Analysis paralysis

24 11 2014

It’s such a burdensome and frustrating experience to make a purchase decision in this highly consumeristic world. I’m simply overwhelmed by the number of choices available, which results in a number of decisions at every step.

I’m basically a rational person, who usually likes to evaluate alternatives and make an informed decision. But of late, I am trying to avoid or at least control analysis paralysis by not analyzing too deeply certain decisions which won’t have a considerable impact to my lifestyle. But alas! It’s easier said than done.

Let me give a personal example. All I wanted to get myself is a smartphone. I started with great enthusiasm. The first and foremost decision to take is – the brand and model. Which one? Samsung or iPhone? Ok, I mulled over it for a week. I consciously steered away from rationally listing down pros and cons of various models, which consumes lot of time and energy. Somehow I zeroed in on iPhone. Yay!! I briefly congratulate myself on reaching this milestone with minimum effort.

Next comes the decision about the carrier. It seemed easier. AT&T. Because people all around me are using the same service. I just accepted their wisdom and refused to do my own analysis to convince myself. Another victory. Yay!

But “picture abhi baaki hai mere dost” (the story is not over, my friend)! I now need to select the plan. It’s right here that my head starts spinning. There are AT&T Next and 2 year Contract besides the option of buying the unlocked phone upfront and then use a mobile share plan. Of course, I also need to consider my data usage, sharing possibilities and so forth. It seems simple and straight-forward as I put it out here, but actually it’s not. It took me a lot of time, energy and effort – constantly going over the options, reading reviews, and evaluating them.

Even as I start getting irksome about the whole elaborate process, it gets worse. I also need to check for the “deals”. How I hate it! Grrr! 👿  It’s often difficult to ignore the lure of the “deals” because they have the potential to save you significant number of bucks. In the case of not budging and insisting on the straight path and buying for the MRP, there is a high possibility of feeling cheated when folks all around you get the same stuff and more much cheaper.

With “deals”, you have to be watchful, scour the websites for updates, wait, and then pounce. Meanwhile, rest assured, one will be spending significant amount of time and resources on the internet and related stuff. Even after all these, it is possible that you may not be 100% sure that you got the best deal. In order to get certain level of confidence, you have to increase the intensity of your search and give it your best. And think about the processing effort – the strain on our brains!! 🙄

It’s the same case for any other significant purchase (read – “worth more than few tens of bucks”). Today’s consumer market is not for the lazy. It demands considerable effort on the part of the consumer. If you want to get the best for your money, you have to spend lots of time, energy, and other resources. Otherwise, you are a fool.

Even after all these years, I don’t get used to this idea and I fume every time I’m compelled to go through this process.

It’s the same with Tax Savings too. Agreed that, government wants to incentivize good behavior (aka savings), it’s not very clear for a layman what all constitutes “good behavior”. After a few basic things, it all gets murky and we are tempted to leave the planning to tax professionals. Why to make it so difficult in the first place is my question. (Other than providing bread and butter for the tax experts, that is. 😛 )

With the myriad of options for almost every product/service, the consumer is undergoing analysis paralysis. Does anyone bother about the collective effect of this? – how much stressful it is for the people, leading to lower well-being; how much productivity loss with all the time and energy that is spent on the process of purchasing?

It’s the curse of “maximizing”. The sellers are just trying to take advantage of this “toxic mental habit” of us. And we feel helpless as we are going deeper and deeper into its vicious jaws.

More on “choices, consumerism, analysis paralysis, maximizing vs satisficing” to come.

Intuition and decision making – Part2

19 11 2014

By definition, intuition, like our logical processing, is based on past knowledge/experiences (whether we know it or not). So, it may not give you a right answer in a new situation. It is at best a guide. It can be right in some circumstances and wrong in others. David Meyers, an experiential psychologist, in his brilliant book – Intuition: Its Powers and Perils, suggests the context in which context our intuition serves us well and in which it doesn’t. We can trust our intuition when:

  • harnessing the automaticity of everyday life – our implicit learning, memory etc.
  • we have experience based expertise
  • we are reading emotions from others’ faces
  • after letting our distracted or sleeping unconscious mind work on a decision task

We should not trust our intuition when:

