We make decisions everyday and all the time, some big and some small. Some big ones include which home to buy, or whether to take up a project, or where to go on a vacation, for example. Some small ones may be what to cook, which route to take, or how much to prepare for a meeting. Notice one thing: in all these decisions there are uncertainties in terms of events that we do not have control over. For example, there could be natural disasters or weather phenomena that could wreak havoc, a pandemic could occur, an accident can happen, or a war could break out. There are also uncertainties involved in terms of choices that would show up in the future such as new houses, new projects, or a better deal for a travel destination.
There are also other uncertainties such as not having full information while making decisions. The point about uncertainties is that oftentimes when they occur, we wonder if we made the right decision. Annie Duke in her wonderful book “Thinking in Bets” does say that the quality of a decision must be assessed based on the information available at the time of making the decision. Evaluating a decision after the fact (i.e. when the uncertainty is revealed) results in flawed decision-making. So the strategy is to make a decision with the information available to us without second-guessing in hindsight but also adjust our expectations that unplanned things could occur. That said, it is time to ask how we make decisions, whether big or small.
A lot has been studied on how we make decisions. There is a possibly-faulty notion that people are maximizers or satisficers (an amalgamation of the words satisfy and suffice) and their personality-types shape their decisions. To put it simply, maximizers are out to get the “best” among the alternatives while satisficers are looking for what is good enough. It is also believed that satisficers are generally happier than maximizers. In my opinion the flaw is that people are not always maximizers or satisficers. That is, it is not a personality-type that is involved in making decisions. Depending on the context, we may choose to maximize or to satisfice. For example, someone may find the best deal possible when it comes to flight tickets whereas they may buy the first suit they feel comfortable in!
In the field of operations research, decision-making problems are formulated using objectives and constraints. The objective is what we would like to optimize, so this is what we would do while maximizing. The constraints are what we would like to satisfy. In a sense, we both maximize and satisfice while making decisions. But what we throw into the objective and what we use as constraint could vary (by situation and time). For example, we may want to get from point A to B in the fastest way (doesn’t matter what it costs due to tolls or whether it is scenic). Alternatively as long as it is reasonably scenic, tolls lesser than an amount, and we can get there in 30 minutes, any route would do. The former can be thought of as maximizing while the latter would constitute satisficing.
While making decisions big or small, it is important to think about the criteria (which could include gut feelings that are easier to satisfice than maximize) and decide what we would like to use as objectives, as constraints, or just leave out. Here are some things to ask ourselves.
Are we maximizing?
Chances are that factors that align with our values, bring us joy, or meet our basic needs are things we tend to use as the criteria to make decisions. Many times when a group-decision is made (as a team or a family, say), it is possible that different people can have different priorities that are maximized, and the same metrics could be measured differently. For example, cost savings for a company could be computed differently by different people leading to different decisions. So a clear alignment of the objectives and how they are measured can lead to favorable results.
Are we satisficing?
In many situations, there are numerous criteria to consider. For example, while buying a house, it could be cost, distance from work, school district, amenities in the house, the access to stores by walk, etc. While doing such multi-criteria optimization, it may not be easy to find one objective. In those situations, satisficing is a reasonable solution. In that case getting a house that is acceptable in all the criteria may be a great choice. Again, not everyone may have the same criteria or thresholds but satisficing for all may be achievable.
Are we embracing uncertainties?
In my opinion happiness with a decision is not whether we are maximizing or satisfizing, but it is whether or not we embraced uncertainty. Instead of being surprised when unforeseen events unfold or new information rolls in, if we anticipate things (obviously not the exact event), then we are better prepared. When we make decisions and expect things to go a certain way, uncertain events can throw a wrench. So best would be to remind ourselves that the decision we make is the best given the circumstances and information, but things can go awry!