Decision Making
“I walked into Gap and told the salesperson I wanted a pair of jeans – 32-28. She replied – “Do you want them slim fit, easy fit, relaxed fit, baggy or extra baggy? Do you want them stonewashed, acid-washed or distressed? Do you want them button-fly or zipper-fly? Do you want them faded or regular?” Before all these options were available, a buyer like myself had to settle for an imperfect fit, but at least purchasing jeans was a 5 minute affair. Now it was a complex decision in which I was forced to invest time, energy and not small amount of self-doubt, anxiety and dread” – Barry Schwartz
In today’s world, there are so many options – we constantly find ourselves asking “what clothes should I wear?”, “what 401(K) or health insurance plan should I enroll in?”, “who should I select as my significant other?”, “what should I do with my career?”, “how should I spend my time between work, friends, hobbies, etc.?” As Americans, we tend to equate more choices with more freedom. However, in today’s world, there are so many options that we (i) end up getting overwhelmed and not making a decision or (ii) select a sub-optimal decision because we do not devote the time to fully assess each opportunity or (iii) make a decision but feel unsatisfied with it, constantly thinking about the other options that we missed out on. Some of these decisions can significantly impact your life in terms of wealth, health and self-confidence. Therefore, when you are making these life-impacting decisions, it’s important to follow a robust decision making process.
In today’s post, we’re going to discuss how “maximizers” and “satisficers” vary in their decision making process and discuss the biases that come into play when you make decisions. Because we are human, we are wired to follow these biases. However, being more mindful of these biases can help us identify when they come up and if necessary, change our decision-making process to avoid sub-optimal decision-making.
Fun Quiz
Before we dive into some of the research, let’s first start with a “fun” quiz.
Grab a piece of paper and write down how much you agree with the below statements on a scale of 1 (completely disagree) to 7 (completely agree).
Whenever I’m faced with a choice, I try to imagine what all the other possibilities are, even ones that aren’t present at the moment
No matter how satisfied I am with my job, it’s only right for me to be on the lookout for better opportunities
When I am in the car listening to the radio, I often check other stations to see if something better is playing, even if I am relatively satisfied with what I’m listening to
When I watch TV, I channel surf, often scanning through the available options even while attempting to watch one program
I treat relationships like clothing: I expect to try a lot on before finding the perfect fit
I often find it difficult to shop for a gift for a friend
Deciding on what show to watch is very difficult. I’m always struggling to pick the best one
When shopping, I have a hard time finding clothing that I really love
I’m a big fan of lists that attempt to rank things (the best movies, the best singers, the best athletes, the best novels, etc.)
I find that writing is very difficult, even if it’s just writing a letter to a friend, because it’s so hard to word things just right. I often do several drafts of even simple things
No matter what I do, I have the highest standards for myself
I never settle for second best
I often fantasize about living in ways that are quite different from my current life
Now add up your totals! If you got less than 40, you’re mostly a “satisficer.” If you got more than 65, you’re mostly a “maximizer.” If you’re between 40 and 65, you’re somewhere in the middle. So what does this all mean?
Maximizers vs Satisficers
Barry Schwartz came up with the concept of “maximizers” vs “satisficers” related to decision making. Satisficers establish decision making criteria and stop searching once they find an option that meets their criteria, whereas maximizers research every option to find the “best” option. People are satisficers in some areas of their life and maximizers in others. You cannot be a maximizer in every area of your life, or else you’d never make a decision.
It is important to note that satisficers don’t have low standards or compromise. In fact, they know what they want and once they find something that meets the criteria, they stop looking. Maximizers are constantly looking for the absolute best. While maximizers objectively tend to have a better outcome than satisficers, they report being less satisfied with their decision and often experience regret after making a decision.
In an interesting study, maximizers landed jobs with starting salaries 20% greater than satisficers. But, maximizers were more pessimistic, anxious, stressed, worried, tired, depressed, regretful and disappointed than satisficers.
I’m a satisficer when it comes to restaurants - I pick what type of cuisine I want, what neighborhood I want to be in and what time I want to eat. Then, the first or second restaurant that meets these criteria is where I dine. This is the same approach I take with vacation destinations, home décor and book selection. However, I have friends that spend hours researching where we should go to dinner, where we should go on vacation and what book we should read because they want to experience the “best restaurant,” “best vacation destination” and “best book” - it sounds exhausting!
I have found the more selective I can be in terms of applying the maximizing mindset, the happier and less exhausted I am. For me, I am a maximizer in my career and friends, but try to be a satisficer in all other aspects of life.
How to make decisions
The process of making decisions seems easy – (1) figure out what you want (2) evaluate alternatives based on these criteria (3) select what you want. However, we fall subject to many biases when making decisions. Below are some of the common biases that you may experience. Being more mindful of these biases can help you make better decisions.
When we are going to make a decision, first we need to figure out what we want in the future. It turns out we’re pretty bad at this.
Bias: I know what I want
Description: We tend to think we know what we want and how we will feel in a future state event, but when the event comes to fruition, we often choose the opposite of what we anticipated
Scientific Study: People were asked if they would want to decide their treatment if they got cancer and 65% of participants said “yes”. However, of those who do get cancer, only 12% of them want to decide their treatment.
