Archief van
Tag: decision making

Acknowledging our Ignorance – Bounded Rationality

Acknowledging our Ignorance – Bounded Rationality

A few weeks ago I heard a TV-maker in a talk show say that people make about 35000 decisions a day. 35000!! As you can imagine, they are mostly not life-changing decisions, but decisions like: do I snooze or do I get up, do I keep my fart in or will I let it go, do I give 2 or 4 kisses while greeting someone in France, stuff like that. These decisions of course do not need extensive research and reasoning.

But what happens if the decisions are about merging two company cultures, having another baby, deciding whether or not to start/keep deforesting the jungles in Brasil, or whatever decision you have to make that is bigger than yourself? I hope we can all agree that when complex issues like these come up, tossing a coin to make a decision won’t do. We all hope (I hope) that people gather all the objective information they can and make a decision according to what they’ve found. And still… company mergers fail because of culture clashes. Poor people keep adding babies without being able to pay for their upbringing. And flora and fauna in Brasil (and elsewhere) is being destroyed.

So why do these kind of things happen anyway??

In earlier pieces Michel and I wrote about shortcomings and limitations in human behavior and our control, or lack there of, over it. I’m no better than the rest of us, let alone Michel..! We are all prone to cognitive biases and heuristics that prevent us from seeing the world objectively, as it is, at any given moment. Humans have a tendency to want the stuff they want right now, and not in 10/20/30 years. And lastly we often fail to take into account the complete system of the problem at hand.

This means that we don’t even perfectly interpret the imperfect information that we do have. We misperceive risk, thinking  that some things are way more dangerous and others much less than they really are. Also, we pay too much attention to recent experience and too little  attention to the past, focusing on current events  rather than long-term behavior.

Bounded Rationality

Even today I ran into a guy whom I managed convinced to invest in cryptocurrency. He told me he sold them, after it went down a few dollars. If he’d done a little analysis, gathered some more information, and kept them he would’ve doubled his initial deposit today. Confirmation bias determines what kind of news we let in or not (indeed, we do not completely decide ourselves). All of this means that overall we do not make optimal decisions for our own, let alone for the greater good. This phenomenon is called Bounded Rationality.

Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability of the decision problem, the cognitive limitations of their minds, and the time available to make the decision. ~ Wikipedia

bounded rationality

Thought Experiment

Before we start blaming people for the stupid decisions they make I have a little thought experiment for you that I found in the book ‘Thinking in Systems by Donella H. Meadows’ (highly recommended), where I also first learned about the concept of Bounded Rationality.

Suppose for a moment you are for some reason lifted out of your usual place in society and put in the place of someone whose behavior you have never understood. Having been a firm critic of government for example, you suddenly become a member of parliament. Or as a donator to Greenpeace or WWF who hates Shell and the likes, but suddenly you become the person at Shell who makes the decisions regarding the environment.

In your new position, you’ll experience the information flows, the incentives and disincentives, the goals and discrepancies, the pressures – the bounded rationality – that goes with that position. You very likely will base your decisions on the information you have in that position. If you’d become very poor, you’d probably see the short-term rationality, the hope, the opportunity having many children would bring. As a farmer who has a family to feed, a house to pay for and incomplete information about the state of the Amazon, you’d probably take down those trees.

perspective
It’s a matter of perspective

Don’t believe this? I’d suggest you look up on YouTube the Stanford Prison Experiment by Zimbardo. You’ll be shocked how fast you might forget who you were and how little control people really can have over themselves. As Dr. Meadows says, this is no excuse for narrow-minded behavior, it just provides an understanding.

Step Back

To change this narrow-minded behavior it is first and foremost necessary to take a step back and try to get an overview of the complete system. This way it might be possible to restructure the information flows, the goals, the incentives, so that bounded rational actions add up to desired results. Knowledge is potential power. The more complete the information is you got, the better decisions you’ll be able to make.

