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Decide more easily

Yvonne Wicke | 3. April 2017

For a long time you can observe how scientists have been arguing about which is the only true theory of decision-making.

Specialist literature helps to gain an overview of the current state of research. These are the literary works by Daniel Kahneman "Fast thinking, slow thinking", by Gerd Gigerenzer "Risk, How to make the right decisions" or "Personality, decision and behavior" by Gerhard Roth, to name but a few. Keywords such as risks, uncertainty, probabilities of occurrence, cognitive biases or helpful rules of thumb are used very frequently.

Rational or intuitive?

It is undisputed that anyone who makes decisions makes mistakes! We all know that from our own experience. One sensible goal is certainly to reduce these wrong decisions. To achieve this, it is necessary to provide today's decision-makers with tools that make it easier for them to make decisions. My personal recommendation is not to forget your gut (intuition) when making decisions with unknown risks (great uncertainty) and to trust your gut decision more often. To put it simply, we make decisions either with our head, i.e. rationally, or with our gut, i.e. intuitively. There is a consensus that if all the parameters (risks) of a problem are known, then the rational decision is the right one. However, we live in an uncertain world in which not all parameters are known. There are complex risks, and it is questionable whether applying or attempting to apply complex solutions is always the right answer.

Use of rules of thumb

There are many positive examples where the use of simple rules of thumb is the right approach to solving complex risks. The use of gut decisions is useful, for example, in foreseeable situations with learning potential such as firefighting, aviation or sport. Moreover, in highly uncertain situations without a reliable data basis. Even if you cannot rely on the probabilities on which you base a decision model, you may be better served by a rule of thumb.

A popular example of a positive rule of thumb is explained by Mr. Gerd Gigerenzer in his book "Risiko, Wie man die richtigen Entscheidungen trifft" (page 42ff.). The situation of the emergency landing of the passenger plane on the Hudson River in 2009 is described here. Using a simple rule of thumb, the pilots decided against attempting a landing at LaGuardia and opted for an emergency landing on the Hudson River:

"Fix the tower: if the tower rises in the cockpit windshield, you won't make it."

This "shortcut in decision-making" gave the pilots a window of opportunity for the next steps in the emergency landing. In science, these rules of thumb or decision shortcuts are called heuristics. The pilots used the "gaze heuristic". For example, we use gaze heuristics to catch a ball (... and not complex calculations of the trajectory).

Gut decisions in our society

The big problem with a gut decision, however, is its comprehensibility. Among other things, the current legal framework does not allow economically significant decisions to be explained on the basis of a gut decision. A decision-maker will certainly not come up with the statement "I made my decision based on my gut feeling" to his shareholders. If the intuition was strong enough to make the decision in favor of the gut, then the decision maker will subsequently spend money, time and resources to back up the intuition with rational data.

We should honestly ask ourselves how often it happens that a conscious decision is made against intuition, that a decision is made against one's own experience, and that a rational decision is consciously made. Because from the decision-maker's point of view, this is only the second choice. The question is, does this even result in economic damage? This leads to the conclusion that managers need to know when to make decisions according to formal rules, when to make decisions based on gut instinct and when it is best to combine both approaches.

It would be interesting to develop tools to measure the quality of gut decisions. TD Trusted Decisions GmbH, in cooperation with the Institute for Information Systems - Information Engineering at the JKU Linz, is currently researching this topic in various projects. It will be my pleasure to inform you about further interesting news on this topic in our newsletter.

TD Trusted Decisions GmbH Philipp Wicke
Philipp Wicke
©TD Trusted Decisions GmbH

TD Trusted Decisions GmbH Frank Werner
Frank Werner
©TD Trusted Decisions GmbH

In our newsletter 12/2016, we already reported that we were represented at the 17th conference of the working group of commercial directors, managers and administrative directors of zoological gardens in German-speaking countries at Augsburg Zoological Garden. Among other things, we inspired the participants with precisely this topic: "Simpler decision-making." This was not only actively discussed by those present during the conference. No, even at the evening event, this complex and exciting topic did not let go of the participants.

I would also like to invite you to send me your comments, your personal opinion or your experience.

I look forward to your feedback at

Philipp Wicke

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