… to complement the excellent and widely praised “Thinking, Fast & Slow” from Daniel Kahneman. As I’m currently writing on the complexity of decisions we encounter in our lives, I realized that there are so many books on decision-making available today that I thought it would be great to pay tribute to those authors and researchers who inspire me as well as to help newcomers decide what book is best to read next. This list is neither ordered nor exhaustive but covers a broad spectrum of situations where decisions come into play.
Decisive: How to Make Better Choices in Life and Work, by Chip Heath & Dan Heath
When I think about which book I would recommend first to someone looking for their first reading on practical decision-making, I would probably name “Decisive.” Although I’m not a big fan of their WRAP framework, which I found a bit artificial, I’m positively in line with their depiction of recurring issues that we should pay attention to when deciding. I feel like this book carries the right balance of practicality and genericity. [Goodreads]
“To make good decisions, CEOs need the courage to seek out disagreement. Alfred Sloan, the longtime CEO and chairman of General Motors, once interrupted a committee meeting with a question: “Gentlemen, I take it we are all in complete agreement on the decision here?” All the committee members nodded. “Then,” Sloan said, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what this decision is about.”
— Chip Heath
Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Dan Ariely
Dan Ariely’s classic. Via several fascinating randomized experiments, Dan and his team highlight the lack of consistency in our decisions. They demonstrate that things that should not interfere in a decision can significantly affect our choices. I don’t necessarily agree with his view on rationality, and I feel like the studies tend to demonstrate that “we’re all dumb in a way” — and we certainly are — but I regret the next step is missing: WHY do we observe such lack of consistency? (Note how I prefer the term “consistency/inconsistency” rather than rationality/irrationality in this kind of context). None the less, “Predictably Irrational” is the sort of book that will make you remark on configurations of Decisions that you probably hadn’t noticed before, which makes it worth the read, and I’m personally in line with Dan’s view on classical vs. behavioral economic theories.
“Wouldn’t economics make a lot more sense if it were based on how people actually behave, instead of how they should behave?”
— Daniel Ariely
I recommend the revised edition to benefit from updated results.
Thinking: The New Science of Decision-Making, Problem-Solving, and Prediction in Life and Markets, by John Brockman
In this book, John Brockman has put together a captivating collection of thoughts on decision making by leading psychologists, neuroscientists, and philosophers. From the book’s summary:
- Daniel Kahneman on the power (and pitfalls) of human intuition and “unconscious” thinking
- Daniel Gilbert on desire, prediction, and why getting what we want doesn’t always make us happy
- Nassim Nicholas Taleb on the limitations of statistics in guiding decision-making
- Vilayanur Ramachandran on the scientific underpinnings of human nature
Simon Baron-Cohen on the startling effects of testosterone on the brain
Daniel C. Dennett on decoding the architecture of the “normal” human mind
- Sarah-Jayne Blakemore on mental disorders and the crucial developmental phase of adolescence
- Jonathan Haidt, Sam Harris, and Roy Baumeister on the science of morality, ethics, and the emerging synthesis of evolutionary and biological thinking
- Gerd Gigerenzer on rationality and what informs our choices.
If you’re already familiar with those authors, you’ll probably find their lectures somewhat redundant with what is already available in their respective books or papers, but no doubt you will also enjoy reading their more original ideas. Below is a quote from Daniel Gilbert in “Affective Forecasting… or…The Big Wombassa: What You Think You’re Going to Get, and What You Don’t Get, When You Get What You Want” that resonated well with me.
“That is, they predict that future events will have a more intense and more enduring hedonic impact than they actually do. We call this the impact bias.”
— Daniel Gilbert
This lines up with some of my observations drawn during various conversations with acquaintances amidst decisions they had to make (in the unavoidable “where to live” or “what job to take” kind of decisions). By the way, I was pleased to find some more critics expressed toward classical economic theories. [Goodreads]
Rational Decisions, by Ken Binmore
Ken Binmore is a well-known researcher in decision theory, and anyone looking for references on rationality in game theory should consider reading Ken Binmore. “Rational Decisions,” specifically, dives deep into the topic of characterizing probabilistic Nash Equilibrium in the context of Von Neumann and Morgenstern auctions and presents how bayesianism can be leveraged in “large world.” Before, during, or after reading this book, I want to personally encourage every reader to think about actual situations where we face this type of configuration; this should be an eye-opener for some, as I believe that we often fail to recognize the kind of decision that we are facing so that we can apply the right tools and get the most out of the situation.
“This book follows Savage in arguing that Bayesian decision theory is applicable only in worlds much smaller than those in which it is standardly applied in economics. This chapter describes my own attempt to extend the theory to somewhat larger worlds. Although the extension is minimal in character, it nevertheless turns out that even very simple games can have new Nash equilibria if the players use the muddled strategies that my theory allows.”
