Mindmap-BookSummary-RulebookForDecisionMaking

Mindmap-BookSummary-RulebookForDecisionMaking

• About Rulebook For Decision Making
  • Date Read: October 08, 2016
  • Author: George Pullman
  • ISBN: 978-1-62466-362-8
  • 135 pages
  • MyRating: 5 Stars
• CHAPTER 1: Decision Styles and Types
  • 6 Decision Styles
    • #1-Unconscious
      • Unconscious decisions are the result of unobserved mental processesthat manifest themselves as preferences, inclinations, or tendencies.We make hundreds of unconscious decisions every day: get up early orsleep in; exercise now, later, or not at all; tee shi
    • #2-Intuitive
      • There are decision situations when you quickly zero in on what seemslike the best possible option, simulate or visualize what will happenin your head, and then go with the plan confi dent that youve madethe right decision.

        We often call these gut-level, instinctive, or intuitivedecisions, in which after a brief pause (a moment of indecision)we arrive at what we are sure is the right thing to do.

        We dont stopto explain the choice or question the evidence we used to arrive at it.We just knowŽ that this person is trustworthy and that shirt matchesthese pants and this ball is going over that fence. We dont have a fullyworked out theory; we just know

        Intuitive decisions are fast and when based on deep experiencethey can be very effective as well. When based on unwarranted orunexamined assumptions, however, they can lead to unfortunateconsequences of the What-was-I-thinking?Ž variety

    • #3-Rationalized
      • Rationalization is a process of explaining a decision after it has beenmade

        Once youve done something or decided to do it, you mayfeel compelled to explain your choice. Although we tend to use theword rationalizationŽ in a negative way, as in the idea of explainingaway a bad decision or excusing ourselves for the questionable thi

        prejudice

        • The word prejudiceŽ has a universally bad connotation, but it really justmeans a pre-judgment and its negative connotation says more about the dominanceof analytical decision-making practices than the nature of the idea.Sure, stereotypes are thoughtless an
    • #4-Justified
      • Justifi cation is a process of defending a decision against accusationsof irrationality or insensitivity or unethical, abnormal, inappropriate,or even just foolish behavior.

        Like rationalization, justifi cation is retrospective,backward looking. Unlike rationalization, justifi cation istypically a public act. Having said that, however, it is worth pointingout that one form of decision making is to imagine how you will justifya

        This kind of dissociative thinking, in which you create a distinctionbetween your present and future self and your personal experienceand the public perception of yourself, is very diffi cult to learn howto do. Many of us live egocentrically in the ever pre

        Self-justifi cation maybe unpleasant, but its healthy if done properly. If done improperly,self-justifi cation becomes self-righteousness or the public equivalentof wishful thinking.

    • #5-Predictive
      • Predictive decision making is a process of deciding what to do based onexpectations about what is going to happen in the future. How youderive that future tells you a great deal about how you think

        Scientifi c thinking is a particularly rigorous form of predictivethinking. Given a model of how B works (a hypothesis), if variableR is held constant while electricity is applied, it is predicted Z willincrease by a factor of one.Ž You dont need to be a

        Whenever you havea model of how something works and imagine a future state basedon that model undergoing some process (even if that process is justtime), you are using predictive thinking.

    • #6-Deliberate
      • Deliberation is a fully conscious, overtly analytical, prediction-basedprocess of deciding among all plausible options using all of the availabledata and refl ecting on the importance of missing or dubiousdata.

