By Deeptha Madhavan, MSc in Molecular Biology
Decision-making in the animal kingdom
A hungry Bonobo monkey wanders through the forest looking for its first meal of the day. It jumps from tree to tree, cleverly staying out of the reach of its predators until it spies a termite mound among the bushes. The bonobo now needs to make a decision. She can climb down the tree to access her meal, but that puts her right in the sights of her predators.
In the forest, it takes the monkey mere microseconds to decide. She quickly climbs down the tree, fashioning a long twig into a rudimentary probe to poke into the termite mound. She quickly catches the first wave of wriggling termites, biting into her juicy meal. But termites colonies only send out their strongest soldiers to defend their home. There are hundreds of termites still hiding inside, and the Bonobo knows this. Should she stay longer? An intelligent Bonobo would quickly assess her surroundings to make sure she isn’t in immediate danger before making a decision to keep foraging. Only an intelligent Bonobo would survive in the wild. The rules of nature are simple, only the fittest survive.
The human brain, despite its complexity, evolved for the same purpose as the Bonobo; survival. However, the human environment has evolved rapidly from the threat-filled forests we inhabited. Today the problems we face are very different, requiring modified decision making skills. Economists and philosophers have studied human decision making for centuries, trying to develop a model for making the perfect decision. However, a lot of these theories are based on the assumption that humans are perfectly logical creatures that make well-considered decisions. When these models are then applied in the workplace, the results aren’t as stellar as predicted.
It is only in the past decade, that researchers have begun to confronting the range of errors and biases that hinder human decision making. In this first part of the series, we delve into the human brain to understand how an individual makes a decision.
Outcome prediction and decision making
A huge portion of decision making is outcome prediction, for none of us can truly ascertain what is going to happen in the future. Among living things, even the lowest unicellular organism displays the ability to make decisions based on potential outcomes. Decision making begins with the delivery of information to the brain. An individual then begins weighing the potential certainties and risks, followed by eliminating un-attractive options. It sounds simple, but in reality what an individual sees as “risk” can be defined by his own life experiences (The theory of Utility). For example, a poor person would be more willing to take high risks for monetary gain. In this scenario, the decision is still entirely rational by his standards.
The conscious and the unconscious mind
Not every decision we make is thought out, with an elaborate assessment of the pros and cons. When you see a train moving toward you, the decision to move away is impulsive, made within microseconds. This process is vastly different from decisions that need to be made deliberately, like solving a mathematical equation. It is important that we understand these distinct pathways and their strengths so that we may harness the total power of the brain in making effective decisions.
Two psychologists, Keith Stanovich and Richard West, proposed that human thinking could be widely classified into two systems: The automatic, involuntary system 1 and the complex computing system 2.
System 1 works intuitively and the decision making process is heavily influenced by the individual’s past experiences, emotions and in some cases – Genetics! (Yes genes can pass on memories!) While many economists dismiss system 1 as irrational, your gut feeling is a priceless asset, particularly when you are faced with an unprecedented situation. For example, being able to detect hostility from facial features, or tone could be life-saving. Furthermore, not all system 1 thoughts are emotional, they can be derived from learned behaviour. For example, you know putting your hand in a fire will burn you.
System 2 is a more deliberate process, which uses the bulk of the brain’s reasoning and cognitive power. System 2 gathers all known information and makes a top-down assessment. This process isn’t perfect and unlike system 1, it makes black or white decisions. A person’s bias may still affect this process leading to poor and sometimes irrational results. For example, cognitive bias can lead even a rational mind to see patterns in information where there are none. We will explore personal biases in detail in part 2 of this series.
Is there such a thing as too much information?
Psychologists from Harvard and Stanford performed a simple behavioural experiment. Two groups were given varying information about the assets of an individual and asked to make a decision regarding granting that individual a loan. Group A was told the individual was in a stable, well-paying job but had defaulted on his last three payments amounting to $5000. Group B was given the exact same information but told the individual may or may not have defaulted in his last three payments amounting to anywhere between $5000-$25000.
They could reject the application immediately or wait for more information. 71% of group A chose to reject the application immediately, despite having limited information. Because they knew the individual had a history of defaulting.
On the other hand, participants in group B chose to ask for more data. Humans hate uncertainty! Therefore it was quite natural that group B asked questions based on how their information was phrased. When they were told the man owe $5000, which is the same information group A was given, only 21% chose to reject the application.
These results highlight an important factor in decision making: You don’t need all the information, you need the right information. When Group B was given extra information, they got caught up in unnecessary details such as the size of the debt without recognising that the individual had a pattern of bad payments and was therefore not eligible for a loan.
A possible explanation for this phenomena is that obtaining too much information, allows humans to use their personal biases in predicting the future. However, when we are forced to make decisions with little information, we only consider the pertinent facts. This issue is of particular interest in today’s digital world where any information you need is available to you at a click of a button.
Making decisions on a time crunch
An animal that makes a quick decision isn’t as discerning as one that can take its time. This phenomena has been termed the speed-accuracy trade off paradigm by psychologists. For example, rock ant colonies have a very unique method of choosing sites for new nest building. They depend on at least 50% of their colony members individually arriving on an agreement to decide on a new site. However, when a rock ant colony has to make the same decision under hazardous conditions, they make certain trade-offs. They depend only on a small portion of their colony to agree on a site before beginning to build. This way, the ant still chooses a fitting site 9 out of 10 times, but the decision is made more rapidly.
A human operating under a time crunch makes conscious decisions on which stimuli to respond to and which stimuli to ignore. In some situations, it is most advantageous to make a good enough decision quickly over spending too much time weighting the pros and cons. This process can be learned by practice and will be described in the third section of this series.
The distractor effect
When a monkey is asked to choose between a piece of orange and piece of apple, he merely chooses the option he likes the most, based on his tastes. However, when a third unattractive option is introduced, the monkey takes much longer to decide between the other two options.
One would think an attractive third option is what would make the decision harder. However, the less attractive the third option is, the more attractive both the apple and the orange looks to the monkey. Humans operate in much of the same way. We perform poorly when we are confronted with more choices.
A human being makes a multitude of choices in a day, some of them not even consciously. Even the most rational among us can make a mistake. No executive should therefore be expected to make the perfect decision at every turn. This series is simply dedicated to helping you understand your own brain so that you may become self-aware of the biases you employ. In the second and third part, we explore ways to correct personal biases in order to make the best decisions for your business.
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