10 ways to make better decisions- part 3

This blog is in continuation with-

1) 10 ways to make better decisions

2) 10 ways to make better decisions - Caution- DANGER AHEAD

Do read these blogs too.

There are 2 types of decisions which we take-

1) The right decisions.

2) The wrong decisions.

1) THE RIGHT DECISIONS:-

Generally we take numerous right decisions everyday. Like when to wake up, attending the natures call, taking bath, making/having breakfast, reaching the workplace on time. Taking the decisions at workplace, prioritising the work at workplace, eating the lunch. Shopping for groceries, which vegetables to buy, paying the bills, driving a car or a bike. Doing routine chores etc. We make these decisions right almost every time without fail.

2) THE WRONG DECISIONS:-

Many times we make wrong decisions like making bad investments, making bad purchases, going in to bad debit(bad debit is the debit where you are losing money, and good debit where you are earning money), inculcating bad habits in to the children, Various addictions, purchasing a property at wrong place or time or price etc.

Do you recognise any similarities and dissimilarities?

Similarities are such things happens to most people, both kind of decisions are taken by the same individual.

But the differences are big. The right decisions were taken for small things, and decisions were consistently right. While the decisions which went wrong, were taken with the big things, they made huge impact, and they were consistently wrong.

No one wants to make wrong decisions then why people still make wrong decisions??

Well, there are many reasons. The common reasons are-

1) Feedback -

While making small decisions, the feedback is immediate. For example, we feel thirsty, we decide to drink water, drink water, and immediately we feel good. Or if we decide to drink water later, we will feel exhausted and more thirsty because of which we will change our decision to drink water right now, drink and feel satisfaction. Or while driving a car we can see where the car is going and make the adjustments to steering wheel so that it goes towards where we wanted it to go. Or we observe the speed of the car and make necessary adjustments to the gears, breaks and gas pedal so as to maintain the proper speed.

But while making big decisions until we get the feedback of bad decisions, the damage is usually already done. For example if we invest our money in the latest market's favourite stock which is trading at expensive valuations usually when we get the feedback about the worthlessness of the stock, the stock price would have already plummeted and we have no choice but to book loss. Other common example is buying an expensive gas guzzling SUV to show off our status, to realise later that the expensive purchase had many hidden costs and depreciation of value which actually brings our status down.

WE GENERALLY FEEL INSTANT GRATIFICATION FROM PURCHASING OF LIABILITIES.

2) Psychological biases-

To function efficiently our brain uses some cognitive shortcuts. These shortcuts are developed through thousands of years of evolution. These shortcuts enabled human race survive until now.

For example CONSISTENCY BIAS- due to which we try to be consistent with our previous thoughts or actions. Like if I say to someone that Toyota Prius is a good car then afterwards I try to tell things about Toyota Prius which are consistent with Toyota Prius being a good car. I won't go against my own statement of Toyota Prius being a good car, even if I found some evidence that the car is not that practical for someone.

Or if I say to a friend that I am an adventurous person and afterwards he invites me on an adventure expedition then it will be very hard for me to say NO. Because by saying NO, I will feel that I am going against my statement that I am an adventurous person. And I will also feel that I am breaking the trust of my friend, he may not believe me next time.

In ancient days such trust among the group members was necessary to stay in the group. Otherwise one may get expelled from the group which will result in loss of the protection from predators by being in the group, loss of efficiency, loss of guidance by experienced members of the group, loss of mating opportunity in the group etc. Which will result in very hard and dangerous life with drastically reduced lifespan.

Biases are like error of our cognitive apparatus, just like a magnifying lenses which always shows the picture bigger than is actual by a definite proportion.

We have many such biases built in to our thinking process which affects our decision making process to a great degree.

We will study more such biases one by one.

Conclusion:-

Right now just digest what you just read about decision making, the very important thing while decision making is the feedback. Feedback helps us correcting or decisions. If you want to take decisions when instant feedback is not available, develop a good logical strategy to move towards goal, decide checkpoints before starting and make sure you are going as per the plan. A good strategy will yield the results you want over time.

Know the limitations of your decision making process.

That's it for now. Hope the wisdom I am gaining is helping you at least as much as it is helping me.

The motive behind this blog is to share my experience in the journey towards health, wealth and happiness by using COMMON SENSE (SAMANYA BUDDHI) so that you get a more familiar with the terrain of the journey, you don't have to make the mistakes which I have done.

But still there are many more mistakes to be made and much more to be learned.

So see you soon..

Sumit
The POWER is when,
You use ODDS,
To get EVEN.

10 ways to make better decisions

Hello friends,

A few days ago, I read an article on the internet. I am reproducing some part of the article which stimulated my brain-

Scientists Shai Danziger, Jonathan Levav, and Liora Avnaim-Pesso analyzed 1,112 bench rulings in a parole court and plotted the proportion of favorable rulings over the course of the day. They found that judges were more likely to deny a prisoner's request and accept the status quo outcome as they advanced through the sequence of cases on a given day. More specifically, their proportion of favorable rulings started out high, at about 65% at the start of the day, but dropped off rapidly.

