8 Decision-Making Insights from a Nobel Prize Winner

A picture of Nobel Prize winner Daniel Kahneman. He is an expert in decision-making.

If you are a decision maker, or aspire to have such a responsibility in your career, this post is for you.

Daniel Kahneman is a winner of a Nobel Prize. He is the author of, Thinking, Fast and Slow, the book where many of these ideas are shared. You can actually read the book for free in PDF here. Much of what dictates today’s decision-making strategies are born out of the ideas of Kahneman himself. If I had to pick one human being in this world to listen to on matters concerning decision-making strategy, Daniel Kahneman is that individual. He has dedicated his life to this and it shows.

So, let’s get into it and supercharge your decision-making abilities!

Decision-Making Insights from Daniel Kahneman

  1. There is a time and place for intuitive or “gut” decision-making. One such condition includes scenarios where the decision-maker has a limited amount of time prior to making a decision. For example, a police officer in a standoff with an armed criminal is not in a position to engage in strategic decision-making. They will make a split second decision based on their training and prior experiences.
  2. It is hard to accurately judge when you are crossing the line into an area similar but not identical to your area of expertise and extensive experience. When this happens, the “expert” becomes over-confident, and thus trusts their gut when a more drawn out, strategic decision-making process would have been better.
  3. Don’t discount dumb luck in the role of one’s success in the context of gut decisions. Sometimes those who have won big have been people that have taken risks that a more reasonable person would have never taken, and then got lucky. They will then use hindsight to justify subsequent gut decisions. Even more dangerous, people around said leader will also use hindsight to trust in that leader’s gut decision-making talent rather than challenge them. Don’t judge an individual’s decisions on the outcome but rather on the quality of the decision at the time it was made.
  4. Have a premortem meeting before a project launches. Daniel Kahneman credits Gary Klein for this practice. It is a postmortem meeting before a project has started. A postmortem meeting takes place after a project has failed. It’s a chance to discuss why the project failed so that the same mistakes aren’t made in the future. In a premortem, you meet to generate ways in which the project in its current form is destined for failure before the launch. For a rich back and forth between Daniel Kahneman and Gary Klein, check out this interview.
  5. Form a checklist of criteria to consider before making a strategic decision. This can help to protect against overconfidence. For example, you might want to know the quality of the information given, whether or not there is a strong possibility of “group think” influencing this information, have any influential team members had a chance to persuade other team members, and also whether the chief decision-maker already has a strong stance on this issue. These are just some of the things you might want to consider before any major decision is made.
  6. Have people do much of the work and thinking behind a decision separately from their team mates. Once you get people discussing a problem in a room together, some amount of conformity will take place. It’s true, at some point, you want your team to get on the same page and moving in one direction. You don’t want this to happen too soon though. Start by having everyone in the room write down their stance on the decision that is to be made and their reasoning before any conversation takes place. Better yet, have people think about the decision at hand and articulate their stance well before the meeting begins. This can also help to reduce social loafing, or the tendency for some people to not do their work but instead piggy back on those that have.
  7. Postpone intuition for as long as possible. Inevitably, a decision will have to be made, and rarely will you have access to every bit of information available. So, in every decision, there is an element of intuition. The key is to postpone that decision so that you can gather and synthesize as much information as possible, and then make a decision with an element of intuition due to the fact that it’s unlikely that you gathered and synthesized all relevant information by the time the decision must be made. The key is to reduce that element of intuition as much as possible given your constraints.
  8. Focus on making meetings efficient and effective. We spend too much time in decision-making meetings. Get people to do a lot of their homework outside of the meeting. Start with a premortem so that we’re thinking about weak points before the project fails, and create a decision-making meeting filled with informed team members that are prepared to challenge one another.

Am I missing anything?

While I think Daniel Kahneman is at the forefront of his field, I recognize that there are many notable contributors to the field of decision making. Any insight from entrepreneurs, executives, and academics that you would add to this list? Share those thoughts below!

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  • Charles

    Hi, yes, I think Alan Savory who has initiated the concept of Holistic Management which is specifically about the decision making process has made an extremely significant contribution to this area. His 7 testing questions are fundamental to making any decision in the Holistic Context. It is applicable to all areas of life and business.

  • The Smart Careerist

    Great blog! My only doubt over Kahneman’s work is in conflating gut feeling with intuition. I think they are different, if related, functions of the nervous system.