How to Make Bounded Decisions on Risk (Part III)

28/03/2011 — Leave a comment

Dealing with the internal ‘yes man’

There is a natural tendancy for people (including you and I) to seek out, remember and interpret information that reinforces their beliefs. Especially in circumstances of uncertainty or when there is emotion attaching to the issue. This bias is known as confirmatory or ‘myside’ bias.

Smart people believe weird things because they are skilled at defending beliefs they arrived at for non-smart reasons.

Michael Shermer

In risk decisions we deal with both uncertainty and the potential for significant loss, so these two factors are implicitly always at work when assessing significant risks. Where this can become very important is when one has made a decision and become emotionally and materially invested in it.

In these circumstances it can become exceedingly difficult to recognise and admit that you’ve erred. Easier to engage in psychological ‘sleight of hand’ and ignore or down play the warning signs, and as Michael Shermer points out the most intelligent among us (often engineers and other professionals) are normally the most adroit at doing this…

So what can you do to guard against the internal ‘yes man’ that is echoing back your own beliefs? Well as always there’s no magic bullet, but there a few techniques that you can try:

  • Estimate the likelihood that you might be wrong, if there is a 25% chance, then you could be wrong 1 in 4 times. This gives psychological ‘cover’ allowing you to admit that you might be wrong, if subsequent events do not pan out as expected.
  • Take a contrary view ‘for the sake of argument’ and see if you can mount a credible argument for an alternative course of action. One technique is to imagine the adverse consequence and explore ‘why’ it might have happened.
  • Ask a person un-invested in the decision and it’s consequences to review your decision. Ask would you make this decision based on the evidence?
  • Run a ‘paper project/portfolio’ alongside your real one. If you were unencumbered by personal responsibility, ownership or stewardship would the decision differ? Why?
  • Write down on a piece of paper before you make your decision, what changes in circumstances would make you change your mind. This will make it harder for you to ignore such events or internally argue that nothing needs to be done.

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