— Ken Binmore
Thinking In Bets: Making Smarter Decisions When You Don’t Have All the Facts, by Annie Duke
One possible explanation of why Annie Duke’s book became a best seller might be that poker — in which she operates at professional level — has evidently its own set of critical decisions, and those decisions require players to deal with uncertainty. An excellent analogy to real-world situations? Annie Duke explains how she was able to make progress in her career as a professional poker player and how she was able to apply those learnings to other situations outside poker. The central theme is around using the question “How much are we willing to bet” to gauge our confidence in a decision, an idea that Immanuel Kant himself had developed in the 18th century. As part of my manager role, I can testify that this thought experiment proved itself a great litmus test to drive some group decisions. Another central point that Annie will continuously highlight is called “resulting.” If you’re just starting your journey in the world of effective decision making, you’re likely to find that concept — coming straight from the poker world — is more often than not negatively affecting our ability to learn from failures and successes.
“Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision. I’m willing to bet that your best decision preceded a good result and the worst decision preceded a bad result.”
— Annie Duke
Resulting is an issue that Annie Duke addresses in-depth in her “Thinking in Bets” and approaches in her second book on decision-making, “How to Decide.” [Goodreads]
How to Decide: Simple Tools for Making Better Choices, by Annie Duke (again)
In her second book, Annie Duke lays out a practical framework for approaching decisions. This one is arranged as a workshop so that readers can apply the different principles to their actual situations. In fact, the main strength of “How to Decide” is to be highly practical, while on the other hand, it will be lacking depth in the more theoretical and philosophical domain. What you get from “How to decide” is a solid decision process, but it is only a decision process (and fair to Annie, it’s advertised as such). Still, Annie Duke’s point of view is well thought out and inspiring. In particular, I share her view on the role that time plays in decision making.
“Knowing when it’s okay to save time is part of a good decision process.”
— Annie Duke
Skin in the Game: The Hidden Asymmetries in Daily Life, by Nassim Nicholas Taleb
Nassim Nicholas Taleb isn’t necessarily the first person that comes to mind when we think about decision theory, but his work deserves to be considered in a decision context. His approach of risk management (or no-risk management?) derived from a deep understanding of distinct probability distribution laws has been popularized by his best-seller “Black Swan,” but to me, I would pick “Skin in the Game” as the book to read.
“Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.”
— Nassim Nicholas Taleb
That quote describes concisely and accurately what this Taleb’s book is all about. While you shouldn’t expect to find tips for better decisions, “Skin in the Game” gives a relevant view on properly assessing the quality of the inputs we’re provided when making decisions. Typically, would you rely on my judgment if I would recommend my own book on this list? [Goodreads]
Don’t Overthink It: Make Easier Decisions, Stop Second-Guessing, and Bring More Joy to Your Life, by Anne Bogel
Anne Bogel brings a different point of view by asking a different question: “at which point should we stop thinking before deciding?”
“Overthinking also carries a significant opportunity cost. Mental energy is not a limitless resource. We have only so much to spend each day, and how we choose to spend it matters.”
— Anne Bogel
The author mainly discusses situations where we spent too much time thinking before deciding. Thus mostly inconsequential decisions. Such decisions are also discussed in “How to Decide” (see above), but here Anne Bogel proposes autobiographical situations that should sound familiar to pretty much everyone. If you feel paralyzed by some decisions that you believe shouldn’t monopolize that much of your time, reading through Anne’s stories should be a first step toward faster decision makings. [Goodreads]
The Art Of Choosing, by Sheena Iyengar
If you wonder how the cultural environment affects choices, then you’ll find some insights in “The Art of Choosing.” Several experiments and studies are presented to outline how we behave in different contexts where decisions are involved. This book is less about the highly theoretical aspect and more about the psychological and cultural factors. [Goodreads]
“Other participants were asked to give whatever answers came immediately to mind. When the researchers followed up with the couples seven to nine months later to see if they were still together, they found that the intuitive ratings were highly predictive of the couples’ success, but the ratings based on reasoned analysis were almost entirely unrelated. The people who analyzed their relationships thoroughly and concluded that they were doing very well were just as likely to have broken up as the people who reasoned that their relationships had serious imperfections.”
— Sheena Iyengar
Bad Blood: Secrets and Lies in a Silicon Valley Startup, by John Carreyrou
You’ll find many fascinating stories in the literature about either success-stories or business-dramas. Both kinds of scenarios are insightful for whoever wants to spend some time analyzing how critical decisions have been made. The aerospace industry, in particular, is an outstanding ground. If you happen to read the documented stories of Challenger or Apollo XIII, you should be struck by how a weak understanding of probabilities, flawed group decisions, and unconscious cognitive biases can lead to severe disasters. The business story I want to propose today as a study case is “Bad Blood,” in which the journalist John Carreyrou documents the fall of Theranos. This promising Californian startup managed to close outstanding deals, whereas it was apparent from the inside that these were terrible deals (and they turned out to be terrible deals indeed).
“After some discussion, the four men reached a consensus: they would remove Elizabeth as CEO. She had proven herself too young and inexperienced for the job. Tom Brodeen would step in to lead the company for a temporary period until a more permanent replacement could be found. They called in Elizabeth to confront her with what they had learned and inform her of their decision. But then something extraordinary happened. Over the course of the next two hours, Elizabeth convinced them to change their minds. She told them she recognized there were issues with her management and promised to change. She would be more transparent and responsive going forward. It wouldn’t happen again.”
— John Carreyrou
If you want to reflect on Walgreens’s decisions, the board’s, or Elizabeth Holmes’, the former CEO, then “Bad Blood” should be on your list. Plus, it’s a great book anyway. [Goodreads]