Choices and Decision Making – essential for business as well as life 1/2
This is the second part of my article about Choices and Decision Making (Part 1).
In the first part of the article I summarized some pratical cases. Basis for those were Dan Gilbert and Derek Sivers. The second part is about different characteristics for deciders and some useful facts to improve ourselves.
An important fact is that most people have loss aversion which means that losses have more than twice the psychologial impact as equivalent gains.
Regarding to this – and sadly to my own experience – mistakes can take a toll even with relatively unimporant decisions.
When you put a lot of time or effort into choosing a restaurant, vacation place, item of clothing, you want that effort to be rewarded with a satisfying result. As options increase, the effort involved in making decisions increases, so mistakes hurt even more. Thus:
- decisions require more effort
- mistakes are more likely
- the psychological consequences of mistakes are more severe
We can seperate two different kind of persons. Maximizers and sufficers.
- If you seek and accept only the best, you are a maximizer.
- If you settle for something “good enough”, and don’t worry about the possibility that there might be something better, you are a sufficer.
A more than true statement about maximizers is:
The goal of maximizing is a source of great dissatisfaction
Derek Sivers summarizes it pretty to the point:
- Maximizers savor positive events less than satisficers and do not cope as well with negative events.
- After something bad happens to them, maximizers’ sense of well-being takes longer to recover.
- Maximizers tend to brood or ruminate more than sufficers.
Whereas maximizers might do better objectively than sufficers, they send to do worse subjectively.
What can we learn out of different cases and studies to make it short?
It´s important how we feel about the decisions we make. We need to figure out when information-seeking has reached the point of diminishing returns, stop the search and choose the best option. Since we know that more options make us feel worse. If there is the chance to get going with a 90% decision and a good feeling, we don´t need to keep on seeking for a 100% decision without any satisfying action. (And still remember: The more options we have, the more likely we will experience regret)
Even though a decision seems to be tough or we have some kind of fears …
Learned helplessness can affect future motivation to try, and future ability to detect that you do have control in new situations.
When it comes to value different choices it is most of the time about valuing the trade-off with every decision.
The quality of any given option can not be assessed in isolation from its alternatives. One of the costs of any option involves passing up the opportunities that a different option would have afforded.
Excellent advice for managing our own psychological response to choice : Pay attention to what you’re giving up in the next-best alternative, but don’t waste energy feeling bad about having passed up an option further down the list that you wouldn’t have gotten to anyway.
The existence of multiple alternatives makes it easy for us to imagine alternatives that don’t exist. When we engage our imaginations in this way, we will be even less satisfied with the alternative we end up choosing.
There is no objective “best” vacation, job, or activity. What matters is the subjective experience.
Derek Sivers points out eleven different advices how to make decisions:
- Choose when to choose: Decide which choices in our lives really matter and focus our time and energy there, letting other opportunities pass us by.
- Be a chooser not a picker
- Satisfice more and maximize less
- Limit how much you think about the attractive feature of the options you reject.
- Make your decisions nonreversible
- Practice gratitude
- Regret less
- Anticipate adaptation
- Control expectations
- Curtail Social comparison
- Learn to love constraints
My two summarizing articles are only a really tiny part of the original articles and the whole topic “Decision Making”. This topic is very essential for business (Marketing, Sales …) as well as for our every day life. Knowing how to handle peoples emotions and acting and especially realizing how we decide and think is great for developing ourselves.