The bounded rationality of each actor in a system – determined by the information, (dis)incentives, goals, stresses, and constraints impinging on that actor – may or may not lead to decisions that further the welfare of the system as a whole. If they do not, putting new actors into the same system will not improve the system’s performance very likely. What makes a difference is redesigning the system to improve the information, (dis)incentives, goals, stresses, and constraints that have an effect on specific actors.

 

Did you guys like it?! Then like it! And more important, complete, adjust or diminish our ‘timeless wisdom’… Do you feel left out in the open? Teach us! (and don’t forget to like us on FB, thanks!)

A lot of this article was lend from the book “Thinking in Systems: A Primer – Donella H. Meadows”, which I highly recommend to anyone who runs into some problems to solve once in a while. Read for a taste of Systems Thinking here

Instant Gratification and a Recipe for Success

Instant Gratification and a Recipe for Success

Today I’d like to share quite a famous psychological experiment with you guys. An experiment every single one of the people reading this will be familiar with. If not directly, you will be indirectly. Be it in your life (which is highly probable) or in the life of someone you know. I’d say the sum of these two probabilities is one. I’m talking about instant, or, immediate gratification.

When we fall prey to the phenomenon of instant gratification, we fail to resist the urge of short-term (insignificant) pleasures versus long-term (significant) gains. We sin one time too often and drink that delicious glass of Muruve wine or that marvelous new edition of Leffe Royale (no advertisement, but you can always contact me or send some samples) in stead of keeping ourselves to our diet with one cheater moment a week and fail to meet our monthly decline in kilos. Or we skip one or two nights working on that assignment because we missed our friends too much. After all we didn’t see them for three days already! Resulting in a missed deadline, failed exam, and university debacle. Maybe you recognize the story of postponing that visit to the gym because there is an immensely interesting program on, which somehow couldn’t be recorded. But as often the case, tomorrow never comes.

Climate!

A salient topic in this regard, which I don’t want to be left unspoken and touch very shortly, is climate change. It’s a huge, inclusive, global example of immediate gratification. We want to eat that meat now, we want to keep the money now (instead of isolating our homes), we want to be alone in the car to work now, we don’t want to wait until we encounter a trashcan, we want to take a long shower now. Of course, in this regard, the short-term gains are indeed still more or less quite significant. But relatively speaking…

Alright. In the case these examples didn’t paint the picture clearly enough, I have a short video of the marshmallow experiment I was referring to in the introductory paragraph. If it was clear enough, I’d suggest you watch it anyway, solely for the reason that it’s fun.

Check Yourself, Before You Wreck Yourself

Aren’t they cute??? I know, right? Hilarious! Let’s watch them again… Anyways! The intriguing thing about this video, is that it is fairly possible to predict which of these children will be more successful in ten and twenty years on a variety of topics and which ones less so. Make a wild guess. Well done! The ones who are able to delay gratification, on average turn out to be more successful. It’s a matter of self-control. A matter of controlling your impulses and emotions. Impulses don’t take into account long-term consequences. Making decisions when emotional is NEVER A GOOD IDEAGOD DAMNIT!! Sorry….

How to…

Good News People! As we humans are equipped with the capacity for life long learning, it’s never too late to develop that invaluable ingredient for success. The ingredient for loosing weight, for gaining muscles, for more money in your pocket, for succeeding at business or school, for a better world. The more I am writing here on this website, the more I discover how the ingredients of achieving your goals, big or small, are interconnected. Fun fact is, that we both (Michel and I) already shared some articles that lead to an increase of deferred, or, delayed gratification. I’d say, read on (or read again)!

  1. Know thyself (two links, one per word)
    • Know the moments you get weak. Be honest with yourself. From the moment on you know your weaknesses in and out, you’ll be able to recognize them in time and interfere with them when they come up. “Woops! No wine for me today!”.
  2. Ask yourself this question
    • You don’t even need to read the whole article. Find the question Michel proposed. Instant and delayed gratification is a matter decision making. Deciding to eat or drink the forbidden fruit, deciding to watch House of Cards, deciding to throw that litter over your shoulder.
  3. Educate yourself
    • “Knowlegde is potential power” – Tony Robbins. The easiest way to gain knowledge is described in this article. It’ll help you to get where you need to be. Point three is in perfect alignment with point one.
  4. One step at a time
    • Don’t overwhelm yourself. Ever! It’s demotivating. It might seem like you save time, but in the end you’ll loose it. Here’s how to avoid that.
  5. Learn to love the process
    • Don’t focus too much on that goal of yours. That is what can make it overwhelming, especially if you dream big. Love the little wins, and celebrate them.
  6. Always remember, good things don’t come easy.

