Decision-Making

DecisionMaking

What is Decision-Making

Decision-making is simply the action or process of making decisions. Sometimes we make smart and logical decisions, but very often when we end up making irrational or emotional choices. 



Why Do We Make Poor Decisions

A cognitive bias is a systematic error in thinking that affects our decisions - our brain is powerful but still has limitations. Cognitive biases can be caused by a number of different things, but very often we make use of mental shortcuts, known as heuristics - while they allow us to make decisions quickly, they can also lead to errors in thinking.

Social pressure, emotions, and dealing with too much information to process can also be the source of cognitive bias. Knowing how these bias work and influence your thinking might help you to make better decisions in the future.



How to Use Mental Models to Make Better Decisions

One of the best ways to improve your decision-making skills is to learn mental models. A mental model is a theory or idea that helps to explain how something works. We cannot understand all the complexity of the world, so we use models to simplify it into more simple concepts.

Most of us are in some sense specialists. By default, a typical Engineer will think in systems. An economist might think in terms of incentives. A biologist will think in terms of evolution. By putting these disciplines together in our head, we can see a problem from different perspectives. In that sense, it is important to learn and apply different mental models to make better decisions.

Some mental models that we wrote about:

  • Why Negative Knowledge is Gold: Via Negativa: In many cases, improvement is not about doing more things right, but about doing fewer things wrong: following the via negativa. Subtraction is often more practical than addition.


  • The 80/20 Principle And Accumulative Advantage: A Case For Prioritizing: This idea, that a small number of things account for the majority of the results, became known later named as “Pareto’s Law” or the “80/20 principle”. This happens because we live in a complex system which is full of feedback loops and where a small difference can make a big impact.