  • Buying a lottery ticket
  • Picking stocks to buy
  • Predicting athletic performance from who is currently “hot”
  • Predicting job performance from a casual interview
  • Judging who is lying vs. truth-telling

Sure, it gave me a lot of clarity. Here is a short video (1 hr) by David Meyers on the topic, in which he gives the gist of his book. In the video, he also explains why we intuitively fear the wrong things. He says, we fear

  • What our ancestral history prepared us to fear
  • What we cannot control
  • What’s immediate
  • What’s most readily available in memory (availability heuristic)

Some of the biases that we need to be wary of are:

  • Self-fulfilling prophecy – we tend to behave in ways that make our predictions about something come true.
  • Confirmation bias – we tend to only look at the evidence that confirms our beliefs
  • Overconfidence bias – we generally are overconfident about our predictions and estimations
  • Affective forecasting – we tend to overestimate our  future happiness or otherwise from an event

Obviously, this short list is no way an exhaustive one. Sometimes, I feel so overwhelmed by all these invisible forces acting against me. 😛 Given the amount of reliance people usually put on their intuition, even while making critical decisions, I think we need more convincing on the part of the pitfalls or rather perils of it than its power. 🙂 Nonetheless, in view of its value, it helps us to be more intuitive. So, how can we improve it? It’s pleasantly surprising and heartening to know that New Zealand would like its kids to “reflect on their own learning, draw on personal knowledge and intuitions, ask questions, and challenge the basis of assumptions and perceptions.” Jamie McKenzie, the editor of an educational technology journal, provides a list of steps that can help students make use of their intuitions:

  1. Clarifying, Demystifying and Defining
  2. Enhancing Awareness and the Ability to Read Intuitions
    1. Meeting new people
    2. Predicting the next move
    3. Sizing up a situation
  3. Testing and Balancing Intuitions against Other Thinking

Read his excellent article here. Practicing meditation and being mindful is an excellent way to improve our intuition. Mindfulness enables us to be in the present, thereby making it more feasible for us to pick up the subtle cues and information around us. Meditation helps us to calm down, bring down the noise inside our heads. This makes it easier for us to listen to our inner self. Being more observant of others and surroundings also helps a lot. This brings to my next question: why are some people more intuitive? Is it a predisposition, a natural inclination? Or is it environment? Like everything else about us, it is a combination of both. Genetics partly shape our ability. But a significant portion of it depends on the kind of environment we are exposed to. Also, as we feel comfortable with a particular way of thinking, we tend to reinforce that behavior by repeatedly preferring it to the other resulting in a positive feedback loop. The popular psychology claims that there is a dominant part of your brain – Are you left-brained or right-brained? Left_Vs_Right_Brain Clearly, intuition is associated with right-brain and logical thinking and analysis with left-brain. But, the recent research indicates that the dominance is a myth and in fact both parts need to work together to solve anything. Nevertheless, we see that some people approach things more in the “right” way and some others more in the “left” way. This article points out that there are biases inherent in both the approaches. Intuition-dominant biases:

  • Overlooking crucial details
  • Expecting solutions to sound in a certain way
  • Not recognizing precise language
  • Believing their level of understanding is deeper than what it is

Logical-dominant biases:

  • Ignoring information they cannot immediately fit into a framework
  • Ignoring their emotions
  • Making rules too strict

People need to use the appropriate approach based on the problem/task at hand. For example, learning a mathematical or science concept should be approached analytically to be more effective, while understanding the emotions needs more of an intuitive approach. It is quite possible that you may not have an intuition in a certain situation. Then, all you have to depend on is concrete data. On the other hand, it is also possible that sometimes, you may not have any or enough data to rely on to make a deliberate decision, or very time pressed to actually make a logical decision. In those cases, you may have to act out of your intuition. I will end this post with an interesting questions: Are women more intuitive than men? If so, why? If not, why the myth is so prevalent? I’ll explore this in a later post. 🙂 Part1 Note: This is a continuation of an earlier post on Effective decision-making.

Intuition and decision making – Part1

18 11 2014

We all have intuition. Whether we acknowledge it or not. It’s not uncommon for people to decide something based on their gut feeling, instinct, intuition.

The questions that immediately sprang up in my mind include:

  • Does it always serve us right?
  • How reliable is it?
  • When should we trust it and when should we question it?
  • Why are some people more intuitive than others?

Before trying to answer these questions, let’s start with looking at what intuition actually is. The dictionary says it is “the ability to understand something immediately, without the need for conscious reasoning.”  It’s what is referred to as System 1 thinking in Daniel Kahneman’s latest best seller – Thinking Fast and Slow. It typically is fast, automatic, effortless, implicit, and emotional.

It also serves the current discussion to differentiate it from “instinct”. Instinct is an instantaneous reaction to a physical environment or situation without any thought put into it. All animals have instinct – so essential for survival. (Intuition vs Instinct)

It’s interesting to note that the past 50 years of scientific research challenges the trust people put on their intuition. It suggests that the more deliberative, slower, conscious, effortful, explicit, and logical System 2 thinking works in the favor of the decision maker. The problem with intuition or System 1 thinking is that it’s influenced by several psychological biases and heuristics, which will lead to incorrect decisions.

But the research results fail to provide conclusive proof of the positive effect of varied strategies to reduce decision biases and encouraging System 2 thinking. The most important pre-requisite for these strategies to work is the awareness of the decision makers of their biases and their willingness to address them to improve their decision-making. On the other hand, for biases which they don’t like to acknowledge, changing the environment to address the bias in play can be a plausible approach Example: addressing the ‘Status quo bias’ by having the desired option as default. (Milkman, Chugh, Bazerman, 2008).

When Malcolm Gladwell brought into the limelight the fabulous “power of thinking without thinking”, by which we make brilliant decisions in the Blink of an eye, I believe many people, including myself, were dazzled.  I feel that it’s written powerfully and extremely engagingly with the purpose of eliciting such response. Sure, he touches upon some of the prejudices and biases that can influence our intuition resulting in misjudgments, but the book fails to clarify when it is right and when it is wrong. In short, this bestselling book doesn’t offer a complete picture and failed to answer my questions.

Personally, I’m a skeptic and have a scientific mind. It’s easier for me to dismiss anything which doesn’t sound logical to me. But of course, it would be a mistake if I do so without investigating or giving it a benefit of doubt. Isn’t it? I believe that despite our strong convictions (or rather because of them), we need to be open to any claim or any new information, and be willing to investigate it to determine its validity. Nevertheless, I’m highly dubious of ideas like “intuitive healing”, which place too much reliance on intuition, make it sound more like magic.  🙂

I think my intuition is not so strong. Actually, I never really thought about it. I’m sure I get certain messages from my intuition but I guess I’m usually not too attentive of them and miss their significance. However, I have come to realize that it’s a mistake. Because, our intuition is a valuable resource, without which our logical analysis will be incomplete.

This makes sense because there is no magic about intuition. It is in fact the result of years of learning, experience, and expertise. We all know that as we gain expertise on something, it becomes automatic. Ex: driving.  Over the time, we don’t consciously exercise our logical mind to do the task but automatically perform it. Intuition is actually based on a lot of cues and subtle information that our subconscious picks up and processes it so fact that our conscious has no idea whatsoever that anything might have actually happened. As such, our stereotypes, prejudices, and other biases which are so ingrained in our psyche manifest themselves in intuition. So, we must always take it with a grain of salt.

Even Hercule Poirot, the master detective who relies on method and intelligence, proclaims “Never ignore your intuition”.  😛 So, the best way to go about it is as Robert Heller puts it – “Never ignore a gut feeling, but never believe that it’s enough”. We should never dismiss it right away because it may be taking into account some important information that your conscious mind is not able to pick up.

Given the nature of intuition – that it’s automatic and comes from without any conscious reasoning process, and the fact that it actually comes from our past experiences or some other subconscious knowledge, we need to take it into account. But test it against data. If you don’t have enough data to dismiss it, gather more data.

Note: This is a continuation of an earlier post on Effective decision-making.

