Risk and Uncertainty Archives - Decision Coaching – Ursina Teuscher, PhD

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Effects of sleep deprivation on decision making

How does a lack of sleep affect our judgment? Does it really lead to poorer choices?

"Drowsy drivers use next exit": warning sign on Interstate 15 in Utah Unfortunately, the answer is many times yes. In my research into the topic, I’ve found at least eight ways how a lack of sleep affects different aspects of our judgment and decision making.

Sleep deprivation affects us both physically and mentally, and decision-making is a complex process that requires the orchestration of multiple neural systems, such as emotion, memory, and logical reasoning. It is therefore not too surprising that sleep deprivation would take a toll on many fronts.

Here are eight effects of sleep deprivation on decision making:

1) What’s perhaps best known is that it impairs attention and working memory, leading to slower reaction times, reduced vigilance, and more mistakes.

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When should you quit your job?

Fortune Cookies: A new job is in your future

What can poker teach you about when to quit your job?

– You got to know when to hold ’em, know when to fold ’em –
– Know when to walk away and know when to run –
Kenny Rogers “The Gambler”.

Here’s a surprising fact about professional poker players: they quit – or fold – much more often than amateurs. Amateur poker players play over 50% of the hands they’re dealt, while great players play only between 15% and 25%.

Our natural intuitions about when to quit are flawed

According to Annie Duke, former poker champion and best-selling author of Thinking in Bets, these numbers illustrate just how poor people’s natural intuitions are about when to quit.

In her latest book,

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Bias and Noise in Hiring Decisions

How can companies reduce not only bias, but also noise, in their hiring and other decisions?

The problem of bias in corporate decisions, such as hiring, promotion and salary decisions, is well-known. However, there is another type of error that has not been talked about as much – perhaps because it is harder to see, and harder to fit into a narrative: noise.

What is noise in corporate decisions, and how is it different from bias?

Noise is a random error in our decisions. Research has confirmed that in many tasks, experts’ decisions are highly variable. Professionals often make decisions that deviate significantly from those of their peers, from their own prior decisions, and from rules that they themselves claim to follow. This is the case even when the stakes of those judgments are high,

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How to Deal with Regret

Do you have deep regrets about some of your past decisions?

A solid “No!” to this question should be much more concerning than a “Yes”. Regrets make us human, as Daniel Pink argues in his new book The Power of Regret. What’s more, regrets can help us become better humans, if we learn something from them along the way.

Drawing from his own research as well as previous studies, Pink claims that people feel regret quite often. He identifies four core categories of regret:

1. Foundation regrets
“If only I’d done the work.”
These are regrets where we opt for short-term gains over long-term payoffs, like not studying hard enough in school or not saving enough money.

2. Boldness regrets
“If only I’d taken that risk.”
These are regrets of inaction,

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Heuristics and Biases in Early Responses to Pandemic Uncertainties

Decisions under uncertainties are driven to a large extent by heuristics and biases. How can policymakers take advantage of this knowledge in order to communicate more effectively?

I’m happy to share the publication of a new commentary article by Raffaella Misuraca’s team that addressed this question in depth. It’s been a pleasure to be included in this collaboration:

Can We Do Better Next Time? Italians’ Response to the COVID-19 Emergency through a Heuristics and Biases Lens
by Raffaella Misuraca *, Ursina Teuscher, Costanza Scaffidi Abbate, Francesco Ceresia, Michele Roccella, Lucia Parisi, Luigi Vetri, and Silvana Miceli
* Author to whom correspondence should be addressed.

ABSTRACT:
During the outbreak of COVID-19 in Italy, people often failed to adopt behaviors that could have stopped, or at least slowed down,

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Berry Kruijning Interviewing Ursina on Decision Making

Berry Kruijning, JD, LL.M is a leadership coach and much admired colleague of mine. She works internationally but is based here in Portland, where I initially met her. She is an expert on communication and conflict resolution. One of her specialties is to help introverts become impactful and confident leaders. Here is an interview she did with me about decision making.

by Ursina Teuscher (PhD), at Teuscher Decision Coaching, Portland OR

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Summer Reading List 2019

Summer Reading List: Ursina's Book Recommendations on Creative Decision Making and Goal Achievement Somehow it became a summer tradition of this blog: here’s my latest list of book recommendations (you can see the lists from previous years here). As usual, they all have something to do with creative decision making and goal achievement. The first is a novel, the rest is non-fiction:

Wood, Benjamin (2016). The Ecliptic. A Novel.

