Wednesday, January 17, 2007

More on Decision Making

I have been plowing through a monograph on adolescent decision-making by Valerie Reyna and Frank Farley, and I found a discussion related to my previous post on decision-making. In the article, they discuss the normative analysis of decision-making:

More formally, the normative analysis of a choice identifies the options in the decision makers’ best interests, given their goals and the information available to them, all integrated by the application of a rational decision rule. Customarily, that is an expected utility rule, which multiplies the utility (or attractiveness) of each outcome by the probability of its being obtained for each option. In these terms, rationality is a matter of consistency with a set of rules, such as transitivity (e.g., individuals who prefer A to B and B to C should also prefer A to C), because following such rules can be shown to result in reaching the decision makers’ goals (i.e., maximizing the attractiveness, to that decision maker, of the chosen option; von Neumann & Morgenstern, 1944; Yates, 1990). Whether people actually adhere to such rules or pursue their own best interests is a detail left to descriptive research as opposed to normative analysis.
(p. 9)
A normative analysis of decision making recognizes that a "good decision" is one that is well-made. The decision-maker considers the alternatives and estimates the probability of achieving different outcomes. The decision-maker then selects the outcome by weighting the attractiveness of the outcome and the probability of achieving the outcome.

Reyna and Farley go on to say:
Normative analyses also recognize that people may rationally pursue goals that others dislike (e.g., adolescents who care more about good times and social approval than adults think is appropriate). Normative analyses recognize that people may make choices with unhappy outcomes because no better options were feasible (e.g., when dealing with bullying or sexual coercion). Normative analyses recognize that bad outcomes may follow good decisions, when chance intervenes, just as good luck may reward poor choices. Indeed, there is a term in decision analysis, outcome bias, for confusing the quality of decision processes and the consequences of decisions (Ritov & Baron, 1995). (p. 10).
This is exactly the point I was making when I described how decisions put us on unpredictable paths. The quality of our decision-making processes affects the likelihood of pleasant consequences, but it cannot guarantee it. Outcome bias confuses the quality of the decision with the path on which the decision takes us.

Outcome bias is so attractive because it is comforting. If I make the "right" decisions, my life will be perfect. If I'm unhappy with where my decisions are taking me, it's because I made the "wrong" decision. It is possible for me to predict the future and make only good things happen to me.

Giving up these unrealistic beliefs and accepting the true nature of decision-making is anxiety-provoking:
  • It is anxiety-provoking to believe that you can make decisions well, but have them take you to bad places.
  • It is anxiety-provoking to believe that you can be in a situation where there are no "good" choices; only least-worst choices.
So, we strike a bargain with ourselves. We would rather feel the guilt and regret of having made "bad choices," than to accept that sometimes--no matter how good our decisions are--bad things will happen to us.

Some people embrace this belief through a toxic spirituality, which I've discussed before: If I am a good person, God will keep bad things away from me. If bad things happen to me, it must be because God is angry at me. This thinking can be almost magical: If I'm good to my family, God will reward me at work.

So, these beliefs give us an illusion of control over our lives and fend off the anxiety that the unpredictability of life engenders. Ultimately, to live happily, we must give up these illusions. We have to recognize:
  • If we make decisions carefully, we have an improved likelihood of taking an enjoyable path, but nothing is guaranteed.
  • If our decisions take us down an unpleasant path, it is always possible that, around the next bend, better things will happen.
  • If we are unhappy with the path we are on and are convinced that it won't improve, we can make more decisions and take new paths.
  • It is rare that a well-made decision will take us down a catastrophic path. It can happen, as in the person who decides to stay late at work and is then hit by a drunk driver on the way home. The probability of such an event is so low that it is not worth worrying about.
And finally, the unpredictability of life is not only threatening, it is also exciting. As I look back on my life, my favorite memories are of those decisions that set me on unpredictable paths. So, instead of embracing outcome bias, I embrace the adventure of life.


Reyna, V. F., & Farley, F. (2006). Risk and rationality in adolescent decision making. Implications for theory, practice, and public policy. Psychological Science in the Public Interest, 7(1) (monograph).

Ritov, I., & Baron, J. (1995). Outcome knowledge, regret, and omission bias. Organizational Behavior and Human Decision Processes, 64, 119-127.

von Neumann, J., & Morgensern, O. (1944). Theory of games and economic behavior. Princeton, NJ: Princeton University Press.

Yates, J. F. (1990). Judgment and decision making. Old Tappan, NJ: Prentice Hall.

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