Decision Making Psychology & How to Make Better Decisions

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How do you make your decisions? Do you use a proven model? Do they turn out as well as you wish on a regular basis? If not, try these decision making models and learn more about the psychology of decision making. Material drawn from college-level courses and the new eBook Think Well & Prosper: A Critical Thinking Guide by Steve Bareham, Summa Publishing.

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DECISION MAKING MODELS for success in life & career By Steve Bareham, Selkirk College:

DECISION MAKING MODELS for success in life & career By Steve Bareham, Selkirk College 1

2 decision making models covered Taught in critical thinking and conflict management courses:

2 decision making models covered Taught in critical thinking and conflict management courses Participation Plus & Multi-voting for group decisions when consensus is desired The BODI of Thought , good for groups, but also individuals. Enormous improvement over force field analysis and PRO & CON lists 2

Some people applaud gut decisions. But, the “gut” is a metaphorical construct? It can’t think! Gut instinct & intuition are actually engrained knowledge & experience :

Some people applaud gut decisions. But, the “gut” is a metaphorical construct? It can’t think! Gut instinct & intuition are actually engrained knowledge & experience 3

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"In leadership, it's important to be intuitive, but not at the expense of facts." —Michael Dell, founder of Dell Computers 4

Decision making tools:

Decision making tools The difficulty with decision making is that it’s typically a multi-faceted proposition that requires multi-cognitive thinking Often there will be more than one issue, several possible options, and difficulties predicting the outcomes of each option

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6 “Life is like a jigsaw puzzle but you don’t have the picture on the front of the box; sometimes you’re not even sure you have all the pieces.” --Roger Von Oech Problem solving crow

Decisions, decisions…the types::

Decisions, decisions…the types: those with clear “correct” answers those made in environment of uncertainty and doubt those that involve jeopardy or risk those that involve conflict, confrontation, emotions, sacrifice 7

Hasty decisions can be costly:

Hasty decisions can be costly A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost? The intuitive answer is 10 cents. The correct answer is 5 cents. $1.05 + .05 = $1.10. We often leap to the easy choice without thinking analytically. 8

Judge probabilities:

Judge probabilities Calculating the likelihood of outcomes (good and bad) is called arbitrage It’s what we do when we debate in our heads what decision to make, but we often forget to put all the possibilities in because we don’t analyze well enough 9

Psychology of decision making:

Psychology of decision making Faced with decisions involving uncertain outcomes, decision theory says we select the option with the best chance to maximize gain, health, happiness, etc. Decision theory assumes the ideal decision maker is fully informed and fully rational : this isn’t always/often the case 10

Math ups the ante...:

Math ups the ante... Three major choices with three sub choices that overlap one with the other, isn’t six choices, it’s 3 to the 3rd: 3 x 3 x 3 = 27 combinations 11

Lots of overlapping options:

Lots of overlapping options 12

Being fully informed is complex:

Being fully informed is complex How many possible decisions and interconnected sub decisions are there in this scenario? Your career choice, where you apply, where you live, what specific career path you choose 13

Now, also mix in...:

Now, also mix in... How much money do you want to make? chances for rapid promotion “happiness” in the job lifestyle options for “happiness” are you a spender or a saver? where does family fit in? how will it all affect your retirement? retirement at what age? retirement where? 14

Good decisions hampered by::

Good decisions hampered by: inadequate analysis: facts, evidence, research inaccurate interpretations and inferences unexamined beliefs, values & emotions lack of systematic approach: no knowledge of decision-making process inability to anticipate range of outcomes overly conservative or optimistic? 15

Decisions and psychology:

Decisions and psychology A sense of lost opportunity from the decisions we didn’t make. the more options we considered and rejected, the more loss we can feel. This isn’t pleasant and can lead to a habit of superficial contemplation… 16

Are you primarily one type?:

Are you primarily one type? A Thinker tends to use reason and logic A Feeler who uses values & subjective judgment Can you deliberately be both? Are you a gambler? What’s your choice? 17

Which would you choose?:

Which would you choose? $1 million dollars or $zero based on the simple flip of a coin: all or nothing and with no obligations. A guaranteed $1 million for one year of unpleasant work in a mosquito-infested jungle? 18

Decisions and risk…:

Decisions and risk… As an employer, or an employee, there is relevance in understanding the risk tendencies and tolerances of people you work with or for. 19

Can you live with “worst” outcome?:

Can you live with “worst” outcome? You can anticipate decision making likely and possible outcomes in your head. The “best” are easy to live with, but don’t take risks that CAN lead to the “worst” which you can’t live with. 20

Psychology of decision making:

Psychology of decision making Planning to fail: vicariously experience regret, the equivalent of rehearsing failure in our minds for all the options we consider and then reject. Experience as much as possible the emotions of a relationship break up, a decision to leave a job, or ??? 21

Decision making process for managers:

Decision making process for managers Define the issue: get accurate information. Gather facts and understand their causes. Brainstorm possible options and solutions. Consider and compare the pros and cons of each option - consult if necessary - it probably will be. Select the best option - avoid vagueness or 'foot in both camps' compromise. Explain decision to those involved/affected, follow up to ensure proper and effective implementation. 22

