The Theory of Decision
Recently I’ve been exploring different subject about community, value, procrastination, and influence, and I realized a fundamental part of doing anything was the decision to do so. If you do not choose to do something, it won’t happen. When you force yourself to do something you are choosing to do it. As I dove deeper into the rabbit hole of understanding decisions, I realized there were two types of decisions: conscious and unconscious. An example of a conscious decision is answering “what should I eat for dinner tonight.” An example of an unconscious decision is how you react when someone initially approaches you. Whether it is a conscious decision or an unconscious decision, they both go through a cost/benefit analysis and based on the outcome of the most beneficial decision will be made.
Cost / Benefit Analysis
When someone makes a decision there is an immediate cost vs benefit analysis that happens. When it is a conscious decision someone actually considers the benefits and costs and makes a decision. In comparison to an unconscious decision, the costs and benefits are filled through experiences, traumas, and goals. Some examples of the costs and benefits people evaluate are:
Benefits
Desired Resources (Money, knowledge, Network)
Proven Experience
Attractiveness
Functionality
Quality
Availability
Costs
Time
Effort (Energy, emotional investment)
Financial Burden
Distance
Risk/Consequence
Health
So when you’re trying to figure out what to eat, you may weigh the time and effort of cooking vs going out. Depending on the situation not all the costs or benefits apply. I like to think of it as a worksheet where on one side it has a list of benefits and the other it has costs and people put a number on certain benefits and certain costs and whichever has the higher number they will act accordingly. If you’re choosing whether to cook or go-out.
Desired Resources (Money, knowledge, Network) - Will this help me get something I want?
Proven Experience or Reputation - Do I believe this is possible?
Attractiveness - Is it visually appealing?
Functionality - Does it solve a problem?
Quality - Does it look like effort was put in?
Availability - When do I need to take action?
Cooking may look like:
Benefits (22)
Desired resources is 6 because its cheaper, functionality is a 8 because its healthier, quality is 8 because its fresh.
Costs (19)
Effort is an 8, the financial burden is a 4, the time is a 7.
Total - 3
Going out may look like:
Benefits (15)
Functionality is a 10 because it’s fast and convenient. Proven experience is a 5 because I know exactly how it will taste.
Costs (9)
Effort is a 3 because we have to leave the house and wait in line, 3 for costs because it’s more over time, 1 for distance because we’d go somewhere close, 2 for health because it’s less healthy.
Total - 6
It looks like we’re going out to eat tonight… The way the cost/benefit analysis was filled out was based on the present situation. Past experience and future goals could also start coming into effect when filling out the sheet. If my goal was to be more healthy, then the benfits of cooking start going up. If the restaurant I’d be going to made me sick in the past, the results could change. This is a good example of a conscious decision. We went through and consciously evaluated whether we should eat out or cook. Sometimes the cost/benefit analysis is filled in without us thinking about it, using our past experiences, traumas, and goals.
Unconscious Decisions
When humans are born, their minds are a blank slate, only being influenced from what they were able to hear while in development. As we grow we go through tons of situations that affect why we make the decisions we make. Our relationship with our parents, our relationship with peers, the things we watch, the things we read, the things we listen to, our individual experiences, social standards, and many other factors all affect how we make decisions. As you build experiences, people use those experiences to fill in the cost/benefit worksheet based on what the expected outcomes there will be. When you’re thirsty and have a glass of water in front of you, you don't consciously think “should I drink or should I allow myself to dehydrate,” you simply fill in the benefit of relieving the thirst and drink the water. Sometimes unconscious decisions can lead to problems because the expected outcomes are based on assumptions. Referencing the water example from before, if the water didn’t belong to you and you drink it, the costs of the consequence of drinking someone else’s water wasn’t accounted for.
Our goals and desires also play a part in filling in the blanks as to how we make decisions. When you have a plan, often times people will make conscious decisions to achieve those goals.
With conscious decisions, you go through this process internally, but in unconscious decisions, the costs and benefits are filled in unconsciously. How the answers to the cost-benefit analysis are determined through a few factors, specifically: needs, past lessons, past traumas, the current situation, goals, and wants.
If your focus is much on your past your decisions will be impacted by past lessons and traumas. If your focus is more on the present, you’ll focus on your current situation with the balance between the past and possible goals and wants for the future. If you focus mostly on the future, your decisions will reflect your goals and wants. That being said all three (past, present, and future) still play a role.
Instincts
When your decisions are based on your needs, which are things that are required for survival, they are unconscious decisions often called instincts.
Conclusion
What you choose to compromise is very important. Lots of times the added costs aren’t seen immediately.
Having this understanding of how decisions work, I have significantly more understanding of how sales and marketing work. The overall goal is to highlight perceived benefits over perceived costs.
Decisions result in an expectation. If you can deliver greater than the expectation.