.50 = 0.25 or 25%. That is, the probability of getting at least one face is 100% – 25% = 75%.
These are the simple calculations we should not only learn, but really come to terms with, until we fully understand them. If we manage that, cognitive biases will be greatly reduced.
The author suggests that we “spend just a few minutes, or hours, and learn about it: this will help you with the first two rules. You’ll be able to better express your uncertainty and to numerically think about it. The three rules are more powerful when used together.”
Read the full article by clicking here.
