I recently finished "How We Decide", which tries to answer the question how do people make decisions? Contrary to popular belief, human decisions are rarely -- if ever -- "rational." Almost all of the decision-making-process lies in our "emotional mind."
How can this be? Our minds are incredibly powerful when it comes to reasoning and logic... Why is it not engaged when it comes to making a decision?
In essence, the rational part of our brain is relatively new -- in the evolutionary sense. As such, it cannot compete with the emotional side, which has been making critical decisions for millions of years. The emotional side is capable of tremendously complex analysis of systems with hundreds of variables in a split second... for example, should I jump out of the path of a moving car? Yes! The rational mind can make these complex calculations as well... however its much more slow. This is because the rational mind can only juggle a few variables at a time, and it is lousy at "knowing" which variables are important and which aren't... Which direction should I jump? Should I plant my right foot first, or my left? When I land, should I roll to avoid injury? What if I get my shirt dirty?
Too much logic leads to a condition called "analysis paralysis." It is common when people try to make a decision with too much data. It is also common amongst people with damage to the orbitofrontal cortex -- which is critical in generating emotions. Far from having Vulcan-like decision making powers, these poor individuals can take hours just to decide what to eat!
The "emotional" part of our brain has served us well for millions of years... and it is great at helping us quickly make decisions about survival and self-preservation. It does so through a complex series of neural pathways and dopamine receptors that make us feel good when we make a "right" decision. The feeling is similar to what we feel when we exercise, have a healthy meal, or have sex. It is "good" in an evolutionary sense to not only do these things, but also to decide to do these things. When a person has lots of experience making certain kinds of decisions -- such as stock broker picking stocks, or a fireman putting out fires -- they engage the emotional mind to get a "feel" for what the "right" decision might be. In fact, its much faster to go with your gut, than to try to weigh all possible variables.
Your emotions are excellent at sifting through tons of information, noticing the important details, and ignoring the noise. These hard-wired pathways are lightning fast at making decisions, because they piggy-back on a system that had to be fast to ensure our survival. With the proper training, a person can "feel" the correct decision, even if they can't explain it.
However, this can also be a problem... using the emotional mind means you will be suppressing details that "feel" irrelevant. However, that is only because those details were irrelevant in the past. It is perfectly possible to "feel" right, even when you are 100% wrong.
The key is to know how to engage the rational mind, and how to engage the emotional mind. Only then will you consistently make good decisions.
"Simple" Problems Require Logic
The rational brain is easily overwhelmed... if you give it too many variables, then it won't be able to keep track of which variables are more important than others. Depending on the mind, you may be limited to as few as 4, or as many as 9 independent variables. This can increase with lots of training, but its a good rule of thumb.
So, we should not engage the left-brain in the decision-making process unless the problem is "simple." Buy this, we mean that the problem can be reduced to a mathematical formula with an obvious "right" and "wrong" answer. The term "simple" is misleading, because it includes problems like the NASA shuttle launch checklist, and mathematical problems so complex you'd need a PhD to solve them... nevertheless, since we can formalize the problem into a mathematical formula, it is "simple."
When a problem can be reduced to a formula, you should avoid instinct as much as possible... they can lead us astray on simple problems. Like, should I play the lottery, should I rebalance my stock portfolio, or is the shuttle ready for launch?
Once you do the math, the solution is clear... so keep feelings out of it!
"Complex" Problems Require Emotion
Now... choosing between different breakfast cereals? That's a hard one!!! How many factors will play into this kind of equation? Obviously, price, nutritional data, and the ingredients can be plugged into a formula... but there are other factors like flavor, brand, and novelty that can't be easily quantified. Also, if you dont' "feel" good about your decision, you'll wind up regretting it. So how should you choose?
The rule-of-thumb is that the rational mind is only good with four variables. Therefore, it is perfectly fine to engage logic when purchasing things that are all very similar. When buying a can opener or paper towels, it really comes down to quantifying "price" and "quality."
However, when making decisions about something with dozens of hard-to-quantify variables -- like strawberry jam or cold cereal -- you're better off trusting your "gut" instinct.
Numerous studies have shown that when people try to choose their favorite kind of jam, or their favorite work of art, or the best house in their price range, they usually agree with the "experts." If they are told to just go with their gut, they are frequently right on. However... if they are asked for their opinion plus an explanation, the whole thing falls apart!
The mere act of engaging the left brain clouds the issue, and they suddenly make bad decisions. In order to make good "complex" decisions, its important to distract the left brain so it doesn't try to hijack the process. Experts are usually capable of explaining their decision making process, but the untrained should stick with their gut.
