Greetings all! Judging from the response on last week's blog, The brain - old and new (hartejsingh.com), it seems that the evolution of the brain and the fact that we still rely on parts of the brain that were 500 million years old came as a surprise for many.
Today's blog is the third in this series on decision-making, and we will consider how our brain constructs models of the world and one way it leads to decision-making errors.
Before we dive into today's idea, it is worth underlining that cognitive errors cannot be framed as something ‘other‘ people do. I believe everyone does it, and that is because we are sometimes too fatigued, too busy, too involved or too distracted to give the decision at hand, our fresh perspective. It is also not the preserve of those who score lower on IQ tests - people who have been trusted with power who might have every qualification on Earth might make a completely avoidable howler.
The mind works by creating a model using the data it has. For example a child believes the tooth fairies take teeth from under the pillow and replace it with money. The model works from the data points observed and once a model of the world has been established (however flimsy), brain activity decreases to a small set of neurons - the case is settled. This decrease in brain activity is comfortable as it means the brain needs to expend less energy. The takeaway here being that your mental models don't need to explain every eventuality, just most of the observed ones. This is true even if we only have a few data points.
It’s extremely important we have this facility. We make hundreds of decisions each day and do not have the decision bandwidth to overthink things. It’s an amazing feature that makes us not need to think about whether we brush our teeth or not, which way to walk to the park or which coffee to order. BUT, and you all guessed there was a but - what happens if we are making a new decision which is important?
Joining the dots
We are constantly trying to join the dots. How do we make a model from the things we see or experience? The mind works by filling in the gaps by using the data points observed and trying to thread it into a compelling narrative e.g. when it rains, it's the heavens opening up letting the water in. In a later blog, I will be outlining the importance of stories, which i think is a fascinating subject and one which explains much of our need to understand 'why' something happens.
Think of an optical illusion. Your mind is constantly trying to fit the data to something it might already understand hence why your mind can sometimes be lulled into a false sense of understanding.
So far so good. Models are comfortable but create overconfidence because it lulls you into a sense of 'what I see is all there is' i.e. you think you have enough information to make predictions. This is the basis of jumping to conclusions - threading together only a few data points, with a healthy dose of assumptions and come to a conclusion that seems entirely sensible to them even though its completely wrong. I was guilty of a modern day example of that five years ago by predicting that Brexit would be roundly defeated in the referendum. I started with my view of the world, overlaid the (in hindsight) very one-sided arguments through the news sources I chose, and felt very confident about my assumptions. The gap I had papered over was why did poll after poll suggest that nearly equally as many people had come to the opposing view, and what story of the world do they tell themselves to get there.
Thank you agilebuddha.com for this fantastic visual aid. This is what happens when different people use a little bit of data and come to completely different conclusions.
When decisions are important ie they have a lot of future impact, we need to a bit more careful about getting caught up in a lazy mental model. For example when people make financial forecasts a common statement is ‘this has never happened before‘. A model of the world where this event is unlikely because it has not happened before is often enough to get people comfortable that it will not happen in the future, but we know that over the last two years, many things have never happened before, happened.
An example of this was my model of the world that petrol is freely available and a petrol station with petrol will never be more than 10 miles away. This led me (perhaps dangerously) to not consider filling up the car unless my predicted range was less than 10 miles. In October 2021 the U.K. suffered a petrol shortage which meant that for four weeks petrol supply was scarce. I had to fill up whenever I saw petrol as my wife is a doctor and would not be able to get to her patients otherwise. That episode added a new data point to my model, and even though petrol supply is plentiful, I now fill up when the range is below 25 miles- I am now aware of some uncertainty around my petrol assumptions and leave some margin for error in the system.
My misplaced confidence in the availability of petrol, can be applied more broadly.
However confident we are, we always have the scope to be surprised and that requires us to build in room for uncertainty to avoid bad situations. Unexpected things frequently happen, and they impact you most if you have assumed everything will go perfectly.
Our mind loves to be bathed in data that confirms our theories, and that is good if the decision is small. However if a decision is big and therefore important we need to experience a bit of discomfort and expend some cognitive effort by engaging some more of our neurons and really stress testing our model of the world.
The best decision-makers I have come across 1) actively challenge their own understanding to make sure they apply stress tests to their assumptions, 2) look at imaginative ways that might also join the dots 3) actively consider what might be different from history
We often dismiss people with different views of the world as conspiracy theorists, ignorant or malicious but it’s worth finding out which data they are considering that you aren’t.
What stories of the world do you have that you would like to re-think?
Next week we are going think about when we can rely on our intuition and when cannot.
Also thank you to the many people that have reached out to me with their own perspectives. I am doing this to improve my own decision-making and I hope by publicising my own research, it encourages others to review their decision-making.
Have a great week.