Decision making

Many a times we find ourselves taking decisions and making choices: be it buying a shirt, investing money, applying for a company for job or deciding on a place for vacation. And more often than not after we take such ‘decisions’, we regret on what we did and ponder how things could have been better if we would have taken decision in some other way. In this blog I would be reasoning that the outcome of such decisions is bound to sometimes go in our way and at other times the way we didn’t want it to go and this is a quite usual and scientific process.

Every problem or issue we handle is in a way a problem of optimization i.e. getting best out of limited resources with lots of constraints around it. Mathematically that means arriving at best possible solution but the understanding of available resources and constraints is the hard part. The decisions we need to take are to be taken in a finite time and hence the information about the constraints need to be collected in that time period only. In actual life decision making process is often complex with numerous stakeholders, intangible benefits and losses each having its pay off which influences our decision and very often we miss out on one or more of them to take into account in the process. If not missed, assessing their pay offs and influences on the outcome to an exact value is many a times not possible in the finite time period we have in our hands. Hence we are forced to take decisions with limited information often forecasting and guessing on the missing pieces leading to an outcome. Now if our assumptions about missing information are in line with reality the decision would be what we expected but if those are different or divergent, unexpected outcome is bound to occur.

So what is the solution? Limited time, information asymmetry about preferences of other stakeholders, resources constraints and the aspect of intangibility attached to most pay offs. The solution lies in understanding these issues and doing the best one could do under these circumstances. Regretting on past decisions and imagining how things could have been better will appear a worthless activity once we have understood and convinced ourselves under what situations we took that decision.