Decision making in times of uncertainty (Stanford)

A new study from Stanford Business School tells us something we probably already know: when people can’t predict what is going to happen they tend to become more cautious.

Researchers discovered that when faced with a choice between being given a guaranteed $100 or having a 50:50 chance of winning $200, more people chose the guaranteed $100. Similarly, when faced with the choice between losing $100 or having a 50:50 chance of losing either $200 or nothing, more people chose the certainty of the smaller loss.

The researchers explained:

“People really don’t like the complexity and cognitive load of making decisions under uncertain circumstances.”

In other words, when it is difficult to predict what is going to happen, people tend to choose what seems like the safer option.

So far so good.

But in a world where everything is changing, this creates two problems.

First, what we think are the safer options might not be safe any more. A changing world might not work the way it used to. So choosing what seems like the safer option can actually increase our risk by lulling us into a false sense of security.

And second, when people choose what seems like the safer option they are missing out on finding the new opportunities that are emerging.


What Can We Do About This?

There are three steps that we can take to address this natural human tendency in our decision making.

The first is to learn to stay more centred and grounded in the face of uncertainty and to make clearer sense of the situation. This makes us feel safer. The tools of Chapters 1 and 2 help us to do this.

The second is to then get better at finding more opportunities in the situation and choosing the one that is best for us, even when the situation is unclear and the outcome is uncertain. This gives us more options and it optimises our choice. Chapters 3 and 4 give us the tools to do this.

And the third step we can take is to learn to describe our chosen way forward in ways that then inspire us and the people around us to long to make it happen: because when all ways forward are uncertain, the best path to success is the one that gives the most people the most energy to long to make it happen. Chapters 5, 6, and 7 give us tools to achieve this.

Most human beings naturally seek to avoid risk. That’s just the way it is. But in a time of change, when what happened in the past is no longer a guide to what might happen in the future, ‘playing it safe’ actually increases our risk and hides the opportunities that are emerging.

If we take the three simple steps described above, we can overcome our uncertainty, reduce our risk, and increase our opportunities and our energy to achieve them. And all of this will make us more antifragile: able to use change to become stronger, more valuable, and more likely to get the results we most want.

Have you ever taken a decision where the outcomes were uncertain? Did you choose what seemed like the safest option? Would it have been useful to have known how to explore the other opportunities more fully?

Photo By Dean Hochman via

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