        Often the word deliberationŽ is reserved for group decisionmaking, especially with reference to a jury. But whenever a group ofpeople with common or related interests gets together to choose acourse of action that will benefi t them all if it succeeds and

        Whenever you talk to yourself in asimilar way, thinking about the pros and cons, calculating the probabilities,estimating the rewards, weighing the risks, preparing for possiblecontingencies and unintended consequences, and so on as youplan a course of acti

        The more intentional, refl ective,computational, and self-aware your decision in favor of one course ofaction over another is, the more deliberate you are being

  • 10 Decision Types
    • #1-Linked decisions
      • Linked decisions are exactly what the phrase suggests, a decision thatis connected to another one. Sometimes there are multiple, interrelatedconnections. Linked decision making is strategic or logisticalthinking. It is the purview of the planning self when
    • #2-Indirect decisions
      • Sometimes we make decisions about one thing while thinking aboutsomething else. Often this happens while inhabiting the experiencingself, as we are focused on the sensations of the present moment

        not refl ecting on the possible consequences or thinking about howthe present links to the future. Remember, the experiencing self hasno sense of the future

    • #3-Threshold or tripwire decisions
      • Theres also a class of predictive thinking that we might call thresholdŽor tripwireŽ deciding. Sometimes its a good idea to make a

        decision in advance in order to restrain your experiencing self frommaking an impulsive decision in the heat of a moment or to keep yourexperiencing self from letting a situation get out of hand

    • #4-Passive decisions
      • Some decisions are passive, in which you choose the default, eitherjoining the group or following the leader or following a trend, acquiescenceessentially. If you just fi nd yourself going with the crowd, unawareof the moment when your feet left the ground,

        On the otherhand, if you actually said to yourself, Im going with the default here,Žthen you let your refl ective self break in for a moment, to accept consciouslya decision made by somebody else or by circumstances beyondany one persons control. Such de

    • #5-Delayed decisions
      • Choosing to delay a decision is a decision. While we tend to think ofprocrastination as counterproductive, it might be the best decision if further information is required or circumstances might change in theforeseeable future
    • #6-Irrevocable decisions
      • Some decisions have unalterable consequences. Once such a decisionis made, everything changes and theres no control-alt-delete.

        When you recognize a decision as irrevocable, you may feel paralyzed by theenormity of the situation or you may feel like procrastinating eventhough you know you shouldnt. You might fi nd yourself waffl ing.Should I stay or should I go? It also sometimes h

        never to burn your bridges

        • Theres a fairly common piece of advice never to burn your bridges.Typically this advice is offered as a restraint against an impulse to hurtsomeones feelings or cause a stink out of anger or frustration. If youinsult an employer on the way out the door, y

          The expression, however, to burn ones bridgesŽ actually had adifferent meaning when it fi rst entered the world of ideas during thewarring states period in China. The advice is this: if you need yourtroops to fi ght the enemy on the other side of a river,

          One simple way to burn a bridge is to tell other people of yourintentions.

          You are much more likely to do something if you tell peopleyou intend to.

          Saying we will do something and then not following through creates cognitive dissonance in most people, thus pledgingworks.

          You may want to keep in mind the fact that there are always twobridges to burn, the one that leads forward and the one that leadsback. In other words, whenever you think about committing to acourse of action you should at least consider committing to its op

    • #7-Pseudo decisions
      • There is a category of decisions we might call pseudoŽ or fakeŽ decisionsin which you seem to have alternatives but they dont amount toreal alternatives for one of several reasons. They may all be basicallythe same.

        With no differences that matter, theres no real decisionto make. This is why branding is so important in consumer societies.It creates apparent differences where no actual differences exist.

    • #8-Stochastic versus deterministic decisions
      • The list of decision types Ive just given you is by no means complete,but it is probably more than enough to get you thinking about howthinking needs to happen in a context, how knowing what kind ofdecision you are making can help you make better decisions

        Decision making can be equated to problem solving, and effectivedecisions come about because the problem is correctly understood. Itis critically important to begin any decision process by fi rst analyzingthe situation into the two possible types: determini

        two types

        • deterministic
          • linear, causal
          • A deterministic problem is one in which the action and outcomeare causally linked.
          • Given certain inputs, certain outputs certainlywill result.
          • If you exercise more, you will improve your cardiovascular health
        • stochastic
          • dynamic, probabilistic

            A stochastic process, on the other hand, is a processin which the outcomes are probabilistically rather than deterministicallyrelated to the actions taken