New And Novel Problems Require Reason
The emotional mind is good at making quick decisions, but it is limited to past data. Only the logical mind can look into the future to plan; only the logical mind can properly put new information into the proper context.
Therefore, when faced with a new kind of problem, you will be tempted to "go with your gut". However, that can lead to problems, since your gut is only aware of instinct and your own history.
When you "feel" the right decision, you must remind yourself that this is a new kind of problem, which likely requires a new kind of solution. Use your rational brain to look for errors in judgement, and force yourself to explain your "gut" feelings. It is likely that you will uncover important data that you discounted as "irrelevant."
Certainty is the Surest Sign you Made an Error
The world is a big giant mess... and the brain is very, very uncomfortable with uncertainty. When your brain is face-to-face with new data that contradicts existing information patterns, it has a tough time feeling "certain" about it. In order to ensure proper right-brain functions, you need to work through this new data, and be ok with being "uncertain" for a while.
Unfortunately... your brain finds it a heck of a lot easier to just invent a "rational" reason why the new data can be ignored... so usually it does exactly that! It just feels soooooooooo good to be "certain", that our brains crave that feeling, even if we're dead wrong!
This problem is most notable when it comes to political partisans. Drew Westen scanned the brains of voters in the run-up to the 2004 US elections. He had three groups: hard-core Republicans, hard-core Democrats, and independents. He then showed them four clips: two when Bush obviously contradicted himself, and two when Kerry obviously contradicted himself. The independents noticed both sets of contradictions... however, the hard-core believers only saw the contradictions of their political enemy! They were dead-certain that their guy made perfect sense, and the "other guy" was illogical.
The brain scans of the subjects were more interesting still... The independents engaged the rational parts of their brains the whole time, which is why they spotted the logical contradictions. However, the hard-core believers did not. They used purely their emotions when asked about the contradictions. They only engaged the rational parts of their brains to help "reason away" the obvious contradictions made by their candidate. As Ben Franklin said:
"So convenient a thing it is to be a reasonable creature, since it enables one to find or make a reason for everything one has a mind to do."
Philip Tetlock performed an even more interesting study about the predictions of political "experts." He would give them a question about the future, with three possible answers. Then, years later, he would see how often they were correct. It turns out, not very often! In fact, the "experts" were correct less than 33% of the time!
That's right, folks... a drunken dart-throwing monkey is a better predictor of world events than most professional "analysts." To make matters worse, the most popular pundits were wrong the most often!
Why? Because of "certainty." These people felt like experts... they felt they knew the right decision... and they are literally addicted to the rush of feeling "right." No way they will be giving that up any time soon.
Once you "feel" certain that you have made the right decision -- especially about a new problem -- then I guarantee that you have ignored important data.
The Best "Deciders" Analyze Their Decision-Making Process
The Tetlock study did highlight which experts were actually useful... almost uniformly, the best experts create "testable hypothesis." This means that they were quite aware of the limits of their own decision-making powers. They knew they had biases. They knew they had incomplete information. They knew that this was a new kind of problem with new kinds of solutions.
Therefore, they used their gut most of the time, but they used their rational minds when analyzing their own limitations.
When a good decision maker feels certain, he will stop and say, "wait a moment, I'm under-thinking this." That is the time to look at what is so certain, and try to poke holes in it. Good decision makers create testable hypothesis about what they "know", and then they re-evaluate their position at a later date.
Good decision makers are also aware of emotional traps that can prevent you from making the right decision. These include things like loss-aversion, which means that losses "feel" worse than wins. You'll never be a good stock broker or a good general unless you are aware of how loss-aversion can prevent you from making the right decision.
When making decisions about "simple" problems, you need to engage your rational mind. Be aware of emotional traps, and try to distill the problem down to a mathematical formula. Simple Pro / Con lists frequently help, when data is hard to quantify.
When making decisions about "complex" problems, you need to distract your logical mind. What house should I buy? What furniture should I buy? Which candidate should I vote for? Put the question in your head, and then engage the right brain. Go see a play, watch a movie, listen to music, or take a nap. Then, make a "snap" decision based on emotion. Odds are, you'll be much happier with the result.
If you want to be an expert, the most important things are experience, and humility. Certainty is the enemy: there are no 100% guarantees in this world, so stop thinking like there are. Go with your gut at first, but constantly engage logic to validate the decision making process. When you are satisfied that your decision making process is as good as it can be, then its time to engage the right brain again. Distract the left brain, and then make a "snap" decision.
If you do this, then odds are you'll be right more often than a drunken dart-throwing monkey... in which case you're doing better than most paid "experts."