The Wharton text brings up the discussion on reasoning in multistage decision-making. Many people don’t often fully think things through much like a researcher would and end up making bad decisions. The two ideas that will be discussed are his ideas on complete forward planning and heuristics.
Complete forward planning is defined as “maximizing total utility over a horizon, decision makers are assumed to look ahead to all future periods and anticipate all possible choices and outcomes.” (Hoch & Kunreuther, 2005) The idea is simple in the sense that we should always make the choice that yields the best outcome. But as Dan Gilbert quickly points out in his talk, it’s never that simple. (Gilbert, 2005) People vastly change their opinions due to internal errors in calculating odds and internal errors in calculating value. A simple change in frame somehow yields vastly different results. Sometimes it’s hard to predict the best outcome, but if you can apply and follow the maths, better decisions can be made.
This is something that I’ve been employing myself, or at least trying to employ. My original plan was to stay in the military for 20 years for the incredible retirement, however the possibility of having a more lucrative civilian life hasn’t fully been considered. On one hand the military is a guaranteed stable income whereas on the other hand working in the civilian sector can go any which direction. This is one case where I am still doing my research so that I can properly apply and assess the different situations and to choose the best outcome for me.
Another idea I found absolutely amazing was the one based on heuristics, which is something most people do anyways and that is to “use experience to learn and improve.” (Merriam-Webster, Incorporated, 2015) Hoch and Kunreuther apply this idea to our dating techniques in the sense that once we properly sample within a given pool, we can then figure out what which are the good and bad picks. (Hoch & Kunreuther, 2005) Hannah Fry takes this a step further and claims that mathematically speaking, we should sample the first 37% of our available pool before being committed with a concrete answer. (Fry, 2014) When I entered my first serious relationship this strategy was actually haunting me because according to the maths it wasn’t a relationship I should be in, however after not being in the relationship anymore, it only sets my standards higher for the next one. I almost feel like that’s a rather shallow thing to say.
Discussed were Hoch and Kunreuther’s ideas on complete forward planning and heuristics. Each of these currently plays a role in how I view my current long-term career plans and on with my dating views. While some may govern their choices simply by their emotions, but applying a sort of science behind the decision, then perhaps a better more informed decision could be made.
References
Fry, H. (2014, April). Hannah Fry: The mathematics of love. Retrieved August 2015, from TED: http://www.ted.com/talks/hannah_fry_the_mathematics_of_love#t-515665
Gilbert, D. (2005, July). Dan Gilbert: Why we make bad decisions. Retrieved August 2015, from TED: http://www.ted.com/talks/dan_gilbert_researches_happiness#t-95465
Hoch, S. J., & Kunreuther, H. C. (2005). Wharton on making decisions. Hoboken, NJ: John Wiley & Sons Inc.
Merriam-Webster, Incorporated. (2015). heuristic. Retrieved 2015, from Merriam-Webster: http://www.merriam-webster.com/dictionary/heuristic
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