Business & Life Skills
Optimal Decision Making and Avoiding Risk (Kayt Sukel)
CJ interviews author Kayt Sukel on “The Art of Risk: The New Science of Courage, Caution, and Chance” on how the brain learns how to make optimal decisions. Learn how our brain works in conjunction with our emotions, intuition, and experience to reduce risk and make better decisions.
Source for all text in article: Sukel, K. (n.d.). The art of risk: The new science of courage, caution, & chance.
DECISION MAKING – HOW EACH PERSON HAS A DIFFERENT RISK ALGORITHM?
How a person makes a decision varies based on how our brains are wired, genetics, hormone levels, and more. Kayt Sukel, author of “The Art of Risk: The New Science of Courage, Caution, and Chance” unveils the mysteries about how we make decisions, and how it’s mostly about our assessment of risk.
HOW DECISION MAKING IS IMPACTED BY AGE, GENETICS, AND NEUROSCIENCE?
After extensive research with neuroscientists, statisticians, and genetic researchers, as well as gamblers, surgeons, and extreme sport enthusiasts, Sukel discovers that how each person makes decisions is as unique as their fingerprint based on how their brains are wired, their genes, and their hormonal balance. This video explains how these systems work:
• Your Brain circuitry: According to Craig Ferris, a neuroscientist at Northeastern, the brains motivation system (mesocortical limbic circuit) is what is responsible for evaluating both risks and rewards of any decision. This system works like a probability calculator to calculate outcome probabilities to predict both subjective value and maximize utility. Sukel explains that the brain computes the probabilities of potential outcomes by gathering information from both the current environment and past experiences about each choice and then weighting each alternative with a subjective value based on our needs, wants, beliefs, and goals. To illustrate how the brain would work in a typical decision, Sukel shares in the video below how the brain works in making a common decision involving risk, whether to take a job offer, or not. Check out the video to hear more:
• Risk-Taking Gene: In investigating how genes factor into decision making Sukel interviews Christopher Chabris, a psychologist at Union College who studies genetic contribution. Chabris shares that there is not one “risk-taking”gene, but instead many, perhaps hundreds, of individual genetic contributions all of which influence the brain’s natural decision making algorithm. These genetic differences mean that you can have several people seeing and perceiving the same thing, but each of them will make different decisions due to these genetic differences. Essentially, each brains finds different levels of risk acceptable.
• Age influences decision making: It seems like common sense, but our decisions get better with more life experience. During the teen years, young adults get better at decision making through a lot of trial and error. It’s through doing things over again and again that they get the experience and start understanding the consequences of making certain choices. All of this experience informs their brain and when they apply the gas and brakes in making decisions. It’s at age 25, that the prefrontal cortex (brakes) matures and the brain is better at applying the brakes when faced with making a risky decision. Until that maturation time, young adults may find that it’s harder to prioritize, link things together, filter out irrelevant stuff, and make the best decisions when they are faced with risks.
OPTIMAL DECISION MAKING
HOW CAN WE MAKE BETTER DECISIONS AND AVOID RISK?
In the “Art of Risk” Sukel offers several strategies on how we can optimize our decision making and increase the likelihood of a successful outcome with difficult decisions.
- Familiarity: Sukel explains that researchers have found that risk-taking is influenced by how familiar you are with the activity at hand. She suggests if you are faced with a risky decision, it’s important to do your homework and get to know an activity so that you can better access the true scope of the risk involved and in doing so, you will be able to make better decisions.
- Practice and Planning: It seems like common sense, but the more you practice the more familiar you are with an area. But in order to make better decisions Erik Dane, a professor of business at Rice University, who studies decision-making, says that you have to do “deliberate practice”. Deliberate practice is getting really good at something till you are an expert, which means going to the edge of your performance ability and your comfort zone, which involves continually failing and getting back up again over and over. Good decision making is about taking on harder and harder challenges and pushing past your boundaries.
“Extended practice activates a network in the brain called the action-observation network- a circuit involving the motor cortex (the region of the brain responsible for movement), temporal cortex (the part of the brain involved with memory and processing sensory input) and frontal cortex (the seat of executive control and function)- giving you a boost in how your brain communicates with the rest of your body. Activating this network means you can mentally rehearse movements, which prepares you for when it comes time to actually execute them. You can learn better from observation of other’s movement since you have the experience to put in in context. And, perhaps most important, harnessing the action-observation network through practice e allows you to break down movement into digestible chunks, so over time, more complicated routines become easier to learn- and the movements within them become very automatic… Practice also makes your brain work more efficiently”. P 140
“If you have practiced enough that you are an expert in a particular field, you have a lot of information about that field on hand. You can anticipate what comes next, what you need to do, the best way to respond to a situation. That means you can deal with things in your field that people without that expertise can’t. It allows you to deploy your attention faster and in a different way.” (p144) Michael Posner, neuroscientist at University of Oregon.
More on Decision making and planning here : http://www.fireitupwithcj.com/730-decision-making-made-easy-allison-rimm/
- Social circles: Scientists are learning that our social groups have the power to influence how, where, when, and why we take risks. This is particularly true with adolescents, but adults can be influenced by groupthink and the attitudes and beliefs from our friends, family and co-workers. Groupthink results in bias because we neglect all the variables involved in important decisions. Groupthink happens when individuals follow the advice of he most powerful person or leader within a group. Avoid groupthink and social pressure by stepping back, and examining all factors, such as “Are your social circles helping you consider all the elements? Are they stuck on certain variables that may lead you astray? Are they allowing transparency and challenges to the status quo? Are they closed off to any criticism?
- Feeling and Emotion: Today’s scientists have found that a little emotion or feeling may be a good thing. Emotions create physiological changes in our body that when very powerful protect us from things that may harm us. Antonio Damasio, a neuroscientist from USC, has been studying emotion on decision making for decades, and he suggests that over time we learn from our past emotional experiences and instead of pulling up the intensity that we can call up some “affect” or essence of emotion without causing a strong physiological effect (e,g.- higher heart rate, sweat). This “affect” ends up being a fast-thinking system and helps us take shortcuts in our decision making and protects us from making decisions that are too risky by unconsciously considering the potential emotional consequences of different choices. While there are benefits to our emotions, Sukel cautions us to watch when we are flooded with strong emotions and gut feelings and to balance them with emotional regulation.
- Stress: Sukel describes stress a situation where demand exceeds the regulatory capacity of an organism, when faced with unpredictable and uncontrollable life events. She notes that a little bit of stress is good when you face a new task and that sometimes stress can result in better performance. However, research on animals and human show that repeated or chronic stress results in fairly severe cognitive deficits in memory and attention, focus, emotional regulation, and good decision making. Stress leads to acting impulsively with what is right in front of us, which results in focusing on potential losses at the expense of our long-term goals, memories, and past experiences. Additionally, stress interferes with our rational prefrontal cortex, defusing its power to calm down our reptilian brain. Stress also downgrades the limbic system which removes key emotional input. When these two systems are compromised, we fall back on our habitual behaviors. How much stress is needed for making a good decision varies by person. For some, stress is needed to motivate them to complete a last minute deadline, where for others even a little bit of stress is too much. Some of these effects are mitigated if you can rely on training and planning which will kick you into automatic thinking when under stress. Sukel suggest that simple breathing and saying “relax” can be enough to help bring balance. Check out this simple 20 second meditation to try:
- Fear of Failure: Often it’s are fear of failure that affects our decisions. We focus on negative outcomes, overthink a situation, and fear mistakes, which results in narrowing our perspective and choices. If we can adopt the right frame of mine and see mistakes as opportunities to learn, we can learn more when we fail than when we have successes. People who succeed despite setbacks and learn to take disasters in stride learn to view potential mistakes as feedback. Instead of focusing their energy on the mistake and taking it personally, they focus instead on adjusting and responding to what arises in the moment. The next time you feel as though you have made a mistake, Sukel suggests we put those errors in the context of the larger goals and do some self inquiry by asking: “What might we have missed? What factors should have been given more credence?” Get more on tackling your fear of failure here: http://www.fireitupwithcj.com/aug-4-the-fear-of-the-unknown-fear-of-success-fair-of-failure/
- Planning a Path for Long-Term Success: Successful risk-taking is about taking risks that help us move toward a long-term goal. It’s important to take small steps while keeping the long-term goal in mind, versus always looking at immediate outcomes. Instead of focusing on failure along the way, it’s important to instead shift your perspective to planning for a path of success in order to make better decisions. When you focus your planning for success, you can anticipate what could go wrong and come up with a game plan to address each event. Planning involves projecting out several steps down the road to anticipate what may go wrong and how to respond. The more you can master self-control the more you can master obstacles toward your goal and be empowered by choosing paths when things go wrong, versus having to impulsively react to unforeseen obstacles. In the end, we empower ourselves through feeling a sense of control.
