Why is decision making so difficult?

Many orchestras have potential entrants play from behind a screen and then make a selection. This seemingly mundane act has resulted in female membership, skyrocketing to close to 50% from an abysmal 5% about fifty years ago. This is indeed astonishing! Blinding is a simple trick to reduce biases in decision making. The effect of cognitive biases and intuition on decision making can be devastating.

Cognitive bias plagues decision making and often results in flawed thinking and results that are disastrous. Daniel Kahnemann talks about two distinctive styles of decision making. System 1 and System 2 are two distinct modes of decision making: System 1 is an automatic, fast and often unconscious way of thinking. It is autonomous and efficient, requiring little energy or attention, but is prone to biases and systematic errors. System 2 is an effortful, slow and controlled way of thinking.

When making decisions, we all rely too heavily on intuition and use flawed reasoning. But it's possible to fight these pernicious sources of bias by learning to spot them and eliminate such biases. To broaden our perspective on the future, you can use proven tactics for improving the accuracy of estimates and preparing for contingencies. The idea is to think more expansively about the objectives and come up with many possibilities before deciding what's most important, get input from others, and then carefully examine one goal at a time. Intuition has its role but to just go by the gut would seem unwise.

Considering the above it seems obvious that System 2 thinking is better, where decision making is more deliberate and careful, rather than being intuitive and fast and possibly wrong. However, System 2 thinking can also have issues as we many people are decision misers, which means that they are looking for quick closure and cannot settle with ambiguity. Obviously, in such cases, brainstorming is a good option, where many ideas float past hopefully allowing us to select the best one. An interesting pursuit, is the 'vanishing options test', wherein, you decide upon an option and then decide that if it did not happen what would your future course of action be. Assuming that you have decided to invest $100000 on a new machine and have made a careful decision, push it a little further and check what would happen if the machine is not available? What would you do next? The human mind can be lazy on most occasions and somehow wants closure. In a highly competitive world, just satisficing is not adequate. Satisficing is a decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution. Rather than putting maximum exertion toward attaining the most ideal outcome, satisficing focuses on pragmatic effort when confronted with tasks. This is because aiming for the optimal solution may necessitate a needless expenditure of time, energy, and resources.

And we generate better options if we identify several and evaluate them side by side. Don't settle for the first one that's acceptable; imagine that you can't pursue it, and you might find an even stronger alternative. Strong emotional attachments or investments make cognitive biases even harder to overcome. The endowment effect is the curse of many an entrepreneur. Steve Job's NeXT Inc. is a great example. Post his rather unceremonious exit from Apple in 1985, Steve Jobs founded NeXT Inc. Jobs then spent close to three years in designing his Cube, a masterpiece for the future. Steve Jobs was so convinced and focussed on his product, that he lost track of what was happening in the outside world. His masterpiece was good when it arrived, but there were cheaper options available which people found good enough. The Cube perished without a trace, sinking with it many millions of Dollars!

Ruthlessness in decision making is called for. Checklists and algorithms are advocated to stay focused on the right things, and set "tripwires" to trigger planned responses at key points in the decision-making process. Eventually, the best decisions come from the best minds, keeping cognitive biases at bay!