Scientific rundown on decision making in lay terms
Making the right decisions is seldom easy. Situations change and choices confound. Faulty perceptions and biases can block clear thinking and undermine the ability to weigh alternatives rationally. As U.S. Supreme Court Justice Benjamin N. Cardozo explained 90 years ago, "We may try to see things as objectively as we please. Nonetheless, we can never see them with any eyes except our own." This is the vexing paradox involved in making decisions: People who are in the process of deciding cannot always trust their own perceptions and thought processes. Psychologist Scott Plous, winner of numerous awards and honors, examines decision making in this rigorously scientific yet mostly accessible book, itself an award winner. getAbstract believes it will interest decision analysts, researchers, psychologists and strategists, as well as readers who want to know why they may make poor decisions and how to make better ones.
Are we rational decision makers?
First we need to define what we understand under rational. Initially, researchers measured human rationality by analyzing the degree of "maximization" of utility (net wealth) of their decisions. Using this approach, we seemed not too "rational". Then they came up with a value function, defined in terms of gains and losses as deviations from a reference point and which incorporates decreasing returns. (For a deeper explanation read Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics). This curve makes the loss segment steeper than the profit segment ("S-shaped curve"). When measured against this function we seemed a bit more rational. For me, this should come as no surprise since decision making was probably a bit more oriented at preserving our lives and escaping dangers (loss part of the function) than at obtaining food. It would not be too useful to be the best food gatherer if you succumbed to your enemies at the first opportunity. (This is probably my first "hindsight bias", which means that after knowing the outcome of a study, we tend to say that we knew it from the beginning).
Apparently we tend to "satisfice" not "optimize", which for me is obvious (second hindsight bias) and I will try to explain why: In several of the examples, in order to "maximize" value, you need to multiply one probability with one or several others to obtain the "combined probability result" of two or more events happening one after the other. In other problems, you need to add up the individual probabilities in order to obtain the probability of one or the other event happening. Assuming that you knew how to state the problem in terms of probabilities and the rules to calculate them, you would still need to actually perform the calculations (consciously or unconsciously) in order to take a decision. Many decisions need to be taken quickly and even if there is enough time, I do not think people usually do these calculations, so they probably rely on some sort of intuition (what the author calls heuristics or rules of thumb). These rules of thumb will depend on past experiences specially on those that are easily accesible to memory because they were frequent or recent or because they had a great emotional impact on us (positive or negative). If to "maximize value" we need to perform complex calculations, then I am sure we do not "maximize", we rather settle with a fairly good decision. Further, if we need to "maximize value" in order to be considered rational, then we are probably not rational.
It would have been interesting to know how people decide when previously given the calculated expected values of each choice (considering the probabilities). I think that "rationality" would increase a bit, but not significantly, since some people believe they can "outperform" the odds (by special luck), while others try to avoid undesirable risks, even if the probabilities are very low (specially if the impact of the risk is big).
The book explains thoroughly how we deviate from what would be "rational" decision making. Each of the 20 chapters presents research that exemplifies one or more biases like inconsistency, perception and memory biases, framing, intransitivity, neglecting base rates, attribution errors, social loafing, sunk costs and behavioral traps. It makes quite clear that we do not decide in a "rational" way, but it does not explain the actual process we use to make decisions. Additionally, the author shows that we are not good at probability and statistical analysis, but he does not explain the calculations we should have done were we "rational decision makers". (He could have included it in an Appendix). If you already know this kind of math or if you are not interested, then the book can be read without it. Finally and although the book is very interesting and full of insights, I need to say that I am glad that I bought a used one, since its price seems not too rational to me either.
A Wonderful Work
This work by Scott Plous should not be taken lightly. Dr. Plous, indeed, reviews the literature, but he also puts the missing pieces to the puzzle together as you try to understand how we got to the point we are today in the Psychology of judgment and decision making. Without this comprehensive review, it is hard to put other books in context. Many books explore specific persuasion principles and the psychological aspects of decision making. The problem is, how to you put all of the pieces together to make sense of it all. Plous gives the big picture so you will have a place from which to view all the other articles and books you read. I read this book four times and tried to pick apart each paragraph to see how it could apply to influencing others. I promise you the pearls are there if read each page with the goal of understanding how it can be applied in the real world. This book was my top 2 of all time!
Outstanding
One of my favorite recommendations to non-cognitive psychologist friends in addition to required reading in several of my courses.
Loved it and will read it again.
I think it is probably the best book on decision-making psychology I read. This book is full of great insights and tips into the decision making. It gives a very well rounded overview of the many aspects of decision making: selective perception, memory, biases and heuristic, behavioral traps, etc. It is also one of the more easily read books on the very complex subject. It has a large number of relevant and easy to digest examples.
Lev Virine, author of Project Decisions: The Art and Science
(19 reviews)