            If you exercise more, you wontnecessarily lose weight because you may eat more as a consequence.In stochastic situations the outcomes are uncertain, but they are availableto analysis (often statistical analysis), and thus one can predictwith varying degree

    • #9-Immediate, near-term, and far-term decisions
      • Whenever we make a decision it is because we want to solve a problemor obtain something we cant get directly

        The object of our intentionis called a goal.Ž A goal is a single answer to two linked questions:what and when. Goals are immediate, near term, or far term

        goal

        • The object of our intentionis called a goal.Ž
        • A goal is a single answer to two linked questions:what and when.
        • Goals are immediate, near term, or far term
        • Immediate goals
          • Immediate goals are like itches that need scratching or fi res thatneed putting out: well-defi ned, unambiguous, discrete problems withobvious causes and predictably effective solutions

            They are deterministic,in other words. You know what to do and how to do it. You alsoknow when to do it because when is now.

            Action taken, problem solved

            Complications arise when you mistake a complex decision situation for an itch that needs scratching

            Taking immediate and focused action tosolve a problem you dont fully understand creates new problems

        • Near-term goals
          • what you need to accomplishthis semester or this fi nancial quarter, cant be achieved with asingle move and thus require sequencing your activities and prioritizingyour resources (time, energy, money, etc.).

            To accomplish a neartermgoal you need to set targets.

            A target is typically some kind ofdeliverable, a document, a skill set, a product, a number

            Your targetsshould be concrete, specifi c, and stable.

            Moving targets are hard tohit. Confl icting targets, goals that are somehow in each others way,seriously hamper success.

        • short-term goals
          • Because short-term goals can be achieved or abandoned quickly,temporarily shifting resources from longer-term projects and ignoringone or two of your immediate needs may provide enough resourcesto accomplish a short-term goal without harming your long-termp

            If a short-term goalis proving illusive and therefore starting to siphon resources fromlonger-term goals or interfering signifi cantly with immediate needs,then its time to reassess the target or consider shifting the goal fromshort to longer term.

    • #10-Targets versus objectives
      • While it is possible to achieve near-term goals by setting targets,long-term goals typically require a less focused and more fl exibledecision-making process: a fl ashlight rather than laser beam.

        A lotwill happen over the course of several months, to say nothing of yearsor decades. For one thing, over time you will be distracted by moreimmediate and therefore more apparently urgent needs. Additionally,short-term goals will come and go, constantly sh

        Crucially, over timeyou will change intellectually and socially and so the person who realizesa lifelong dream almost certainly will not be the same person whoset that goal ten years earlier.

        This is why enjoying the process is somuch more important than achieving specifi c goals in life and whysome people prefer to make big decisions by intuitive thought processesrather than analytical ones

        Obviously, if you dont know whatyou want youre unlikely to get it, but if you focus too closely, you arealmost certainly going to miss the mark even as you hit your targets.Thus when setting long-term goals, its often best to think in terms ofa range of

        Rather than deciding at fi fteen, for example, that youwant to be a doctor, it would be more prudent to develop a passion forscience and biology and see where your passions take you.

        Thus when it comes to long-term decision making, think objectivesinstead of targets

        target

        • A target is concrete and static.
        • Targets are like individual stones on a specifi cpath.
        • having a milliondollars when you retire is a target

        objective

        • An objective isabstract and dynamic.

          Objectives are more like a bearing or heading

          minimizing expenses, maximizingsavings, and consistently increasing investments are objectives

          Because objectivesare abstract, they can advise you how to respond effectively inany situation, even unforeseen situations.