More than the plot, it was the premise and setting that had me hooked from the start: an isolated artists’ colony on a small island – its anonymous residents lingering for years, all expenses paid. Relieved of their own ego and the burdens of everyday life, they should be free to create their next masterpieces. Needless to say, it doesn’t work out quite so smoothly for everyone. You can start reading here.

Two excerpts highlight why this book fits this particular reading list and the topic of my blog.

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Summer Reading List 2018

New Summer Readings: Books on Decision Making and Goal Achievement Another hopefully long and beautiful summer is coming up, and my intention is to spend a lot of it productively: reading. Preferably in a hammock. If you feel the same, here comes my new list of book recommendations about decision-making and goal achievement.

Dan Ariely and Jeff Kreisler (2017). Dollars and Sense: How We Misthink Money and How to Spend Smarter. I’ve always enjoyed Dan Ariely’s self-deprecating sense of humor, and in this collaboration he found a great match in Jeff Kreisler. Even though I was familiar with most of the concepts they discuss, this book not only kept me entertained, but also highlighted very clearly (and sometimes painfully) the irrationalities around money that I still allow into my life. Read a sample here.

Chris Guillebeau (2017). Side Hustle: From Idea to Income in 27 Days.

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German Translations of Decision Coaching Methods

(And you’ll also find some similar resources in English.)

I’m excited about my upcoming opportunity this month to teach several postgraduate seminars to career counselors in Switzerland again. The topic will be decision coaching methods: how to apply decision support tools in a career counseling setting. For that purpose I created course materials in German. I’m happy to share a part of those materials here, because I know some of my blog readers are native German speakers, or work with German-speaking clients, and have asked me before about resources in German.

The following are all downloadable pdf’s:

Entscheidungshilfen in der Beratungsarbeit – Wegleitung und Methoden
[Not the same, but the most similar resource I have in English: Decision making guideline – workshop handout with exercises]
Vorlage für Szenarienbäume
[In English: Paper/pencil template for scenario trees]
Vorlagen für quantitative Entscheidungsmethoden
[In English: Paper/pencil templates for decision tables and trees]

The first one is a guideline with exercises,

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Are You Scared of Your Next Decision?

Scared of Your Next Decision?

Edvard Munch (1893): The Scream. Oil, tempera & pastel on cardboard. [Image rights in the public domain.]

Tonight will be a scary night for the bravest of us, with countless children roaming the streets, high on sugar, threatening to knock on our very doors.

However, even today, our most crippling fears probably come from within. Are you scared of your next decision? Afraid of making the wrong choice? Funnily enough, while dogs and – some say – children can smell our fear; on our own we’re not always very good at recognizing when and why we’re scared.

Here’s how you can recognize whether your decision scares you:

You avoid making the decision altogether, for example by procrastinating or by shifting the responsibility to others.
You get overly emotional about your decision.

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Decision Skills Matter

To what extent do decision skills matter in real live? Do these skills actually lead to better decision outcomes and fewer unpleasant life events?

Or, more specifically: do people who perform better on hypothetical decision tasks also make better real-world decisions, to the extent that they experience better outcomes over the course of their lives?

Let’s take a step back. Based on all the different theories of what counts as a “rational” choice, we know that some people perform better in the kinds of choices that are typically presented in research studies. There are people, for example, who are less affected than others by the way information is presented to them (in other words, they are better able to resist framing effects). Or, while most people are overconfident most of the time, some people actually have a pretty accurate level of confidence into their own judgments.

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Summer Reading List 2016

Some book recommendations on decision making, innovation and productivity:

Kayt Sukel (2016) The Art of Risk: The New Science of Courage, Caution, and Chance
A very readable overview of current research on the neuroscience of risk, illustrated with personal stories and some inspiring interviews with risk takers and scientists.

Charles Duhigg (2016). Smarter Faster Better: The Secrets of Being Productive in Life and Business.
Important insights into how organizations can foster better productivity and innovation. For my taste, the book relied very heavily on anecdotes though, to the extent that I found it difficult to identify key takeaways.

Philip Tetlock & Dan Gardner (2015). Superforecasting: The Art and Science of Prediction.
A convincing case that – while even experts usually make poor predictions about the future – forecasting is a skill that can be improved.

