We often get into trouble for making a decision about simple day to day things or finding a solution to a complex problem.
What Exactly is a “Problem”?
Problem is a conflict or difference between the current situation and a situation we wish to produce i.e., our goal. For example, I want to reach the other side of the road, we have to decide how to do it, whether to use the over bridge and cross it or wait for the next traffic signal so it is safer.
Now we have two options, which one would you pick?
In many situations, we decide much faster and easier than in other situations depending on the information available and our own skills.
So, now let’s see what decisions to make and how to make them.
What is Decision Making?
Decision Making is essentially a problem-solving tactic that helps us to reach a solution by choosing between two or more courses of action that leads to a possible solution to a problem at hand. We take decisions every day, but do we know how we make those decisions?
Umm, not much because day to day decision making is intuitive and approximate. We learn from our past experience how the previous similar problem has been dealt with. Intuitive decision-making can be the rule of thumb and might take less time and energy. However, in times where we need to make complex and difficult decisions we might have to invest more time in researching and gathering information about the particular problem. In such cases, we use a reasoning process to choose the action.
Why Do We Make Decisions?
Why do we choose a particular brand of car over the others? Or choose to take the overbridge to cross a road? Or choose to invest money in one bank over the other?
We are trying to achieve a goal that is beneficial to us in some way or another. We also try to maximise the expected gains and minimize the perceived losses thus optimizing the utility of the decisions made.
What is the Probability of Making a Decision?
We might not be able to foresee an outcome for a decision thus there is a level of risk. We do not know which option will lead us to the right outcome, thus we take into account the knowledge of probability. Such perceived estimates of the probability is known as subjective probability.
We might use both utility and subjective probability to make a choice among many alternatives.
How Do We Take Decisions?
There are various ways and strategies we use to make a decision. Some are systematic and comparatively straightforward but as we go into real-life decisions we might need a more eclectic form that may include one or more strategies in hand.
1. The Single Feature Model
In this decision-making model we give importance or base our decision only on one feature or aspect of the problem. For example, when we have to choose a product among many other products we might just look into the quality aspect and take a decision based on it.This is a relatively more simple and faster way of making a decision not suitable for complex decisions.
2. Additive Feature Model
This method involves taking into account all the important possible features and rate each factor on an arbitrary scale and then add up the ratings of each feature for each alternative.
3. Elimination by Aspect
In this method, the decision comes after stages of elimination. At each step, the decision-maker selects an aspect that is important and eliminates the alternatives which lack the attribute.This process continues and the selection of the next important aspect is made until the decision-maker comes to one alternative and makes the final decision. This method is much more systematic and rational, but time-consuming.
Before we discuss more strategies, let’s introduce ourselves with heuristics, which is also known as the rule of thumb. It is a short-cut we tend to take based on our past experiences and habits. Below are some examples of such short cuts.
4. Representative Heuristics
This method is used to make a decision based on the probability of an event by comparing it to an existing prototype. This prototype is the most relevant example of the event. Representative heuristics is a very helpful method but can sometimes lead us into cognitive biases.
5. Availability Heuristics
This is another mental shortcut to make decisions based on the available information about a particular situation or object in our memory and matches the current situation.
How to Make Smarter Decisions?
- Recognise and define the problem in hand
- Identify and analyse the different alternative courses of actions.
SWOT analysis is very effective in understanding the nature of the problem and helps us to take a rational decision.
- Choose a preferred course of action
- Implement the action
- Evaluate the result and most importantly follow up.
Decision Making is an essential tool as our world runs on decisions. Good decisions yield positive results, whereas bad decisions lead to suffering. A very common example, we might spend the whole weekend deciding which Netflix Show to watch and end up seeing something on repeat or nothing at all.
I guess you get the point of how important it is to learn this tool and use our wisdom to make better and smarter decisions.
Let’s conclude with the hope that we start to acquire such skill and make meaningful decisions.