How to make the right decision

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What prevents us from making the right decision

By Admin

In the modern world with the Internet, the availability of information is enormous, which allows us to increase the amount of knowledge at a high pace and at a lower cost. Today we consume 5 times more information than a quarter of a century ago. By 1950, the volume of medical knowledge had doubled in half a century, and by 1980 it doubled every 7 years, in 2010 it was 2 times faster.

The acceleration of the knowledge set leads to its revision, respectively, beliefs also become obsolete as well as principles and tools of the scientific world.

It's not easy, because the longer we think about something as the truth, the more it takes root in our head. School programs are replaced along with historical and scientific programs. While I, like many people, still consider Pluto a planet... some scientific facts in history, paleontology, biology have also been revised.

If you look at the objects, the acceleration is even faster: yesterday's floppy disks, disks have become antiques.

Then why is it difficult for us to change our beliefs in our head? Why, despite the facts, we blindly remain to believe what we are used to.

We often want to be right no matter what reasonable arguments. There are so many people around us, and we ourselves make diagnoses, or hang labels on anybody who has not yet been seen by the rumors of others or choosing a partner in marriage.

Doubt more often

Suppose you have a friend - a financial consultant. He recommends buying shares or transferring money to a pension fund that is not supported by the employer. And another friend, who also has an economic education, says that this can be a risky investment.

What do we usually do?

This is a real case, Stephen Greenspan decided to check the opinions of a skeptical friend. His sister was just investing part of the social.deductions to the same pension fund, and she seemed happy. The fund's income seemed remarkable - the % yield was double-digit (for understanding in the US, the rate of about 1-2% fluctuates, which indicates about the same fair return on deposits).

And that very positive-minded financial consultant decided to invest all his money. Greenspan invested part of the savings, and then all of it. At first, the funds grew. Then the fund went bust, and Stephen Greenspan lost money in a day. The scam turned out to be implemented by Bernie Madoff.

We must remember the basic principle of all investors: high income is always high risk. Or, more simply, “free cheese in a mousetrap.”

Mental traps

According to Phil Tetlock, we often think and speak like a preacher, a prosecutor and a politician.

In each state we use a certain principle of reasoning.

In the role of a preacher, if something sacred is under threat, we sacredly defend it, preach like a fanatic about important truths and values in our opinion.

We enter the role of a prosecutor to blame someone's opinion or find weaknesses in their position.

And we become a politician when we need to show ourselves good and earn someone's approval.

We often blame, defend our opinion or try to please someone that we weakly revise our beliefs.

In the case of choosing a fund to invest in, Stephen Greenspan and his sister also fell into these mental traps. When choosing the foundation, the sister was a preacher, advertising the benefits of the foundation.

Then, taking the side of one of his friends, he accused another, a more conservative financial acquaintance, of bias. And then, in order to please his sister and his successful acquaintances, and following them, he became a politician. It is interesting that Greenspan, an educated and respected man in scientific circles, was just finishing a book about why a person is easily fooled.

Today, he thinks differently, and instead of blind faith, he could analyze the fund's strategy, turn to other sources and invest a smaller amount in order to take less risk. This is a reasonable scientific approach.

The scientific approach is optimal for the right solution

A scientist always rethinks everything.

Big changes are often the result of multiple small changes that accumulate the potential for a decisive breakthrough.

The specifics of the profession is to limit the limit of the definite and proven, to gain new knowledge, verify them and revise existing knowledge.

It is necessary to constantly doubt in order to move towards new discoveries on scientific principles. To this principle we owe inventions and human progress. A scientist is a principle of thinking. The ability to understand the sermon, accusations and the desire to please and reconsider false opinion.

The principle of a scientist is that there is scientifically proven information by experiments and research, and there are hypotheses that need to be confirmed. If the hypothesis fails, they are painlessly refuted.

There are also many hypotheses in life. Is it possible to apply a scientific approach in your own or professional life?

Let's consider this experience based on a large-scale experiment involving more than a hundred founders and managers of startups in various fields: IT, sales, cooking, health, entertainment, equipment and industry. Most of them have not yet reached profitability, which is good for the purity of the experiment.

The founders of startups were invited to Milan for an educational program. For 4 months they studied business, strategy, entrepreneurship, research customer needs, and design products.

They were divided into groups, but without telling them about it: control and experimental.

The course of study was the same. But the experimental one encouraged a scientific approach, the essence of which was that strategy is a theory, and consumer research helps to formulate a hypothesis and test it with the help of a minimally viable product (MVP).

That is, to pilot and get feedback from users as quickly as possible in practice. After that, the result was measured and a decision was made to verify the hypothesis.

So, over the next year, the incomes of startups in the control group were on average at the level of $ 255.4 dollars lower. But the profit of the startups of the experimental group exceeded $ 12,071 (the difference is more than 47 times!!), and the number of clients grew twice as fast.

The fact is that the managers and entrepreneurs of the control group clung to the old strategies. They were more comfortable extolling the advantages of proven solutions, rather than reviewing time-tested practices and looking for other solutions. The entrepreneurs of the experimental group with a scientific approach changed the business model several times, if the hypotheses were not justified, they changed the tools and strategy.

Interestingly, many great startup founders, entrepreneurs, scientists and leaders are valued for their dedication and foresight. And also for the ability to change your mind for a more correct one.

Good luck in making the right decision!

Source: Adam Grant, Think Again

Application LifeFix

We have developed the LifeFix app so you can develope your life
The app will help you:
  • A to-do list will help structure the day
  • Templates will help you form good habits
  • Notifications will remind you of an important matter
  • The timer will help you focus on the important thing
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