Psychologists have long been interested in
how we make decisions. I'll cut the history of psychology lesson short, except to say that
- People do not perform like calculators.
- Even when we (mathematically) model human decision making, the models outperform the humans.
- People are really quite good at taking a lot of information, ignoring the junk, and making a decision using some very simple short-cuts.
Making tiny decisions that affect only me are not really the ones with which I have a lot of difficulty. I have trouble when it comes to making larger scale decisions. Sometimes, these decisions involve others. Here are some examples:
- Whether to replace our existing windows with better insulated ones.
- Whether to put in a patio.
- Whether to buy a new refrigerator.
- Where and when to go on vacation.
You might think that a good place to start would be to take a piece of paper and list the costs and benefits of each alternative. That's a good idea, I suppose, but I've developed a short cut. My first step is to look at a pending decision and ask myself what are the
three most important factors or variables regarding the decision. My next step is to
pick two of the three that are most important. In many cases, I find that the most important variables to me are price, timing, and quality.
In the case of the windows, I can be flexible on timing (when we get them), but I don't want to pay a lot or sacrifice quality. That means that I can wait a week or a year or two years to get something that doesn't compromise on the quality of the window treatments and is manageable in terms of cost.
In the case of the patio, it's a similar situation: I can slide on timing, but price and quality are most important.
In the refrigerator case, it was clear that the old refrigerator was dead and that we needed a new one. Food was spoiling. In this case, I could slide on price to get a good quality refrigerator quickly. See how it works?
Recently, we were planning a family vacation. Our daughter is in St. Louis and our son is in Chicago. We were having difficulty deciding where and when to get together, and I detected some apprehension on everyone's part about leaving it up to me to decide where to go (something about a houseboat trip on Table Rock Lake 15 years ago that I planned and no one else enjoyed). I was describing my newly discovered principles to Jeanne, who asked how they applied in the vacation situation. I realized the important things to me were
where to go (half day drive),
who goes (everyone, no one left out), and
when to go. I could slide on when the vacation took place in favor of a shorter drive and everyone being there. Who did the actual planning wasn't important to me, but it was to others. Jeanne and the kids took over and planned it.
Seeing decision points in this way has lead me to be able to 1)
examine what I really think is important, 2)
explain my priorities, 3)
understand the priorities of others in the situation.
OK, here's a final example. I've been doing some soul searching regarding my work. I did the analysis: The three most important things for me are to be earn a good income, to make a lasting contribution and to enjoy my work. Which would I trade off? Easily, I'd settle for less income in order to make a meaningful and lasting contribution while enjoying my work. That analysis helps me to understand what I am searching for and helps me to keep it in mind and to plan, accordingly.
In summary, I would say that
- Every situation is amenable to analysis. Try it!
- Optimizing or getting the most means there are going to be trade offs.
- Figure out the three most important things about the situation and pick two. If you get those two, then be overjoyed!
by Greg Monaco, Ph.D.
Copyright, Monaco & Associates Incorporated. All rights reserved.
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