Wednesday, July 11, 2012

How to Make Good Decisions

How many of you think that your driving skills are better than average? In a typical poll, 90% of respondents say that they are better than average drivers.

Let me tell you about a person I know. Linda is thirty-one years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations.

Which do you think is more probable? 1) Linda works in a bookstore and takes yoga classes. 2) Linda is a bank teller. Most of you probably chose 1 over 2.

Now, another comparison. Which do you think is more probable? 1) Linda is a bank teller. 2) Linda is a bank teller and feminist. Most of you, I know, chose 2 over 1. However, ,think twice.

Linda being a bank teller and feminist is clearly a subset of Linda being a bank teller. The probability of Linda being a bank teller and feminist cannot be higher than the probability of Linda being a bank teller. However, you made an apparent logical mistake. Why do you think so? It is because you formed a stereotype in your mind when I described Linda.
The Linda test is from Danielle Kahneman’s book Thinking, Fast and Slow (2011). In this book, he suggests that we have two thinking systems: system 1, which is fast and intuitive, and system 2, slow but meticulous. Because we are lazy (according to Kahneman’s description), or because we seek efficiency in as many occasions as we can, we try to avoid the effortful system 2 as much as possible. In most cases, the system 1 will handle problems as they arise, and system 2 will occasionally check the validity of the system 1’s answers. Therefore, most of the time, we can respond fast with minimal efforts. This is also what Malcolm Gladwell describes in his book, Blink(2005).

When you hear the description of Linda, your system 1 responds accordingly, and searches through your cached database for plausible answers. The quick answer comes from the patternized knowledge database you have stored in your brain. In your patternized knowledge, Linda sounds more like a bank teller who is a feminist as well, rather than just a bank teller. So you choose the more plausible description even before engaging the system 2 to verify if the conjecture makes sense at all.

As a conclusion, here is my suggestion for your decision making, based on my reading of those two books, Thinking, Fast and Slow, and Blink. When you face a decision-making situation, your system 1 will automatically engage and provide a quick answer. Pause for a second at this moment, and effortfully engage the system 2, if you think the decision is worth the efforts. If your system 2 concurs with your system 1, you have the best answer you can have. If not, ask another question. Am I super-confident about my system 2 answer? If yes, go with it. If no, you’ve better stick with your system 1’s original answer. Probably, your intuition (based on your lifetime experiences) produced a good answer, even though you cannot quite articulate the reasoning verbally.

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