What makes a good decision maker? — — Study notes from Cassie Kozyrkov’s Decision Intelligence course (Part Two)
In my last post, “What makes a good decision maker? (Part One)”, I summaries 4 important study points from Cassie Kozyrkov’s course on Decision Intelligence, and in this post I will continue to share another 6 points from this course.
5. The value of clairvoyance
When you are having a hard time to make a decision, imagine you have a clairvoyance. From the clairvoyance, you can tell how much effort, information, and data you need to put forward a decision, and visualize the best and the worst scenarios that could come out of your decision.
Use your intuition if it’s an easy and quick decision, for example, what to eat for lunch. In another word, don’t overspend your effort where the stakes are low. When you are practicing these skills for low stake decisions, you are growing your skills as a decision maker for high stake decisions.
However, good decision requires structured and high value information. In such situation, you should avoid using intuition, instead, you should rely on expertise. That’s the reason why we have so many professionals in our modern life, such as doctors, lawyers, data analysts, accountants, etc. We need professionals’ expertise to make decisions for our health, legal rights, investment and others.
6. A hackable human
Some people think they can make certain things happen or not happen by will power. Though it sounds anti-scientific, decisions ARE affected by biological factors. For example, you may not make good decisions when you are not getting enough sleep, being emotional, and/or under stress. How to change it and prevent yourself from making bad decisions? Cassie’s advise is that “Pre-hack yourself.” “Pre-hack yourself” means creating optimal conditions, preventing yourself from making bad decisions in bad moment, and revisiting the situation when you are in a better condition.
7. Principal-agent problem
Principal-agent-problem basically is a conflict in priorities between owner and manager. To prevent manager’s actions from harming owner’s interest, the owner has to create constrains to prevent managers from doing things out of his own interest. In decision intelligence, the long-term you is the owner of the company, the board, and the short-term you is the agent, the manager. You can act as the owner of the company and create constrains for short-term you.
For example, the long-term you want to be healthy, but the short-term you want to eat 4 scoops of ice cream. In order to realize the long-term goal of being healthy, the long-term you can create a constraint for the short-term you. Say the constraint is: only 1 scoop allows.
8. Why are people indecisive?
People are being indecisive for a lot of reasons. Sometimes it’s simply a bad habit. Sometimes people delay a decision. Sometimes people are distracted by other decisions. In in all, people are indecisive because making decision does take great amount of cognitive space. How to invest such valuable cognitive resources determines how good you are at making decisions. Thus, you should be intentional about your priorities, and save energy for the most important ones. When you are in grief or strong emotions, and all decisions seem to be bad, you should pick the Least worst one.
9. Confirmation bias.
Confirmation bias, a phrase coined by English psychologist Peter Wason, is the tendency of people to favor information that confirms or strengthens their beliefs or values and is difficult to dislodge once affirmed. Confirmation bias is an example of a cognitive bias.
What you have already believed affects how your perceive information. At this moment, a fact is no longer just a fact. Your brain tricks you and sometimes leads you to make irrational decisions. For example, changing the wording, or adding irrelevant information to the same text can change the ways people behavior. For example, when stores or charities put the sign of “visa” or “Mastercard” along the POS machine or payment page, people usually tend to give more tips or donate more money.
10. Digitize the decision process.
When there are too many decisions to make, you need what we call “decision intelligence”. Though some people claim that they memorize things better when they write down by pen and paper, Cassie suggests that instead of pen and paper, people should digitize their decision process. Digital data allows you to have better memory, easier access, and ability to reshape and upgrade data.
Data has limitations too. In my next post, I will share with you the rest of the course, which includes two important parts — — How Artificial Intelligence affects Decision Intelligence and how to make decision in a group setting.
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If you have any thoughts or life experience related to this post, please feel free to leave a comment. Thanks for your time.
