Decision Making

Often, decisions must be made based on incomplete information.

Here’s an example. Suppose you need to get from Sioux Falls to Denver. Traveling by car, with a couple of stops, the trip would last at least ten hours and cost at least $50 in gas and food. While these estimates could be improved, the exact duration could be extended due to a snowstorm or a multi-vehicle accident. The cost could be increased due to a flat tire or other unexpected events.

Aside: I once had an engine seize up while driving through Kansas on my way to Denver. I was able to limp into Hays, the next town, and had a mechanic look at it. The vehicle was totaled, as it would have required a new engine. I sold it on the spot for scrap metal and got enough money to purchase a bus ticket to get the rest of the way to Denver. I even made it in time for a party that night!

We can make decent assumptions, but we can’t control everything that might happen.

Another option would be to fly from Sioux Falls to Denver. In this case, the trip would last about three hours and cost about $300 for one person, although it could be significantly higher depending on when it’s booked and with which airline. Because there are a limited number of flights from Sioux Falls to Denver, there would be a constraint on the specific times available to depart. Again, while these estimates could be improved, uncertainty would remain.

Even so, most people don’t struggle with deciding on whether to fly or drive. (Let’s rule out the possibility of walking from Sioux Falls to Denver!)

Humans are good at making such decisions. We are not nearly so good at making other decisions.

Suppose the trip involves two travelers, one who is afraid of flying and another who tends to get car sick. Emotions could run high, with neither traveler wanting to consider the option preferred by the other.

Or consider the movie Sophie’s Choice, where a mother is forced to decide whether her son or daughter gets to live.

Chip and Dan Heath have written an entire book on the topic! I recommend Decisive: How to Make Better Choices in Life and Work for anyone who wants to make better decisions.

A topic for another day is when “gut decisions” and “data-driven” decisions might make sense.