 

Did you enjoy the article and found value in it? Let us know in the comments and don’t forget to subscribe and like our facebookpage. You can find the button on the right. Thanks for listening!

From Lost Boy to Purpose Driven – Creating Self-Awareness

From Lost Boy to Purpose Driven – Creating Self-Awareness

Self-Awareness

having a clear perception of your personality, including strengths, weaknesses, thoughts, beliefs, motivation, and emotions

The following phrases are actual statements different people told me multiple times, be it in different wording.

  • My job is great actually. Even the pay is fine! But it’s just not for me…
  • I hate my job! “So why do you stay?”, I ask. What else should I do?!
  • I keep ending up with these wrong type of guys
  • This is my third education, but it’s still not what I’m looking for
  • Dan, how’d you advise me to get a sense of direction..??
  • etc..

MyStory

Imagine being eighteen and having the idea that you have to choose the direction of the rest of your life. You choose to attend university to become a high school teacher. In the third year you think: “what on earth am I doing here?!”. You’re about to quit, but you get offered a job as a teacher. You take it because you’ll make money, and because it’s “not that bad” (and because you are 21 years old). Of course your motivation is so low that you don’t make it to the finish line and you take another direction. You start a business with a friend in an utterly commercial sector which strands for certain reasons. Then you’re 25 and standing clueless in a retail store for a while. Diagnosis: Self-Awareness-Lack-itis.

Without a Root, There’s no Grip

Self-awareness is the necessary root for the right direction. It’s the little brother/sister of self-knowledge, and they go hand in hand. Respectively they’re the what and the why of your feelings, thoughts, emotions and actions. Together, these elements determine where you are and where you will be in life.

Self-Awareness, together with self-knowledge, will provide you with a grip on your life. Control. Control might have a freakish connotation about it. But paradoxically enough, control leads to freedom. Two fundamental needs of our human species. The freedom to choose, the freedom to have an own opinion, the freedom to execute on your ideas. Personal control, inherently, is a premise to these propositions.

Answering the Questions Asked

Now let’s address the questions we started of with. What exactly can, and in my opinion, should you do to become more self-aware.

  1. Meditate!

This one is by far, by miles distance, the best place to start and the biggest shortcut. To become self-aware, you have to be mindful of the things you do (or don’t do), think and feel. Meditation is about observing the contents and the qualities of your consciousness, which are the senses plus the thoughts and emotions. Meditating is for the mind, what sports is for the muscles. The more you train, the stronger it gets. Your awareness in general will expand, which is a life changing event in itself. I’ll stop myself from listing the other benefits science has ‘discovered’, millennia after the far east monks had empirically tested this already.

for Self-Awareness

  1. Ask the right questions

The last question in the introduction was asked me by a colleague a few years ago. The answer I gave him, I’d still give today. They seem so simple, yet they are fundamental. Just as the questions asked are fundamental questions. And the questions posed here connect seamlessly with Michel’s most important question. (Any questions?)

  1. What makes you happy? What daily events put a smile on your face?
  2. What are you good at?
  3. How can I make a money with this? How can I arrange my life so that my priorities will be in the foreground?

Answering these questions isn’t a matter of minutes. So don’t expect to answer them in a jiffy. To answer these questions you’ll need to prioritze them and be mindful (#1) of the answers daily life gives you. Also answer the opposite of questions a & b. Don’t underestimate it, and use #3!

