The Dual Approach to Solving Problems
After reading some books and blogs on decision making, pscyhology, problem solving and the like, I found a very strong emergent theme: an effective way to approach problems, especially problems where other people come into play, is to approach it in two distinct ways, simultaneously.
One is to approach the problem by analyzing the rational factors, and the second is to approach it “non-logically” by analyzing the irrational, emotional factors and “the short-circuits in the brain”.
Some examples of where this duality is identified are Kahneman’ System 1 and System 2 dichotomy and Rory Sutherland’s logic vs. psycho-logic modes of perception, Munger’s Two Step Decision Making Process, etc.
This approach seems common sense but I think it’s (1) is very easy to forget, (2) not applied everywhere it can and should be, (3) and is far more powerful than it seems.
One: Understand the Rational Forces at Play
- What are the interests of the parties involved rationally?
- What does math and statistics say?
- Know what you know and what you don’t; circle of competence, how much data you have, how much data you can understand
- Even if you don’t know, you might have to take a decision, but now your approach will change.
- For example: if something is outside your circle of competence, use the rule of inversion— that is avoid stupidity.
- If you are operating within your circle of competence, then you should be able to identify the key variables a play; you need to develop fluency in the area, and you need to pull big ideas from multiple decisions to ensure good judgement
Two: Understand the Emotional/Subconscious Forces at Play
- What are the subconscious influences where the brain at a subconscious level is doing things which are usually useful, but might disfunction. Are they in disfunction here?
- One possible way is overconfidence
- Second possible way is making decision on small sample sizes and extrapolate the results to a larger population
- Third way is to remain committed to something we have said in the past
- Might default to what everyone else is doing
- usually when you have extreme success or extreme failure, four or five factors are working in the same direction
Poker Analogy
Poker is a useful analogy here: like life, outcomes in poker depend on other players as well as rational decision making, logical analysis and statistical thinking. Many people have talked about poker being a metaphor for life and I think its a fairly approximate one.
One: compute probabilities, use ranges, GTO, etc. Second: being aware of and exploiting psychological factors such as fear and greed, “playing the man”, wishful thinking, etc.
Sources and Further Reading
Alchemy, by Rory Sutherland
Thinking, Fast and Slow, Daniel Kahneman