Traditional economics does an excellent job explaining human decision-making in situations where people have all the facts and are thinking logically. Nevertheless, in our everyday lives, we often do not have complete information and decisions can have an emotional impact as well. Dealing with these uncertain and risky day-to-day decisions can often lead to bias, require emotional regulation, and may result in habit formation too.
This article provides 5 tips on how we can make better day-to-day decisions:
1) Rest or Sleep on It: When you have to make a big and important decision, it may be best to do it when you are rested, focused, and motivated.
2) Take Your Time: Thinking clearly and logically takes time too. When we are in a rush, we jump to a quick conclusion that may be full of biases and hunches, rather than carefully thinking through the facts and information.
3) Gather The Facts: Beyond having the time and energy to think clearly, our decisions are only as good as the information we have about our choices and options. We can ponder a choice for hours, but if the information we mull over is very limited, or of poor quality, then all that effort and thought will be much less effective. Therefore, the more reliable facts and information we can gather and consider about a decision, the more we can reduce our uncertainty and make better choices.
4) Stay Open to All Possibilities: Sometimes, our quick thinking biases how we consider facts, information, and options along the path of decision-making—not just at the final decision. Particularly, we often automatically accept things as “true” before we carefully deliberate about them. Also, our reasoning about an issue may be motivated by a “directional bias”, leading us to selectively review only the information and facts that support what we already want to believe. Given that, we can often jump to conclusions, or be biased to confirm something that we want to believe, rather than honestly looking at what all of the information and facts are really telling us. Therefore, when making important decisions, it is helpful to stay open to all of the facts and possibilities (especially to the ones you don’t want or like).
5) Create Rules: We all get tired, unmotivated, rushed, stressed, and emotional at times. Beyond that, gathering every fact and carefully thinking through every decision is impossible—especially as we move through our day-to-day lives. That is why, when they are thinking clearly, more effective decision-makers often set up simple rules and formulas to make better choices—even when they are rushed at a later date. Even in situations where we might get caught up in biased and emotional thinking, we can often set up rules or formulas ahead of time to see us through.
