There are many ways to make decisions. We can do it the way our brains were designed, the way we've been trained, or the way we think is best. But one of the most important things to remember is that intuition and confidence are not enough.
Humans are naturally biased, swayed by nostalgia, and attached to our own beliefs. We tend to seek out evidence that confirms our beliefs, while ignoring evidence that contradicts those beliefs. We also tend to be overconfident in our own abilities and judgments.
We have to make a lot of decisions. Recruiting employee, client acquisition, design and colors – we have to make a decision for all of them. Do you trust your own intuition and your gut feeling? Your experience, knowledge and your feel for the information. What do you think? I think that it doesn't work. Studies in this area use cognitive illusions, cognitive biases or cognitive errors. Many of these studies demonstrate how human intuition systematically deviates from rational thought, and why human intuition is highly susceptible to framing effects, conjunction fallacies, belief bias, and numerous other cognitive biases. And that's not only the cognition anomaly which represents a fascinating field for psychologists and behavioral scientists but also one of the greatest threats to effective decision-making.
To what extent are you aware of your own strengths and weaknesses?
David Dunning and Justin Kruger, social psychologists at Cornell University, have been researching the so-called "Dunning-'Kruger effect" since the early 1990s. This cognitive bias embodies the idea that unskilled people are unaware of how incompetent they are: because they have no knowledge of their own areas of expertise, it may seem that everything comes easily—when in fact it does not.
Dunning and Kruger maintain that the skills required for competence are in fact the very same skills used to judge one’s level of competence. People with only a cursory knowledge of a subject are unable to make accurate assessments of their own skill level or that of others in the field. We’re talking about metacognitive skills and self-reflection here. For example, you may be able to identify grammar mistakes in text if you understand how the rules of grammar work.
When you are learning a new skill, you may be more confident than people who have been practicing that skill for years because the knowledge of your future area of expertise accumulates faster than perception that there is still to learn. In fact, the older student may have already begun to suffer from a form of "inferiority bias", where they have begun to underestimate the level of their skills compared to the assessments made by others. It has been thought that the Dunning-Kruger phenomenon may be related to another type of thinking error: impostor syndrome, in which a person is convinced that they are not as good as others think they are. Impostor syndrome is a feeling of inadequacy that persists even in the face of evidence that proves otherwise. Those who are experts in a particular subject area (and realize they have much left to learn) will be the most likely victims of fraud.
What Your Brain Has To Say About Chance, Logic And Reasoning
The human mind is a fascinating thing. It's our most powerful tool, but it doesn't always work the way we want it to.
We know that intuition, the ability to make fast decisions based on incomplete information, is a crucial part of human cognition. But what exactly is intuition? And how does it work? Dr. Asta Raami, a Doctor of Arts researcher who has a thesis on intuition, says that human thinking is the cooperation of two different systems that have merged into one: intuition and reasoning. According to her, high-level expertise is the intelligent utilization of intuition. These two systems are very different in terms of capacity and speed and are based on different databases. Our deductive intellect is slower and reasoning is laborious. According to Raami, our intuition system can process information 300,000 times more efficiently than our reasoning system—some newer sources claim that intuition is up to a million times more efficient information processor than reasoning. However, you should not blindly trust your intuition because the mind also produces incorrect, unreliable and biased information.
Some researchers think that the human brain gathers information about its environment and makes choices based on a Bayesian formula. In many situations, it really seems like this when we know how to anticipate situations. However, the human brain is not very skilled at calculating probabilities, and we often cannot rely on intuition in these matters. It is very difficult for us to make probabilistic decisions because our brains are not well equipped to do so. The human brain is built for pattern recognition; we look for familiar situations and react accordingly. We quickly recognize faces and guess based on facial expressions what people are feeling. In situation after situation, we rapidly jump from to particular facts to generalizations that can help us understand new facts and situations.
The Bayesian brain has a number of flaws, but one of the most significant is its tendency to see short-term trends and small-number runs as significant. We notice a short stretch of cool days and ignore the long-term global warming trend. We note with consternation the recent downturn in the housing and stock markets, forgetting the half-century upward-pointing trend line. Sawtooth data trend lines, in fact, are exemplary of folk numeracy: our senses are geared to focus on each tooth’s up or down angle, whereas the overall direction of the blade is nearly invisible to us. The result is that we are constantly misperceiving probabilities—and consequently making bad decisions based on those misperceptions.
So how do we fix this? The first step is recognizing that our brains have these flaws in them—and knowing that they can lead us astray if we’re not careful. The second step is learning how to overcome them by recognizing when they’re influencing your decision making.
Professor Daniel Kahneman, winner of the Nobel Prize in Economics and author of Thinking Fast and Slow, says that intuition works when three conditions occur: one, regular order as in a game like chess; two, “lots of practice”; and three, “immediate feedback” that is, “you have to know almost immediately whether you got it right or got it wrong.” Unless those three conditions are satisfied, says Kahneman, “the mere fact that you have an idea and nothing else comes to mind, and you feel a great deal of confidence — absolutely does not guarantee accuracy.”
There is much to unpack in Kahneman’s comments. First, they reveal why so many decisions prove wrong in the first place. The conditions for regularity do not exist in business; it is why stock picking (as Kahneman says) is so risky. While an executive may have a good experience making decisions about an aspect of business — such as a product or a marketing campaign — that does not mean they have the right instincts for making business decisions. Second, Kahneman’s comments raise questions about how executives should make decisions when they lack experience. The answer is to seek out people who have been involved in similar situations in the past and learn from them.
Experience is important in the decision making process, but it is not infallible. Therefore when big decisions are being made, it's a good idea to be deliberate about them. Test assumptions by adopting a “red team” (devil’s advocate) approach and assume the worst. It takes courage to make a decision that will affect the outcome of a company. And it also takes guts—and humility—to acknowledge when you are wrong. And therefore, it is essential to invite honest feedback.
Our intuition is a very powerful information processor and our mind is not limited to one system for information processing. Therefore, by increasing the number of perspectives or points of views, you increase your ability to think efficiently as well as accurately. Intuition and reason represent different sides of the human brain and their collaboration is important to come up with useful conclusions. Their union makes us able to attain expertise and saves us the time of doing full-scale reasoning. We have to accept that both are critical for making decisions, and that developing conscious control over both can produce the best decisions possible.