Strategies and tactics for making better decisions
Behavioral Economics (BE), a mash-up of psychology and economics, originally interested me because it promised a way to understand and predict mistakes that people make. This helped me do a better job as a banker to governments and nonprofits, because I could help them (and me) avoid those mistakes. It took a while for me to … Read more
A High Stakes Hunch I had just got the news: the bank I worked for was going to sell the business I was supporting. This was going to be the seventh transition of my 27-year banking career. Should I try to find a new job in the industry or start my own business? Somehow, I … Read more
In short an objective decision is a just and fair one, supported by verifiable facts, with which rational and informed people will tend to agree. That said, subjectivity has its place. It’s up to us to determine mindfully the degree of objectivity is required in each case.
I’ve learned (and re-learned) a lot from tutoring middle-schoolers in math at Top Honors.1 For example, if a math problem is too hard to solve in your head, I counsel my student to draw a picture. That’s one of the best features of decision trees: it allows you to draw a roadmap for complicated, multi-stage … Read more
Open enrollment for health insurance began November 16 and the decision isn’t any easier than last year. On the contrary, not only are premiums higher and benefits lower, there’s greater uncertainty about the future of the Obama health care act. On a cold, cloudy Sunday afternoon, I analyzed my health insurance choices. Our choices and … Read more
I wish I had picked a different airline or maybe shelled out more money for a better seat. (I’m writing this squeezed into a coach seat near the lavatory on a six-hour flight to attend the Behavioral Finance Symposium in San Francisco.) I wish I had known six months ago that people were much more … Read more
Ethical Decisions are Everywhere The homeless guy I walked past. The hamburger I ate and the tip I left. The verbally abusive parent on the subway that I ignored. The $20 bill I found in the back of a cab. The elections. Life, at work and at home, is full of ethical decisions, choices about … Read more
I recently visited with a 27 year old who asked me for help in figuring out what to do with his life. He is about to start at a prestigious graduate school and is feeling pressure to make some big career decisions quickly. Here’s the letter I wrote him, inspired by Seneca’s Letters from a Stoic. Before you … Read more
Cost-Benefit Analysis (CBA) is a decision process that makes you put a number—usually dollars—on the costs and benefits of every alternative. One chooses the alternative that has the greatest total benefit net of total cost. We can estimate the value of hard costs like construction, opportunity costs like alternative uses of money as well as benefits like improved … Read more
Our decisions, and the actions they lead to, make us who we are. In that sense, decisions are fundamental to our identities, our humanity and even the future of our planet. But what is a good decision and how do we get great at making them? I want to share with you my answers to … Read more