  1. Write. Shit. Down.

In an older post I’ve already written about the con artist living in our skull. Some people are blessed with a memory like a vault. I only know a few of them. Good thing is, it is 2017. From 5 to 85 years old, everyone walks around with an external hard disk in his pocket. I’m in love with Evernote, but there are plenty of other ‘note’able apps (pun intended) that will improve your memory and creativity.

Be mindful, notice what makes you happy, and write down how you can build your life around it and monetize it (you have to eat after all).

  1. Read

Another phenomenon that I underestimated for the biggest part of my life. Reading the right books will give you perspectives you’ve otherwise would never get. It will give you new insights. It’ll take you to places you’ve never been, and it’ll teach you about yourself in a way that other people wouldn’t be able to.

We lose ourselves in books. We find ourselves there too

  1. Life is an experiment

This is how I look at life. And it’s actually quite a scientific way to look at it. You have to try to prove or disprove your hypotheses, your assumptions, beliefs. This leaves room for mistakes, which supports the idea of freedom. Basically you have to be ready to get high fived. In the face. With a chair. Preferably not by the Hulk, but it’s a possibility! It’s not the end though. That’s freedom.

for self-awareness

Good things don’t come easy. Absent self-awareness will not appear on it’s own. So you have to give it some effort. If you’re not prepared to put in a few minutes of your day, to determine the course of the rest of your life, then this post is not for you. And on top of that, you’re breaking our heart. Now you wouldn’t want that, would you?!

Did you like the article? Or not? Or maybe you’d like to add something? Leave a comment in the section down below and don’t forget to like our facebook page. Thanks for stopping by and see you next week!

How Our Brain Unconsciously Influences Our Decisions

How Our Brain Unconsciously Influences Our Decisions

Everything in your life is a reflection of a choice you have made. If you want a different result, make a different choice ~ Unknown

This quote may give you an idea that Captain Obvious has been typing this one, but you’ll be surprised how many people stubbornly keep doing the same thing over and over again. A prerequisite for shaping your life in a Magnanimous way is “knowing thyself“. A good dose of honest self-knowledge will strengthen your identity, clarify what you want and what you’re good at (and equally important, not so good at), and catalyze changes for the better. I bolded ‘honest’ in the previous sentence, because our brain tends to fool ourselves. Regularly. It happens unconsciously, it distorts reality and subsequently impairs decision making.

In my previous post I already mentioned a cognitive bias (Misattribion of Arousal) and how to take advantage of our brain fooling us. When we talk about cognition, simply put we’re talking about everything related to thinking, reasoning and remembering. I promised to write about some more of these unconscious tricksters. These are the ones I believe we encounter a lot and will help us steer our decisions in the right direction, the more we get acquainted with them.

Confirmation Bias

The assumption. We as humans think we’re able to always objectively know how to interpret and recall information.

The wake-up call. When we’re presented with information we automatically, unconsciously search for, interpret or recall information that suits our preconceptions about a certain topic.

This is a bias you will see all around, once you know about it. How, for example, is it possible that two equally intelligent people assess the behaviour of the annoying orange that is in power of US in completely opposite ways? Or how is it possible that when Ajax plays a football match against Feyenoord, their respective supporters both have a totally different opinion who was best? Or even if that foul was a yellow card or not?

Another manifestation of this phenomenon that all of you can relate to (from approximately 16 years old on, depending on where you’re from), is when you have been talking about a car with a friend, or thought about buying one. The following weeks you will be thinking that there are more Range Rover Sports (aim high) on these streets than before, which is obviously not true.

Aim High
Aim High

The use. If you’d like to have an honest discussion with your girl or man the next time, form an honest opinion on something political, or feverishly defend your favorite beer against a great suggestion from another connoisseur, remember this bias. Take the time to place yourself in her/his shoes. Take the effort to read news outlets that support your antagonist. And the hardest of all, taste the damn beer without prejudice. (I’d recommend ‘Leffe Royale Whitbread Golding’)

Availability Heuristic

The assumption. We’re quite apt at estimating risks and we know about which risky stuff we should worry.

