As a species, our judgement couldn't be considered "foolproof" by any measure. In fact there are thousands of foolish actions undertaken by humans every day, all of them somehow getting past a legitimate evaluation process of their reward and effort. Our judgement just isn’t perfect.
Even though we evaluate actions before taking them, we don't use consistent metrics in our decision making. But what we do have is a consistent process. The equation below describes that process in a formula.
The Human Decisioning Equation
2. The Reward forms half the equation, and is weighed against the Effort, Cost, and Risk of pursuing it to determine if action will be taken. If the Effort/Cost/Risk are perceived to be too great, the evaluated action is not taken:
3. Measuring reward can sometimes be done in a tangible way: a monetary reward can be measured in dollars. But sometimes the reward is nothing more than a feeling, and measuring emotions is more difficult. For ease of use in this explanation we'll use a simple 1-10 scale for measuring emotional significance.
2. Effort evaluation is a key factor in decision making, because it requires that we determine what actions are required and how time consuming and difficult they'll be to perform.
3. Effort is measured by two metrics: duration of effort (time expenditure) and difficulty of effort (derived from complexity). If the physical effort is immense (e.g. climbing to the top of Mt Everest) it could outweigh the reward all by itself -- without the need to even consider cost or risk. Likewise if the cognitive effort is immense (e.g. learning the set of skills required to cut, shape, and weld steel) the effort could outweigh the reward. In our simple numeric scale of measure, effort is rated 1-10: 1 being minimal, trivial effort; 10 being the maximum effort we could consider taking for a reward.
2. Cost matters to the equation because it factors in any element of loss to the decision. When there is a reward to be gained, the cost determines its price.
3. We measure cost tangibly where possible: money out, resources traded or consumed (which can be converted to a monetary figure). But cost can also be intangible -- in some cases there's an emotional cost involved when taking an action, or even a psychological cost if the action is potentially traumatising. Most decisions in life are minor, and cost can usually be be most usefully defined as a simple dollar value: preferably $0.
4. The significance of cost is relative to the context, so a dollar figure alone is inadequate for the decision. By cost being contextual, I mean that $100 is a very high cost for a pizza: perhaps a prohibitively high cost rating like 10/10 on the cost scale. But $100 is a very good deal on the latest GoPro, and which we might call a cost rating as a 2/10 in that context, despite the amount of money being exactly the same. The cost rating is really just a measure of your perceived value, which is why converting it to the 1-10 scale is vital. Doesn’t it seem utterly loopy turning a tangible and quantitative unit of measure (dollars) into an intangible qualitative unit (perceived value)? Sure it does. But it’s necessary in order to analyse the significance of the cost.
2. Risk can drop reward attainment right in the toilet, particularly if the subject is afraid of risk. This is significant to the equation because a general fear of risk, or fear of a specific outcome, introduces emotional weight to decision-making, pitting our fear directly against our desire.
3. Once the risks of taking a given action have been considered, and the legitimate risks identified, they need to be evaluated for the likelihood of its occurrence versus the likelihood of the desired outcome.
So here I assign an estimated likelihood to each possible outcome:
99.8% (Desired outcome) I receive a pizza to eat.
0.1% I receive no pizza.
0.1% I receive a pizza but throw it on the roof in anger.
There are any number of potential outcomes to an action of course. Analysis should only include those which are both foreseeable and significant.
In this example I've determined there's very little risk of things not going as planned. Total risk is only 0.2%. Translating this to a simple 1-10 metric, the risk is 0/10: almost certain to yield the desired outcome.
Recording in a spreadsheet your estimated R, e, c, an r ratings of various judgements and their actual ratings (determined after the action has been taken) will give you data that'll allow you to see if you tend to over- or underestimate when making decisions. You'll then be able to compensate with data-assisted precision.
The ratio can become further complicated when the expected emotional value is not a precisely known, but is anticipated to fall in a range, like "between 7 and 9".
But you don't need an optimal decision: that would be pre-determinism in its final state. You just need a decision to act or not. Sometimes things will go right, but every time you have a chance to learn and improve your judgement.
Once habitualised, this cognitive phenomenon forms the basis of pessimism. The same phenomenon, but with a focus on the reward or rewards of the action, is the pattern responsible for optimism.
- Identify strong emotions — Sometimes simply being aware of how you feel and why is enough to remove the emotional bias.
- Put time between decision-making sessions -- Not all decisions have to be made in the first attempt. Uncertainty can sometimes be conquered by facing the decision later when you're in a calmer state.
- Environmental changes -- Stressors affect the emotional state via perceptions and effects on the physical state. Address these
- Maslow evaluation — Are your basic physical and emotional needs being met? If not, emotions will be intense and severely influenced by this. Satisfy these needs before proceeding with the decision if possible.
But it's not always possible to quantify Reward, Effort, Cost, and Risk for every decision we make. In most instances it's worthwhile not to bother measuring it all, since our normal cognition handles the bulk of our decisions almost automatically, microseconds fast, and without the hassle of trying to find a pen. Moreover, the actual metrics of the evaluation system are completely intangible: in many cases it's the expectation that we'll feel a particular feeling that is adequate reward to compel us to spend effort, cost, and accept risk.
In a subsequent blog post we’ll examine The Action Threshold, and provide a tool for recording efficacy data on decision making.