3 Ways to Improve Your Decision Making
Today let’s talk about how to enhance the ability to make sound decisions.
In an article published on the HBR, Walter Frick highlights how, to make a good decision, you need to have a sense of two things: how different choices change the likelihood of different outcomes and how desirable each of those outcomes is. In other words, decision making requires both prediction and judgement.
According to the author, there are three main rules to be followed to help you to improve your ability to predict the effects of your choices and assess their desirability:
Rule #1: Be less certain
Nobel-prize-winner Daniel Kahneman said that overconfidence is the bias he would eliminate first if he had a magic wand: the chances are good that you are more confident about each step of the decision-making process than you ought to be. Once you accept that you’re overconfident, you can revisit the logic of your decision.
Rule #2: Ask “How often does that typically happen?”
The best starting point for predictions is to ask “How often does that typically happen?”. The idea with both prediction and judgement is to get away from the “inside view”, where the specifics of the decision overwhelm your analysis. Instead, you want to take the “outside view”, where you start with similar cases before considering the specifics of your individual case.
Rule #3: Think probabilistically – and learn some basic probability
Research has shown that even relatively basic training in probability makes people better forecasters and helps them avoid certain cognitive biases. Improving your ability to think probabilistically will help you with the first two rules.
Great decision makers don’t follow these rules only when facing a particularly difficult choice, but they return to them all the time! They recognize that even seemingly easy decisions can be hard – and that they probably know less than they think.
[Complete article, “3 Ways to Improve Your Decision Making”, available at https://hbr.org/2018/01/3-ways-to-improve-your-decision-making]
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