Decisions at the Speed of Technology Change

By Linda Hartford MS/P, VP & CIO, The University of Iowa Center for Advancement

Linda Hartford MS/P, VP & CIO, The University of Iowa Center for Advancement

How many decisions have you made today? Probably more than you can remember or count. What to eat, what to wear, what route to take to work, do I want another cup of coffee. Most decisions are simple and automatic.Our environment and technology are changing quickly and additional decision making comes with it.

Most of our decisions are not considered life changing, and our automatic decision process is fine. However, student decisions regarding their higher education, like helping a student make the right choices for a career, selecting the right faculty member, or choosing a system that advances an organization can be life changing.

“A decision that appeared judicious based on the information available at the time may appear negligent in hindsight if an outcome is bad”

Your Brain is Lazy

Your brain has an automatic system (system 1) and a working system (system 2) and most decisions are made with our automatic system. System 1 and System 2 were coined by Daniel Kahneman is his book Thinking Fast and Slow (2011).Your automatic system keeps checking on activities around you and making quick decisions using heuristics which are shortcuts or rules we use to make decisions. Your working system only kicks in when you need to make decisions that take a larger amount of cognitive ability.This is because the working system of your brain takes a lot of energy. For example, if you have to add 2 + 2 your automatic brain can do this quickly with little effort. Now try to multiply 242 X 147, not so simple. (I will wait while you figure it out or get your calculator.) You need to stop and put a lot more energy and cognitive ability toward this task which is done by your working system.

Biases on Judgement

We believe that good decision making is based on quantitative factors and analysis. We use pertinent information available to decide the best outcome. However, there are other things at play in our minds that we are not aware of when processing information and making decisions. These come in the form of cognitive bias and have an effect on our automatic system (system 1). A few of the biases that affect how we make decisions or how we can influence decisions include:

Attribution error – with attribution error we tend to look at the persons personality to explain behavior rather than a particular situation. And we do the reverse for ourselves. This could lead to misjudging others. The term was coined by Lee Rossbased on a classic experiment by Jones and Harris (1967).

Priming – priming occurs when exposure to one stimulus influences how you react to something else (Meyer and Schvaneveldt, 1971). For example, priming of the word food would make you fill in S_ _ P with soup instead of soap.Priming can cause us to make decisions in a certain manner based on information we were provided prior to the decision.

Anchoring–anchoring occurs when we make decisions based on one specific piece of information, usually the first piece of information we receive regarding a subject (Kahneman and Tversky, 1974). Anchoring is used in many instances for example price negotiations. The first person who suggests a number sets the anchor for later decisions.

Framing–is a cognitive bias where we react differently depending on how information is presented (Kahneman and Tversky, 1981). For example, beef that is 90 percent lean is more appealing than beef that is 10 percent fat. In another example we could say the 1-year survival rate of a procedure is 90 percent or the 1-year mortality rate for the procedures is 10 percent. In a world where data is becoming a driving factor in decisions we must be careful how we present the information.

Halo Effect – the halo effect is a cognitive bias that occurs when we use impressions in one area to make decision or assumptions in another area (Thorndike, 1920). For example, when we meet someone and they are nice, cordial, and good looking we assume that they are good at their job. The reverse is true as well. This can cause distortions in the way a person assessed and can affect job hiring, how much we will help others, or even if someone is believable.

How We Analyze Past Decisions Can Be Costly

Typically, we want to use information from past decisions to make future decisions, and this can have bad side effects in some instances.  There are limitations to the human mind that impact how we evaluate a decision. We are unable to reconstruct our past states of knowledge once we have accepted a new view. According to Daniel Kahneman in his book Thinking Fast and Slow (2011), Hindsight bias causes reviewers of decisions to focus on the outcome alone rather than the data that was available when the decision was made. A decision that appeared judicious based on the information available at the time may appear negligent in hindsight if an outcome is bad.

Kahneman warns that hindsight bias is especially bad for those who act as agents of others including coaches, CEOs, politicians, doctors, social workers, and those who are advisors. When the outcome of a decision is bad the agent is blamed. Because of law suits against doctors, additional administrative standards were put in place including more high cost testing. Another consequence of hindsight bias is risk aversion. In higher education we act as agents for students when it comes to decisions regarding financial aid as well as academics.

Decide What a Good Decision is First

When important decisions need to be made it is crucial to define what a good decision is first. In meetings have everyone write down their view on a topic before the first person speaks. The first person who speaks can anchor everyone else. Make sure the data we present portrays information in ways that assist decisions for the greater good and not our own preferences. We cannot eliminate or change our cognitive biases; however, we can take time to slow down our decision making and let system 2 have some input.

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