          Objectives create values andpreferences that eventually turn into habits of mind. Your habits ofmind will always lead you to prefer what will contribute the most toyour long-term goal or minimize the damage done to your progresswhen a setback is unavoidable

          By setting objectives and letting thembecome cognitive habits, you turn a constantly deliberate decisionsituation into an unconscious decision situation

          If you are having trouble identifying your objectives, start with a compellingtarget, something you want, and then ask yourself what it isabout that target that is consistent with your current values. If whatyou value doesnt align with the target, then eit

        Goal Settings

        • 1. Make a list of things you would like to accomplish, experience,or have (a set of goals).
        • 2. Now sort the list in terms of how long it will take you toachieve them, from shortest to longest.
        • 3. Which ones require targets?
        • 4. Which ones require objectives?
        • 5. Now see if you can turn the objectives into values.
  • 48 Rules for Decision Making
    • Rule 1: Learn how to switch cruise control on and off

      Rule 2: Make informed intuitive decisions

      Rule 3: Avoid wishful thinking, but dontdismiss a decision merely because you madeit before you were able to explain it

      Rule 4: Dont do what you dont want to own

      Rule 5: Play the odds, not the game

      Rule 6: Think each decision through tothe beginning of the next decision

      Rule 7: Dont let your default decisionstyle constrain your options

      Rule 8: Always consider the possibility that anygiven decision might be linked to future decisions

      Rule 9: Beware small choices that will add up over time

      Rule 10: Make more disciplineddecisions by deciding in advance

      Rule 11: When accepting the default, make sureyouve thought about it and not just clicked through

      Rule 12: Pay careful attention to timing, both of thesituation in which you are deciding and the situationduring which your decision will be implemented

      Rule 13: Know which bridges to burn when

      Rule 14: Dont waste energy on pseudo decisions

      Rule 15: Dont apply deterministicthinking to stochastic situations

      Rule 16: You cant hit two targets with one arrow

      Rule 17: For long-term goals, chooseobjectives over targets

      Rule 18: Dont accept System 1solutions to System 2 problems

      Rule 19: Pay attention to what you arent thinking

      Rule 20: Dont think pragmatically aboutprocess-oriented decisions and vice versa

      Rule 21: Decide what to do now based on an informedopinion about whats most likely to be coming next

      Rule 22: Dont just memorize the rules;ponder their implications

      Rule 23: Dont confuse your expectationsor your wishes with the actual probability ofan outcome

      Rule 24: Reassess your expectations whenevernew information arrives or somethingsignifi cant changes

      Rule 25: The chances of two uncorrelatedthings happening are never greater thanthe change of one happening alone

      Rule 26: Expected value = outcome × probability

      Rule 27: Dont bet against the house

      Rule 28: Dont fall in love with an algorithm

      Rule 29: Dont make decisions based onfalse or misleading distinctions

      Rule 30: Minimize your losses (and thereforethe other persons gains) as a way ofmaximizing your gains over time

      Rule 31: If you have a truly dominant strategy, use it

      Rule 32: Do unto others as you wouldhave them do unto you

      Rule 33: Dont escalate tensions unlessyou have hidden reserves

      Rule 34: Dont play if you cant win

      Rule 35: When failure is inevitable,fail quickly and cheaply

      Rule 36: Dont reward or ignore badbehavior (your own or anyone elses)

      Rule 37: Dont make decisions based onthe actions of unpredictable people

      Rule 38: Dont play at life

      Rule 39: Dont confuse certainty with accuracy

      Rule 40: If you think something is true,seek evidence to the contrary

      Rule 41: Make certain your numbers aremeaningful and not just precise

      Rule 42: Make sure your solutions are practicable

      Rule 43: Question twice, act once

      Rule 44: Develop decision-specifi cdecision-making processes

      Rule 45: Play the Devils advocate

      Rule 46: Turn your daydreams intodeliberations by focusing on every detail

      Rule 47: Dont provide permanentsolutions to temporary problems

      Rule 48: Count to ten three different ways

      Exercise: Your Turn

      • 1. Make a list of your habitual behaviors. Can you track downthe decisive moment that led to each preference or inclination?Did you inherit each habit from a parent or absorb itfrom a friend?

        2. See if you can identify a habit of mind, a decision you alwaysfi nd yourself making whenever you fi nd yourself in that situation.How did you come by that habit of mind and what aresome alternatives that dont occur to you normally?