Effective decision-making

2 11 2014

I had been to a discussion meet-up last night. The topic was ‘Effective decision-making’. It was an informal session trying to tease out different aspects associated with the decision-making aspects. We all make decisions, big and small, all the time. So, it goes without saying that it serves us well for them to be effective. The first question is how do we define “effective decision-making”. Is it the process or the outcome or some combination of it? Definition: As per the management guru ‘Peter F. Drucker”, an effective decision-making process must go through some steps:

  1. The classification of the problem
  2. The definition of the problem
  3. The specifications which the solution to the problem must satisfy (the “boundary conditions”).
  4. The decision as to what is “right”, rather than what is acceptable, in order to meet the boundary conditions
  5. The building into the decision of the action to carry it out.
  6. The feedback which tests the validity of the decision against the actual course of events.

Unless these elements are the stepping stones of the decision process, the executive will not arrive at a right, and certainly not at an effective, decision.

So, this tells us that “Effective decision-making” is all about the process. But decisions are usually interpreted as good or bad only in hindsight, once we know the actual outcome. And I believe that it’s not the right way to judge a decision. Because while we making decisions, there are risk and uncertainty in play. Risk is known and if we don’t factor it in our decision-making process, then we are not being effective. But the uncertainty relates to unknown and we don’t have any idea about it. (Who would have predicted something like 9/11??) Strategic Decisions Group of Stanford says that “Making good decisions in the face of uncertainty requires understanding the difference between decisions and outcomes. They say that decision quality integrates the art and science of decision making along six elements:

  1. Appropriate frame
  2. Creative, doable alternatives
  3. Meaningful reliable information
  4. Clear values and tradeoffs
  5. Logically correct reasoning
  6. Commitment to action

There are pitfalls at each step that we need to be first aware of and then avoid. The framework suggests that we should try to attain 100% quality on each of these elements. (100% being a point where additional effort will not improve the decision.) But in most cases, when we are judging others’ decision-making, the only thing we have access to is the outcome.

It was pointed out in the discussion that in political scenario, all the citizens know is how the decisions made by the President/Prime Minister turned out bad i.e., in hindsight. Is it how it’s supposed to be? Logically no. But since they have access only to the outcome, people vote based on the outcome.

Coming to the process, there can be several ways to go about deciding something – rational, spontaneous, avoidant, participatory/dependent, intuitive. How to determine, which process is the best. Should it be dictated by the type of problem or situation or just a preference of decision-making style? Every one of us has a preferred or dominant style of decision-making, which is part of our personality. Scott & Bruce’s (1995) General Decision Making Style questionnaire can be used to assess how people approach decision situations.

Many questions sprang up during the discussion. Most important of them being:

  • If your data says something but your gut pull you towards something else, how should be decide?
  • How reliable is “gut feeling/instinct”?
  • How much data is enough to make a data-driven decision? How do we handle analysis-paralysis?
  • How do we arrive at the list of criteria to evaluate our alternatives? How do we prioritize them?

As for me, I make (or at least try to make) rational decisions; I list out my alternatives, come up with criteria to evaluate them, prioritize the criteria and based on all the pros and cons of the alternatives make a choice. Sure, it’s taxing. It’s a lot of effort. Will it always produce good results?? I’m afraid not. The challenge for me personally is in trying to evaluate the alternatives. What are the criteria to consider and what’s the weightage I need to give to each of them? In hindsight, I see that failing to factor in some of the important/relevant criteria has resulted in the bad outcomes. How to address this major pitfall?

One interesting question that was posed is – what is the optimal number of criteria we need to consider? Given the fact that we may have tens of requirements and that it may not be economically or otherwise feasible to consider all of them, we may have to prioritize and limit them to a handful so that we can arrive at the decision in a timely and effective manner. But is there a one-size-fit-all magic number??

One of the major takeaways for me from the discussion is “cost-benefit analysis” of the decision. With the data and criteria we have at our disposal, we have to make sure that the cost of making a decision does not outweigh the benefits that can be accrued from an effective decision-making.  In some cases, the quality of the decision may not affect us in any big way and we can live with sub-optimal choices. We will be better focusing our time and energy on only those decisions which are crucial and warrant the extensive analysis. This is a very important aspect to think about and is one way to deal with “analysis-paralysis”.

It was indeed an exuberant and stimulating discussion. But as you can see, no concrete conclusions were arrived at and there are more questions than answers. There are lot of interesting and intriguing aspects that I would like to explore further and “try to” come up with some perspective, which I hope would be objective.