The Myth of the Rational Decision

I sometimes encounter people who want to learn a foolproof technique for making the right decision. More often I find people who argue that their choices are based on a rational argument and hence are the only right choices. Take two of these people with opposing choices and put them together and each will think the other is irrational. No discussion.

In both of these cases there’s an assumption that there is such a thing as a perfectly rational decision with no subjectivity at all. Wrong! Yes, there is a whole discipline of decision science and I teach decision techniques myself, but I can’t teach you how to make a perfect, irrefutable, mathematically provable, absolutely rational decision.

Back in the 50’s, when computers were first being used, there was a lot of talk about using these “giant brains” to solve major problems. There were futuristic stories about people asking the computer Big Questions, like the meaning of life, and getting back the one, irrefutable answer. The thought was that if you put enough brainpower behind any question, rationality will inevitably lead you to the answer. Now that we have more brainpower in our phones than they had in those big computers, we see that this is not the case.

The fact is that any decision worth more than a few minutes of your time involves subjectivity. Accept it. The people who disagree with you are not (necessarily) idiots. So don’t argue over reasoning — examine assumptions and priorities. If you’re trying to make a particularly slippery decision, don’t get discouraged by the vagueness of it all. Accept subjectivity as a key part of making the best decision, for you, that you can.

There are several ways that subjectivity comes into any complex decision. First, there are priorities. Any decision worth your time affects multiple goals, which are usually in conflict. Cost/benefit. Risk/reward. In buying a house, is an extra bedroom worth a longer commute? Closet space vs. yard space? Only you and your family can weigh the various criteria to make the best choice for you. This gets even stickier when there are multiple stakeholders, all those people who have an interest in the outcome. I once had a Washington, DC cabbie tell me that Baltimore was the best local airport. The reason turned out to be that it got him the largest fares. What’s important to me may not be important to you. It’s all subjective.

There will always be holes in the available information. The way we fill them in is based on our experience, and hence subjective. To make a good decision you need to visualize the future consequences of each of your alternatives. This builds on your imagination and experience. Again, subjective.

There is your level of risk aversion. Most of us are risk averse to some extent. We would rather have a sure thing than a 50-50 chance at twice as much. Some people are risk seeking. If you don’t believe me, go to Las Vegas. Your level of risk aversion—how much more than twice as much you would need to be offered to take that 50-50 chance—drives many of your decisions. Again, subjective.

The most important and most subjective part of decision-making is choosing the decision to be made, identifying the problem to be solved. This is what separates the leaders from the doers. The great decisions are not presented to you—they come from your mind, your observations and your experience. Subjective.

Don’t let the subjectivity throw you. Understanding and accommodating the constraints and preferences of everyone involved is a key part of the art of being an effective decision maker. At the same time, be aware of the biases that skew our decisions. (But that’s a topic for another post.)

How does subjectivity enter your decision-making?

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