        3. Look up the Einstellung effect. Can you think of a decision youmade that was based entirely on a previous decision? The fi rstfour cars I owned were Honda Accords. Lovely, dependablecars those. Dont fi x what aint broke? Or lack of imagination?Brand lo

        Einstellung Effect

        • Einstellung is the development of a mechanized state of mind. Often called a problem solving set, Einstellung refers to a person’s predisposition to solve a given problem in a specific manner even though better or more appropriate methods of solving the pro
• CHAPTER 2: Thinking Ahead
• CHAPTER 4: A Technique for Practicing Your Decision-Making Skills
• CHAPTER 3: Decision-Making Processes
  • 27 Cognitive Biases
    • 1. Above average effect
      • Above average effect„thinking youre smarter, lessbiased, better looking, better read, just generally allround better than everyone else. Its more than a littlediffi cult to identify with this quirk of mind. But keep a listof the number of times you mutter
    • 2. Ambiguity effect
      • Ambiguity effect„mistaking ignorance for complexity. Ifyou are thinking about something for the fi rst time, youmay think it is very complex and you might be right. Butsomeone with more experience might see more clearlyhow simple it is. What looks stochasti
    • 3. Anchoring effect
      • Anchoring effect„focusing too tightly on a single optionor piece of information. When it comes to deciding,anchoring can be a killer because it limits our interpretationof the sample space and thus limits our perception ofour options. Before you ask yoursel
    • 4. Attentional bias
      • Attentional bias„seeing only what you are focusing onand not whats happening around what you are focusedon. Look up the invisible gorillaŽ the next time youreon YouTube.
    • 5. Availability heuristic
      • Availability heuristic„seizing on a recent or memorableevent as proof of something or thinking that somethingisnt likely because you have no experience of it, basicallyusing your own experience as a general frame of reference.
    • 6. Bandwagon
      • Bandwagon„following the crowd, thinking what othersare doing is normal or that what is normal is right
    • 7. Base rate error
      • Base rate error„focusing on irrelevant details and ignoringgeneral probability when trying to determine a specific probability. If a pill cures headaches within twohours in one patient in ten, is it an effective headachemedication? Well, how many headaches
    • 8. Confi rmation bias
      • Confi rmation bias„emphasizing evidence for a preferredbelief and discounting or entirely missing counterevidence.There is a related effect on memory. We aremuch more likely to remember evidence that fi ts ourexisting beliefs and forget anything that contra
    • 9. Contrast effect
      • Contrast effect„overvaluing something because it isamong inferior examples or undervaluing somethingbecause it is among superior examples
    • 10. Endowment effect
      • Endowment effect„overvaluing your possessions andattributes while undervaluing those of others. Whenit comes to our personal possessions, fair market valueoften leaves us cold
    • 11. Framing effect
      • Framing effect„seeing only a piece of the picture, missingimportant details as a result of tunnel vision or justnarrow focusing. Pull back, metaphorically speaking.Learn to see a threat as a challenge, a lose-win as a winwin,a complaint as an opportunity, a
    • 12. Frequency effect
      • Frequency effect„thinking that something has becomepopular recently when in fact it has always been popularand youve only just started noticing it. Like all of the cognitivebiases, essentially mistaking a subjective phenomenonfor an objective one
    • 13. Gamblers fallacy
      • Gamblers fallacy„thinking that a future event will beinfl uenced by a past event. If I rolled snake eyes last time,theres no way Im going to roll it this time (actually, thechance of snake eyes is always one in thirty-six, no matterwhat you rolled last t
    • 14. Hindsight bias
      • Hindsight bias„seeing a probabilistic event (might ormight not have happened) as inevitable after it happenedand deriding others for not seeing it coming or deludingyourself into thinking you knew it all along. We live lifeforward but make sense of if backw
    • 15. Hot hand fallacy
      • Hot hand fallacy„thinking success leads to greaterchance of success (the opposite of jinx) in situations inwhich confi dence isnt the sole factor. From a statisticalperspective, while people can improve incrementally overtime, if you look at performance da
    • 16. Illusion of control