Ethical decision making:

Ethical decision making Transparency: am I willing to make my decision public, and especially to the people affected by it? Effect: have I carefully anticipated the harmful effects of my decision and if it’s possible to avoid them? Fairness: will my decision be considered fair by those affected (consider all stakeholders; effects of decisions can be far-reaching) 23

Participation Plus & Multi-Voting Process:

Participation Plus & Multi-Voting Process Effective way to identify best ideas & to act on them democratically when group consensus is desired Originally developed by Delbecq and VandeVen as the Nominal Group Technique 24

Effective in all groups:

Effective in all groups Quiet, passive people may have the best ideas and they are revealed Assertive/aggressive personalities receive no more time than anyone else The multi-voting can be done anonymously to minimize possible conflict 25

This approach works:

This approach works Ensures that everyone contributes: silent generation round robin group clarification voting and ranking discussion of results 26

The Steps..:

Solo Generation : each participant develops the idea(s) they believe to be worthy of pursuit. Round Robin : each participant briefly explains his/her idea (2 minutes maximum); each idea is summarized and written on green board—there is no discussion by other participants while this is done. 27 The Steps..

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3. Clarification : With ideas posted, group seeks clarification from the people who proposed specific ideas; concepts can be combined if logic dictates. The goal is to obtain common understanding and “cleaned up” ideas. 28

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4. Vote & Rank : Participants rank best ideas, assigning a number value to the idea they like the most, “1” to the idea that ranks at the bottom of their list, “8” to best idea if there are eight. Numerical values are added for each idea to identify the top eight concepts. 29

Each idea is articulated:

Each idea is articulated A square is created for each person…each person enters a vote ranked 1 to however many ideas there are. Here we have 6 people 30 If there were four ideas, there would be four such blocks created. Then, each person enters a number ranking, 6 being the most favored idea, 1 being the least. After all the votes are in, add them up. The idea with the most high numbers is the consensual winner. 1 2 3 4 5 6 7 8 9 10 11 12 Each participant voted for each idea, seven being the idea most favored, 0 being least. The tallies show the consensus

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5. Next Steps : With results captured, it’s time for action assignments and follow-through. 31

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32 The BODI of Thought Great concept for groups and individuals

Forget PRO & CON lists :

Forget PRO & CON lists Many people use the very simple system of creating two lists, one headed “Pros,” the other headed “Cons” It’s easy for emotion to influence the length of the lists, i.e. the one we want magically gets the most entries (rationalization, denial can be rampant). 33

More cons for “pro” & “con” :

More cons for “pro” & “con” Not all pros and cons have equal weight so the simple adding of the numbers on the list is ridiculously simplistic, and Such an approach is totally linear 34

Decision making processes:

Decision making processes Force Field Analysis: two “fields” with opposing arrows, one field of arrows indicating “pros or strengths,” the other “cons or weaknesses” To add “weighting,” the arrows were made bigger or smaller depending on gravity of the issue Then the task was to figure out how to make the + arrows bigger and – arrows disappear (or at least get smaller) 35

Decision making:

Decision making Forced Field Analysis uses two “fields” with opposing arrows, one indicating pros/strengths, the other cons/ weaknesses. It can be a visually odd concept for everyone to follow. Strengths Weaknesses 36 The Problem

Along came BODI of Thought:

Along came BODI of Thought A concept that lends specific number value weighting, plus and minus, to the decision making process Plus it injects lateral thinking to moderate the impacts of being overly linear and emotional 37

BODI of Thought:

BODI of Thought The acronym BODI denotes: Benefits Other Options Drawbacks, and Impacts 38

The BODI of Thought:

The BODI of Thought BODI of Thought gives specific (+) plus/minus (-) weights to decision making; also injects lateral thinking to moderate the impacts of only linear Benefits, Other Options, Drawbacks, and Impacts 39

The BODI of Thought:

The BODI of Thought The “Benefits” and “Drawbacks” approximate pros and cons, but they also get numerical values based on how beneficial or how large/small the drawbacks E.g. if you were to consider leaving one job for another, the chances for future advancement may warrant a +10, while being closer to home may get just +4. 40

The BODI of Thought:

The BODI of Thought Added linear value in this model comes from contemplating “other options” and “impacts”; it’s more difficult to cheat by attaching the scaled plus/minus values E.g. someone wants to buy a new car, but needs to cash in a retirement fund to raise cash. Other options forces exploration of less impactful long-term effects, i.e. not having enough $ at age 65. 41

BODI EXERCISE: What if you got job offer right now? How could you decide what to do?:

BODI EXERCISE: What if you got job offer right now? How could you decide what to do? 42 Benefits + 1 to 10 Other Options + or - Drawbacks - 1 to 10 Impacts + or -

From the eBook :

From the eBook 43 Find it at all major online eBook retailers, including Amazon.com http :// www.amazon.com/Think-Well-Prosper-Critical-ebook/dp/B008FF6TZW/ref=sr_1_3?s=digital-text&ie=UTF8&qid=1348074006&sr=1-3&keywords=Steve+Bareham

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