How it applies to you: Whenever you find yourself anticipating how you would react or feel in a certain circumstance, go do something else because this is a futile exercise. This is especially true if we want to be more mindful – being mindful takes into account the context of a situation and we cannot anticipate the context of future situations.
Next, we start to evaluate the different options, first referencing past events, which is where other biases comes in.
Bias: Peak - End Rule
Description: We tend to remember the enjoyability of past experiences based on how we felt at the peak (best or worst) and how we felt at the end.
Scientific Study: Prior to general anesthetics, a study was done that measured men’s assessment of colonoscopies. In the control group, men had a normal colonoscopy and in the experimental group, men had a normal colonoscopy plus after the exam was over, the doctor left the instrument in place for a short time, which is still unpleasant, but not as much as the procedure. While both groups had the same peak experience, the men in the experimental group had a milder end experience, which led them to rate the procedure as less unpleasant than the control group and more likely to comply with the follow-ups.
How it applies to you: Because we tend to only remember the peak and end of an experience, our memory is skewed. One of my friends is trying to get over a break-up and constantly talks about the peak of their relationship – when they were madly in love, cooking dinner together every night, spending summers at the beach house and forgets all the conflicts that were interspersed throughout the relationship.
I find it helpful to keep a journal and write about how I am feeling on a regular basis, so I can go back and truly understand how I felt during a time period, instead of trusting my memory, which often idealizes or catastrophizes a situation.
Bias: Availability Heuristic
Description: We tend to recall information that is more “readily available” in our mind, which are things that we have recently heard about or that are vivid in our memory.
Scientific Study: Subjects were asked to estimate the number of deaths per year that occur as a result of various diseases, car accidents, natural disaster, electrocutions, homicides, etc. The number of deaths per year from vivid causes of death (accident, homicide, tornado, flood, fire), that are constantly published in the media, were overestimated. However, more mundane causes of death (diabetes, asthma, stroke, tuberculosis) were underestimated.
How it applies to you: When we are making a career decision, partner decision, etc., – we often think about what is most readily available in our memory – which is why we end up working in fields that our family and friends work in and end up marrying people like our opposite sex parent and exs.
Then, we make a decision based on the current context, which is where more biases come in.
Bias: Anchoring
Description: Humans constantly look for a point of reference to compare themselves and products to. Seeing an anchor point tells humans how to interpret something else relative to the anchor
Scientific Study: Restaurants often put a very expensive wine on the menu to serve as your anchor point. Once you see this, the middle of the tier wine looks like a good choice, which is still significantly more expensive than the cheap wine, which helps them drive sales.
How it applies to you: If you want to get someone to do something, first state something outlandish, but plausible and then state something more reasonable. Because you have anchored someone to the outlandish but plausible event, they will happily comply with what they perceive to be a much more reasonable option. In order to get your family or roommate to do chores, start with something outlandish (vacuum twice a day) and then settle on something reasonable (mop the floors once a week)
Bias: Prospect Theory
Description: Humans tend to be risk-adverse (i.e., we prefer certainty) in terms of gains and risk-seeking in terms of losses. Losses hurt more than gains benefit, people get less satisfaction out of each additional unit gained and people feel less pain for each incremental unit of loss.
In experiment 1, subjects were asked to imagine they are a physician working in an Asian village and 600 people have come down with a life-threatening disease. You have two potential treatments:
*Treatment A will guarantee saving 200 people
*With Treatment B, there is a 1/3 chance that you will save all 600 people and 2/3 chance you save no one.
The majority of participants choose treatment A, even though the expected outcome is the same for treatments A and B
In experiment 2, new subjects were presented with the same circumstances, but two new treatments
*Treatment C will kill 400 people
*With Treatment D, there is a 1/3 chance that no one dies and 2/3 chance that everyone will die.
The overwhelming majority chose treatment D, even though the expected outcome is the same for treatments C and D
How it applies to you: Many people talk about “golden handcuffs,” – the pay and prestige of a job makes it difficult to switch and this is because of prospect theory.
In your current job, you continue to acquire things which become yours. If you were to take a lower paying job, the loss of these nice things would inflict significant distress on you. To avoid this loss, people stay in their jobs, even though the incremental things they can buy with their increased salary will only provide a marginal improvement to their happiness.
Bias: More is Less
Description: An additional option makes it more difficult to make a choice
Scientific Study: In a study, doctors in the control group were presented with a case of a man suffering from osteoarthritis and asked whether they would prescribe a new medication or refer the patient to a specialist. 75% recommended the medication. In the experimental group, doctors were presented with a choice between two new medications or referral to a specialist. Now, only 50% went with either medication and 50% (double the control group) went to a specialist, thereby avoiding making a decision.
How it applies to you: In some cases, it is beneficial to constraint the number of options that you look at. In people’s job search and dating, they tend to believe that the more data points, the better. However, many choices may prevent us from actually pulling the trigger to accept a new job or to settle down with someone.
In summary
In today’s world, where options are endless, we must be discerning in which areas of our life we decide to satisfice vs maximize. We must also be aware of how biases can skew our judgement and lead us down a sub-optimal route.
So – here’s my ask
Thank you for everyone who responds to these posts – it really means a lot to me! Please keep the feedback coming – what does and doesn’t resonate with you? What types of writing styles are most effective? E-mail me at nicoleepollack@gmail.com
You can learn more about decision making through Barry Schwartz’s Paradox of Choice: