Considering Alternatives

As we discussed last week, the most common way individuals make decisions is to consider alternatives and make a choice. How individuals go about this process defines the extent, and even quality, of the alternatives among which they can choose.

As we discussed last week, the most common way individuals make decisions is to consider alternatives and make a choice. How individuals go about this process defines the extent, and even quality, of the alternatives among which they can choose.

To reiterate, the approaches to individual decision-making that I outlined are:

1. Consider a few alternatives and pick one
   
2. Research the alternatives and pick the one that seems “best,” whatever that means to the individual
   
3. Look at what others (friends, family members, neighbors, co-workers – which I will abbreviate FFNC below) have done in similar situations – and pick one
   – We may ask those others how they made the decision and how it worked out
   – Or we may not
   
4. Whim
   

Last week we looked at the fourth approach, Whim; now let’s examine the first three.

The first entry above is that we consider a few alternatives and pick one. Sounds reasonable, right? But, this implies we have a base of knowledge that allows us to know what are appropriate alternatives in whatever the situation may be. 

If we do not have that base of knowledge or if we choose to ignore that base, we are essentially falling back on Whim. Maybe the decision become strictly an emotion-based exercise, but, as I said last week, Whim and emotion are interconnected.

But what if we are knowledgeable in the area and actually do know a lot? Many, actually most, of us know a lot about a limited area but most of the decisions we make have little or nothing to do with our area of expertise. Think about that for a minute. What area are you trained and experienced in? How many day-to-day decisions do you make in that area? Before you say that you make a lot of these decisions, what proportion of the decisions you make every day are things like what to eat for lunch (assuming you are not a chef!) or what route to take to work today? These kinds of decisions fall into a category I call minor and unimportant and, arguably, do not require us to have “expert” knowledge about the topic, just that we have enough to make a choice. In fact, often we may not want to have too many choices – we may find ourselves unable to actually make that decision. 

To reiterate what I said above, when you are making a decision based on only what you already know, it is not much different than Whim, or flipping a coin, or any other method of more or less random choice. In fact, “experts” may be the wrong people to make decisions since they believe they have all the information needed. 

Decisions falling into categories I think of as important or major should be made with a bit more careful thought. We are not likely to have a good range of choices based on our own knowledge, so we consider expanding that range. One way is to do research in some fashion. 

The current most common ways to do this kind of research are to use the Internet or ask FFNC how they made similar decisions. Either way, we are trying to expand the universe of choices and alternatives. We are also, ideally, getting information to help us differentiate those choices from each other by learning about the advantages and disadvantages of each. We can then weigh those advantages and disadvantages to make a decision that we are happy about.

Part of the research, whether it is by the Internet or FFNC, is to look for the potential results of the choices available to us. For instance, if we are buying a new car, we can get on the Internet and learn about those in our price range, those that have all the features we want or need to have, and many other facts. We can read reviews and search for information from those who have bought the models we are considering. If we have FFNC who have acquired one of the models we can (and, I believe, should) ask about their experience. There is no better source than someone we know who will give us honest feedback – the personal experience has significantly better credibility than all the advertising and reviews we read from people we don’t know. When I bought my last car, I did a lot of research and visited dealerships and drove various models. I then talked with a friend whose husband had one of the models I was most interested in buying. I asked about the upgrades and bells and whistles and was told about a problem he had with one of the upgrades. When I bought the car I decided not to get that upgrade and have had no problems for five years. This does not, of course, mean that had I added that upgrade I would have had a problem. But my investigations turned up a small red flag about an upgrade that I really did not need anyway.

When we make decisions as individuals, we, ideally, invest the time and effort to do research in proportion to our perception of the importance of the decision. Then, when we have gathered as much information as we think we need we make the decision. At that point, there is still a fairly big component of whim and emotion in the decisions we make. 

Note the word “ideally” I used in the previous paragraph. All too often, individuals make decisions, even important ones, without that research or even any serious consideration of the potential results. Rather, the decisions are made either based on emotion alone or casually, in other words, based on the whim of the moment. Clearly, many decisions do not need much consideration, like the example of what to have for lunch. In many cases there is no issue with the outcome but even the example of the choice of lunch could in some circumstances be important enough to at least consider whether there is a reason not to make certain choices. If you are going into an interview for a new job right after lunch, you probably should avoid a garlic-heavy dish, for instance.

There is, however, a limit. When I said above, that, in our research, we are gathering as much information as we think we need to make a decision, I highlighted a potential trap that too many people fall into. That trap, of course, is never stopping our research and study of the issue and thus never actually making the decision. This is often referred to as “paralysis of analysis.” 

For those of us who are information nerds, it is easy to spend a lot of time just getting that little bit more we think we need before we make that decision. This is one way we avoid decisions. That is a topic we will explore next week.