“Baskin (surgeon talking about risk) tells me that the most successful surgeons in the world are very certain of their abilities- but that they balance that confidence with a healthy fear and respect for what they do each day. It may seem contradictory- how you can have extreme confidence but still have that fear and respect. But you actually can. But it takes a certain amount of training. You have to train yourself, when you have a job like this, to show up in the morning thinking carefully about all the issues, thinking really hard about all the things that could go wrong, but also certain that, no matter what, you’re going to get through it. You mentally prepare yourself with the balance and it almost always leads to success”. p241
- Celebrating Wins: It’s important to recognize and celebrate small wins. Each small win are steps toward achieving your bigger goal and helps makes the overall goal seem more achievable. Scientifically these small wins help with moderating our stress and emotions by increasing our energy, motivation and selectively thinking about the rewards. More on how to celebrate Small Wins:
- Self- Awareness: Before making a decision, it’s important to know both your strengths and weaknesses. Sukel describes this as metacognition, which is “thinking about thinking”. Metacognition is what allows us to be aware of the possibility of failure while not letting it get in the way of your best effort. This is about letting go of mistakes as they arise and learning how to make different decisions the next time around. This process of letting go and learning has the power to influence our decision making by affecting our mesocortical limbic circuitry.
“A recent study of executive leaders done by Green Peak Partners in conjunction with Cornell’s School of Industrial Labor Relations, researchers found that scoring high on self-awareness measures was the best predictor at overall business success. Business leaders who understood their own strengths and weaknesses were better able to manage risk at work…. Knowing what you can’t change- who you are and how you innately respond to risk-leads to better, smarter choices when you consider a risky decision. It can help you learn when to let go and when to press on. And it can help you put risk in the proper context, so you can leverage it to achieve your long-term goals.” P247
- Intuition – From a scientific standpoint, Intuition is about pattern-matching. It’s when someone can map all the experiences they’ve accrued to the situation at hand in a very unconscious automatic level. The unconscious processing of information is an important part of intuition, however people make better intuitive decisions when they have a strong background in a given area. When Sukel asks a researcher when to use intuition in decision making researcher he states that “it depends on the task and your expertise and that it likely depends on some interaction of the two”. Some people are more inclined to make intuitive decisions, whereas others are more analytical but that you can do both.
“As a general rule, in tasks that are concerned with math or logic, in tasks that can be broken down into a series of concrete steps, we see that people do better when they approach them analytically (vs. intuitively). In contrast, what we’ve seen is that when tasks are less structured, less conducive to a mathematical approach, intuition, has a lot going for it. It can lead you to a good decision very quickly, whereas analyzing the problem for a while might not get you to a better or safer place.” P147
- Take the leap: Sukel explains that intelligent decision and risk taking is about letting yourself get out of your comfort zone and exploring new options. It’s having faith that regardless of any decision you will make that all outcomes have the potential for you to learn, grow, and realize your long-term goals. Optimal risk taking and decision making doesn’t have to be about taking huge risks, it’s about exploring, adapting, focusing, and making predictions about your future so that it becomes of your learning and memory. Any activity gives you a new experience. Trying a new hobby, travelling down a different road during your commute, or even brushing your teeth differently can lead to learning and growth.