Decision making is the process of making choices among alternatives. Our decisions and the actions that flow from them play a role in all deliberate, autonomous behavior and are what enable us to realize the ‘future selves’ we envisage for ourselves, according to our higher level goals and values.
It can be useful to use a step by step decision–making process to make more deliberate, thoughtful decisions. We will look at a well-known example of this kind of mindware here.
Decision-Making: Definition & Examples
Decision making can be defined as (ref):
the ability to choose between competing courses of action based on the relative subjective value of their probabilistic consequences
For example, when deciding which college to attend, a student must weigh the likely costs and benefits of each school and come to a decision that maximizes the probable benefits and minimizes the probable costs.
Scientific Basis
Decision-making integrates the complex cognitive processes through which causal relations between actions and consequences are encoded, retrieved, and maintained in working memory with the motivational processes that determine the value, or utility, of actions or sequences of actions (ref).
Cognitive scientists and economists have developed an ‘expected utility’ framework for understanding how to make good decisions. The components of this framework include (1) actions/options – take the programming course or the philosophy course, spend the evening working or going out with my partner, try to run the marathon, or run the half marathon; (2) outcomes – any action chosen results in an outcome, which has some level of uncertainty – take the programming course and learn some useful coding, or fail to learn much at all, try to run the marathon and complete it or fail to complete it and drop out; risk/uncertainty – typically the outcome is not entirely predictable and the action/option may involve risk and the chance of loss; (3) subjective gains/losses – outcomes come with gains or costs: gains are what you desire or value – e.g. include fun or pleasure, monetary or material gains, rewarding relationships, recognition, status, achievement, etc; costs include physical pain, loss of face, financial hardship, stress, unwanted effort or time.
Expected Utility Theory
According to expected utility theory, to choose optimally you must multiply the subjective gains or losses of different courses of action with the probabilities that the actions will lead to these outcomes. By doing this we can calculate the ‘expected utilities’ of different actions or options. Let’s work through some examples.
Which bet do you choose?
A. A 10% chance of winning $1000.
B. A 50% chance of winning $50.
To calculate the expected utility of A we multiply .10 x $1000 = $100.
To calculate the expected utility of B we multiply .50 x $50 = $25.
So, the rational answer is A! Your System 1 (intuitive) thinking might not agree with this, but objectively, this is the better decision.
How about? –
Which bet do you choose?
A. A 10% chance of winning $500.
B. A 50% chance of winning $100.
0.10 x $500 = $50
0.50 x $100 = $50
So the rational answer is either – just toss a coin! Both bets have the same utility – whatever your ‘System 1’ intuitive thinking tells you.
Sometimes the probabilities and values have to be subjectively estimated. For instance:
What do you choose?
A. Trying to learn the guitar (a new instrument) via YouTube.
B. Trying to learn Spanish (a new language) in a language class.
To come up with a rational decision, you need to estimate (subjectively) both the probability of succeeding in learning the guitar or Spanish (or making progress to make it worthwhile continuing), and also both the expected gains of succeeding and the expected costs of failing. You have to imagine your ‘future selves’ to make effective decisions. You might imagine that because you’re in a class for Spanish, you’ve got more chance of succeeding in learning than by using YouTube. You may also imagine that the cost of failing would be greater in a class than on your own. And you might rate the value of learning Spanish a bit higher than learning the guitar. You could sketch out the estimates like this to arrive at the expected utilities of both courses of action. Clearly here it’s rational to opt for Spanish!
IQ Mindware Decision Making Exercises
(These exercises can help guide your applied intelligence wheel rating.)
1. Mindfulness / Meta-Awareness
Slow your normal decision-making process down. Try to make explicit to yourself the times during the day when you have a clear choice and the opportunity to make a rational decision. Try to imagine different ‘future self’ scenarios which different actions may lead to as you deliberate on your choices.
2. Mindware Strategies
Practice using Expected Utility Theory as explained above – weighing up probabilities and pros and cons of outcomes – rather than just going with your instinct or choosing the first option that springs to mind. Use a pen and paper and sketch out a decision-tree if you need to. You won’t be doing this all the time of course, but it might help you develop better decision-making procedures by trying it a few times, perhaps highlighting information you would not normally consider.
3. Cognitive Capacity (Gated DNB) Training
HighIQPro’s gated dual n-back training improves your ability to think things through ‘offline’, even in the midst of real-time distractions on the go. It helps insulate for you a mental workspace in which you can freely spin through different scenarios and do quick calculations, such as are needed when you make use of expected utility mindware.