By the time a meal break came around, the proportion of favorable rulings was close to zero. When court was back in session, the pattern repeated itself, starting high and ending with almost zero favorable rulings. Interestingly, neither the judges nor the panelists who advised them were aware that mental energy is essential to careful deliberation and the later in the day, the lower such energy is, unless a lunch break allows judges to recharge.

Evidence for the same type of cognitive fatigue has been found in other contexts, including consumers choosing among various products and physicians prescribing antibiotics. Primary care doctors often prescribe unnecessary antibiotics for acute respiratory infections (ARI), researchers have found. As the physicians appeared to "wear down" during their morning and afternoon clinic sessions, the rates at which they prescribed antibiotics increased. About 5% more patients receive antibiotics at the end of a clinic session as compared to the beginning, this research shows. Thus, while clinicians make many patient care decisions each day, the cumulative demand of these decisions leads to more inappropriate choices later in the day.

End.

Unbelievable, isn't it?

But believe it, just take a little time and think about your how your yesterday went? How you started the day? What decisions did you take? Whether they were right? How did you felt while assessing the choices?

You will find it that some decisions you took were bad decisions, you could have made better decision if you were in better mood. Others were simply right, and you were in good mood while taking the decisions.

So what is this MOOD??

A good mood can be characterised by an energetic condition of brain and vice versa.

But why does the quality of decisions get's affected by condition of the brain??

Generally after enough sound sleep we wake up with an energetic brain. Everyone knows that we can grasp things easily in the morning. But then 2 things happen as we proceed through the day-

1) Decision fatigue-

As we wake up in the morning we start making a series of decisions, like on weekdays we might be thinking, how to reach the workplace on time? Am I running late? If running late then which things I can skip to save time? Or how can I move fast? How much I have to move fast? After reaching office, how to tackle the boss? How to tackle different problems at the workplace?

Then there are decisions related to relations with other people or about our health or different needs, different compromises, decisions about the family, financial planning, planning for shopping (grocery, clothes, vehicles, study material for kids, consumer durables, fuel for vehicles.....) the list of decisions we take goes on and on. There seems to be no end.

All this decision making process consume the processing power of our brain. As our brain thinks, it produces some chemicals which goes on accumulating in the brain. These chemicals inhibit the processing power of the brain. We can counter these chemicals temporarily by drinking tea or coffee, as the chemicals in the tea or coffee temporarily desensitize our brain cells to the build-up of the slowing chemicals.(but the builds up remains there.)

Along with this there is also a build-up of short term memories which we gather to take decisions. Our brain has to get rid of these two inhibiting factor to regain it's processing power. And the only way to achieve this is to get enough of sound sleep. During sleep, our brain classifies the things in the short term memory in to useful memory, which is then handed over to long term memory and the unwanted memory is discarded.

While we are asleep chemical changes also occurs in the brain. The inhibiting chemicals formed during decision making progress gets removed.

That is the reason why we feel fresh and in good mood after a good night's sleep.(along with the revitalised grasping power)

This explains somewhat why our decision making ability deteriorates through out the day.

Then there is a second reason responsible for bad decisions-

2) Preoccupation-

Our brain is not designed for multitasking. But we still try to multitask. For example you need to pick up the kids or spouse or some grocery item while going back home, and you try to do office work while keeping this information in your short term memory, which is like a RAM in the computer. As you know when the RAM gets crowded, the processing capacity of the computer slows. Similarly as our short term memory gets crowded our decision making ability dwindles.

So what happens when we have decision fatigue and preoccupation???

When our brain develops decision fatigue and is preoccupied it starts taking short cuts while making decisions. Sometimes it doesn't consider all the relevant things, other times it may fit the current problem with some other not so relevant solution, or it simply borrow solution from someone without knowing if it actually suits your problem.

For example even while taking big decisions like buying a car, one may simply chose a car owned by a colleague or neighbour, or best selling car in the country etc. This decision is taken without considering what features we actually need in a car or what type of car do I need to carry out my specific work etc.

How to get past this thing to make better decisions??

10 WAYS TO MAKE BETTER DECISIONS (and live a better life)-

1) A simple answer would be make as few decisions as possible. Weed out the unnecessary ones.

2) Take important decisions when your mind is fresh i.e. in the morning time.

3) Avoid making decisions in bad mood.(remember those bad breakups with loved ones??)

4) Reduce the preoccupation with the help of smart phone reminders.

5) Get away from disturbances.

6) Stop multitasking.

7) Get enough sleep.(enough sleep also ensures good health along with fresh mind)

8) Maintain a good health. Exercise also helps in rejuvenating our mind.

9) Only make friendship with good people.

10) Take your time while making your mind.

A great billionaire and philanthropist- Warren Buffett have given a great advice to the investors -

"To make your investing decisions much better, I will give you a punch card with 20 slots in it, every time you make an investment you punch this card, you only have 20 investments to make in the life. This will dramatically increased the quality of your decisions. And 20 good decisions are enough to make you a lot richer in life."

Many renowned investors including Warren Buffett and Charlie Munger also agree that you only need to find one investment idea in a year or two to get awesome results.

That's it for now. See you again, till then have a nice day...

Sumit
The POWER is when,
You use ODDS,
To get EVEN.