The wake-up call. We trust our limited memory too much which causes us to have a cloudy judgment. Believe it or not, but we homo sapiens tend to believe that if we CAN remember it, it HAS to be something important. And the faster we retrieve it, the more important it is. We even tend to discount information that isn’t in our memories. Remember this the next time someone brings up a fact about a topic you know something about, but unfortunately not that specific fact.

An interesting inference can be drawn here regarding the phrase: “there’s no such thing as bad publicity”. The more you hear about a company or a person, good or bad, the easier, of course, you’ll retrieve it. Chances are it’ll work out fine for the specific company either way. So no worries, Patricia Paay!

The use. The next time your in a conversation about a topic and someone brings something up that you aren’t thinking of, don’t assume it’s not true, because you’re not thinking of it (note to self). And more important, when you’re about to make a decision, don’t solely rely on your inherently flawed memory. Get extra information from other sources. Don’t dismiss them, verify them.

The Framing Effect

The assumption. It doesn’t matter in which way a premise is presented to me. A premise is a premise.

The wake-up call. If people are presented the same premise, but with another choice of words, on average they will choose another option. And with other choice of words I mean a negative vs. a positive frame. People tend to be more risk seeking when a negative frame is presented versus a tendency to react risk averse when a positive frame is presented.

Let’s try the next premise from an experiment, conducted by (Nobel prize winner) Kahnemann & Tversky (1981).

Imagine 600 people are affected by a dangerous infectious decease. There are two treatments, which one would you choose:

  1. 200 people will be saved.
  2. A 33% chance of saving all 600 people, 66% possibility of saving no one.

Your choice..? Ok…

Now consider these treatments:

  1. 400 people will die.
  2. A 33% chance that no people will die, 66% probability that all 600 will die.

Which one do you choose..? Aha!

Now maybe you didn’t choose the other one, as you were given the theory behind it already. Or maybe you would’ve chosen the same option anyways. But the tendency is that people choose differently, while it’s the same situation. I invite you to test it on the next party you’re on. In this particular research, treatment 1 was chosen 72% of the time in a positive frame (saving lives), whereas it was only 22% in the negative frame (dying people).

The use. The next time when you are offered a holiday, for example, and you get offered the expensive one in such a way that you would rather choose that one over the cheaper one… Think twice. And a very useful, but underestimated trick – ask yourself this: Do you have problems? Or do you encounter challenges?

Framing effect
Half full or half empty? Framing options for yourself in a certain way too has an influence on how you proceed, and thus on how many chances you take… Or don’t.

Anchoring

The assumption. We rationally examine and take into account all factors, before making a decision.

The wake-up call. The first perception of information lingers in our minds and affects our emotions and decisions.

I know some people, who know some people who heard from some people that they used this trick when they were still working in a retail store. When a potential client came up to them with a product with no price tag on and asked for the price, they told they client that they ‘thought’ the price was $100, but to be sure they’d look it up. In the meanwhile they knew damn well that it was only $80! At first the client’s went “Uff, that’s a lot”. When the real, cheaper price came they thought: “Alright! That’s not so bad!! Give it to me!”.

Cha-Ching! This of course works especially when we’re oblivious about a topic. The $100 got anchored in the mind of the clients. That amount was too high. Another psychological effect at work here is that people want what they can’t have. So in the mean time the client is hoping for a lower price, because he or she wants the product even more, and he or she eventually get’s the lower price! What an awesome ‘lucky’ day…

The use. Next time you hear an amount about something you know nothing about, try to reason and/or find other information that can add some value towards a better decision. Or the other way around, aim high when selling your house or in negotiations (without overdoing it of course). And don’t trust those watch salesmen who are taking a look in the system to find the ‘real’ price…

Cognitive Biases
A comprehensive list of cognitive biases. For the crazy ones and the misfits among us. Zoom in or click to enlarge.

The keyword here is of course: information. The more information you have, the better decisions you make? Not necessarily. But solely relying on what you know and ignoring other information, or not analyzing the information at hand is probably not a good idea. There is one downside to this. It will cause you to question a lot of things, including yourself, which subsequently will cause uncertainty. But the pros will outweigh the cons, and your decisions will improve, and with that your QoL (Quality of Life). Balance is key.

Share, like, comment, spread the love, grow the tribe! 

Think like A Great Mind – Systems Thinking

Think like A Great Mind – Systems Thinking

“For every complex problem there is a solution that is concise, clear, simple, and wrong.” – H.L. Mencken

Usually I am not that engaged in politics and the world problems. Of course, as any healthy world citizen should, I care about the issues. But I don’t let it rule my day, year, or life. The reason I write this article is not because of a single event or thing. What I find annoying is the fact that it seems as if people are drawing away from reason and fact.

In a world that is drawing to extremes; think Trump, Brexit, IS, immigration issues, we must not forget to think. Sound easy right; to THINK. Extreme events strike at the heart of extreme emotions, and these attract proponents of extreme solutions. The fact that Trump got elected rose for a large part from the unsatisfied, scared feelings from almost half of voting Americans. Trump played this card pretty well, and managed to secure the victory. Here in Europe we have seen the same kind of thinking when (mostly elderly people of) Britain voted for an exit out of the European Union.

Furthermore the problems in the Middle East with IS and the subsequent immigration issues throughout Europe, have struck people at the center of their emotion. Proponents of hard, strict and simple to understand solutions are getting even more popular, and the voice of reason falls to the background.

What is even worse than proposing simple solutions to messy problems, is advocating misleading numbers and not looking at the facts. It’s no use in stopping people from wanting to be popular and thus using popular emotions to win hearts and votes. We need to stop believing these people without reasoning first. We need to start thinking as scientists, and great minds. One way is to start seeing problems as they really are. They are not clear cut, but messy and complex. Thankfully we have a thing called Systems Thinking.

I dare not propose this to be a complete introduction to the practical side of Systems Thinking. But I had a real eye opening when it was introduced to me while at University. Systems Thinking is a way of addressing decision making issues. Using a holistic analysis focusing on the way that a system’s essential parts interrelate and how systems work over time and within the context of larger systems. It recognizes that each piece is affected by each of the other pieces and tries to work out how. Feedback loops or causal loops are used to build an overview to aid decision making.

So a simple set of feedback loops would look like this:

motivation-feedback-loops

These address the concept of motivation. Left is a positive feedback loop that reinforces itself. Right is a negative feedback loop that also reinforces itself.

If you take reinforcing (+,+ or -,-) causal loops and put them together, you could see an escalation of great proportions. For example, the loop in the following left picture.

sustainability-08-00057-g001-1024

People panic and start running, causing more people to panic and run. That’s when you call it a reinforcing loop. When you introduce an negative to a positive or vice versa, you get a balancing loop. Depending on the measure of force in each causal reaction you will get a balance sooner or later. An equilibrium will maintain.

Using these loops you can build up bigger and complex systems. Like this one for urbanization issues.

1437309471873

Or check out this one, about the dynamics in the stability in Afghanistan.

not-powerpoint-fail-us-afghanistan-stability-coin-dynamics-causal-loop-diagram

My point in this article is that most problems in the world are connected to other issues. The larger and more complex a problems is, the larger your system will be. Changing or influencing one feedback loop could distort the entire system. This could result in events that, when we don’t have an all knowing overview, we don’t even know what could happen. This is what is happening to the ecology around us all the time. We are still learning the impact of global warming, deforestation, melting polar ice, waste and other human factors on the well-being of the planet, and all inhabitants of it. But as we uncover more and more, we can see and predict more and more of its effects. Not knowing about it, results in people not acknowledging it (Trump) or coming up with simple solutions.

We need to see that messy problems are messy for a reason. Try to think about the bigger picture, and more important think for yourself (Read why you should here). Let reason be the way to guide your decisions, not emotion. Use facts and proven feedback loops to see the total system (as large as you can imagine, since the total system is endless). Learn and study history (That’s why you should read).

Be a great mind, and think in holistic systems.

 

Did you like this article? Please like or share it. And let us know what you think, by commenting or reacting. Like our page and subscribe on our website, to get the latest updates.