Too hot, too cold, just right?

I like threes and I’m currently quite interested in how we manage (pilot?) our attention. How we make our choices. how we decide what to do.  So I liked the intro to Kahneman and Lovallo’s 1993 paper on how “decision makers” go about their work. The paper is introducing a behavioral model for that, but the introduction briskly suggests two others to get things going.  So I get my threesome.
First, the rational man model presumes we reach into at our basket of risky alternatives, gambles, and carefully withdraw the one with the maximum expected utility. This process involves a lot of quantitative statistical talent coupled with stellar data sampling. It’s has a kind of chess club tone to it.

Amusingly few professional decision makers sign up to that model.  Rather, they talk of their skill, prudence, focus, and self control.  That’s all a process involving a lot craft knowledge.  It has a kind of top flight athlete tone to it.

Model #3, that Kahneman and Lovallo put forward, is cognitive. In crude form it argues that we pull our decisions out of a thicket of cognitive failures.  They broadly sort those into two camps. We shun a range of decisions because we are too timid, while on the other hand grabbing those about which we are excessively bold. This treats the decider’s free will in a more nuanced, more respectful of his animal nature.

So there you have it, three models of how we make our decisions:

  1. Selecting choices to maximize expected outcome.
  2. Deciding based on determined skill.
  3. Course selection via a lousy rudder that’s simultaneous too bold and too timid.

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