      • Illusion of control„believing you have greater infl uenceover an outcome than you actually have. Chance, otherfactors, other people, or all three may have more impactthan you realize when you are under the illusion of control.You neednt just let go and let
    • 17. Illusion of coherence
      • Illusion of coherence„mistaking coherence for validity.Just because something makes sense doesnt mean itstrue. The more vivid a description, the more compellingit is, but a description is just a description. DescriptionsDecision-Making Processes € The cog
    • 18. Loss aversion
      • Loss aversion„failing to take a reasonable risk out of fearof losing something of lesser value that you neverthelessalready have. Most people feel the loss of 5 dollars morekeenly than the win of 10 dollars and so wont take a reasonablechance to make 10 do
    • 19. Magical thinking
      • Magical thinking„mistaking coincidence for cause orseeing a causal connection between two independentevents. Magical thinking is a natural result of our mindsdesire to create coherence and fi nd meaning. We canthelp seeing patterns and making connections
    • 20. Mere exposure effect
      • Mere exposure effect„preferring something merelybecause it is familiar, a regular part of your existence, ora feature little noticed but nonthreatening and thereforeacceptable. The opposite is xenophobia, fear of the unfamiliar.If this rates high on your li
    • 21. Naïve realism
      • Naïve realism„believing the world is exactly as you seeit, that your perceptions are accurate and complete, yourthoughts logical, your actions rational or at least justifi -able, and your memory like a video-recording device. Ifyou want to make good decisio
    • 22. Normalcy bias
      • Normalcy bias„failing to plan for a probable disasteror failure to act when it happens, freezing, the oppositeof panic but with quite likely the same negative consequences.People tend to just keep going about their businesseven as the walls are crumbling ar
    • 23. Optimism bias
      • Optimism bias„underestimating how long somethingwill take, or how much it will cost, and overestimating itschances of success
    • 24. Recency illusion
      • Recency illusion„allowing recent experience to undulyinfl uence your thinking about something, thinking,for example, right after a school shooting that schoolshootings are becoming more frequent whereas, in fact,the frequency of such tragic and horrifi c ev
    • 26. Self-serving bias
      • Self-serving bias„believing that when you are right itsbecause of your hard work and innate talent and whenyou are wrong its because of a corrupt system, bad luck,or some other fault outside your control. If you takesole responsibility for your successes
    • 27. Zero-sum bias
      • Zero-sum bias„having a tendency to see all interactionas winner take all, failing to see opportunities for cooperationor having an inclination to reduce cooperativesettings to competitive ones. Just how Machiavellian areyou?
• Degrees of deliberative rigor 0-100 Point Scale
  • impulse
  • inclination
  • passive
  • intuitive
  • trained
  • intuitive
  • rationalized
  • predictive
  • justified
  • deliberate
• 21 Steps Generalized Decision Template
  • 1. Goal the decision relates to:

    2. Deadline:

    3. Desired outcome:

    4. Do you need targets or objectives?

    5. If targets, what are they?

    6. If objectives, what values are they associated with?

    7. Method for assessing the decision (result or process or both):

    8. What do you know (evidence); what dont you know (missingevidence):

    9. Which of the cognitive biases might negatively infl uence yourinterpretation of the available evidence?

    10. What are the possible outcomes„the sample space?

    11. What is the probability of each possible outcome?

    12. Are there any relevant changes on the horizon that will modifyyour level of certainty regarding each probability?

    13. What is the expected value of each outcome?

    14. If theres a tie, will marginal utility break it?

    15. What are the possible consequences (positive and negative)of each outcome?

    16. What potential unintended consequences might crop up?

    17. To what future decisions is each outcome potentially linked?

    19. How might this go wrong? What uncontrollable forces mightintervene? And what contingencies do you have in place?

    20. How did the decision turn out? Could the process be usedagain? If so, should it be modifi ed in anyway?

    21. Repeat Step #1-20 3 Times

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  • Rigel Arcayan