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Age Differences in Decision Making Skills

A recent study confirms it again: older adults do well with decisions that require emotional skills.

Old age affects our decision-making skills in quite complex ways. Some cognitive skills decline with age, while emotional skills may even improve. This leads to interesting findings: older people do worse on some decision tasks, but they do just as well as younger adults on those same tasks when they get to experience them, rather than read instructions. This recent study, for example, used two ways to present gambling tasks. In the “description-based” task, people received information about different card decks: the probability of winning or losing, and the amount of money that could be won or lost with each card drawn from that particular deck. In the “experience-based” task they received none of that information – they were simply given four card decks,

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Numerical Skills for Financial Decisions

Relatively few people own private long-term care insurance, even though long-term care is one of the largest financial risks currently facing older people. A new study suggests that poor numerical skills may explain a part of that phenomenon: people with better numerical skills (even after controlling for education and cognitive function) are more likely to hold long-term care insurance.

Given the complexity of this particular financial decision, it is not surprising that a lack of numerical skills would create barriers. Assessing the value of a private long-term care insurance policy involves a variety of calculations, such as determining the probability of needing care, evaluating the likely lifetime expense of premiums against the payments one could expect to receive, and comparing the costs and beneﬁts of insurance against other strategies to manage the same risks. It is easy to feel overwhelmed by all this. A lack of skills to deal with all those numbers would certainly prevent people from making the best decisions for themselves.

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Instead of a Book Recommendation

This month I’m recommending an article instead of a book, by Gigerenzer and his colleagues, who have been pioneers in advocating for statistical literacy:
Gigerenzer, G., Gaissmaier, W., Kurz-Milcke, E., Schwartz, L. M., & Woloshin, S. (2007). Helping Doctors and Patients Make Sense of Health Statistics. Psychological Science in the Public Interest, 8(2), 53–96.

The article shows impressively how not only patients, but also journalists and physicians lack a basic understanding of health statistics, which can have serious consequences for healthcare and medical decision making.
The authors make a very strong case that this confusion is not necessary: it is created by nontransparent presentation of information (intentional or not), and the skill of thinking about these statistics and probabilities could relatively easily be taught – but isn’t.

Please let me know if you are interested in reading the article but don’t have access to the full text here.

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Medical Decisions: How to Judge Risks

Thanks for submitting your answer to the poll!

The question was: Would you get a cancer screening done if it reduced your chance of dying from this type of cancer by one third?

If you were undecided, you may have wanted more information about the type of cancer. But there is a more important reason why you should not have decided based on the information you got in this scenario: the number (risk reduction by “one third”) is not meaningful at all, because it only gave you information about relative risk reduction, rather than absolute risk reduction. If you get this kind of information from your health care provider, you should ask: “Ok, and what are my chances of dying from this type of cancer without the treatment?” Or more generally,

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Decision Trees Made Easy

Decision Tree for a 10-Year Old

This may well be the most unusual article I’ve ever come across in any peer-reviewed journal (it was published in an open access journal, so you can get the full text pdf here):

Mullin, Barbara & Roger, commented by Jack Dowie and Rex V. Brown.
Mhairi’s Dilemma: A study of decision analysis at work.
Judgment and Decision Making, 3, (8) (2008), 679–689.

It’s a case description of how a dad (Roger Mullin, a teacher of decision support systems) used a decision tree to help his 10-year old daughter, Mhairi, make a very difficult emotional decision: she had to decide whether to attend a dear friend’s funeral or not.

Decision trees are, in my own experience, one of the hardest tools to teach,

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Shortcut to Conflict Resolution With Game Theory

“Fair Outcomes”, an online system, offers an ingenious alternative to conflict resolution, based on the principles of game theory. The ABA journal has just published an article about it.

In contrast to litigation, arbitration, mediation, negotiation, and traditional sealed-bid/split-the difference arrangements, this system offers no incentive or excuse for either party to bluff or posture – or to try to posture through a refusal to use it.

The beauty is that it not only can save both parties an enormous amount of legal fees, but that the outcome is usually more favorable to each party than what that party
had proposed.

The system is very transparent and well documented, so if you’re interested in the topic, take some time to browse the website and think it through. If you prefer videos, here is a series of presentations that explain the underlying principles.

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