This excerpt from Jonah Lehrer’s recent entry about Risk, Fear, and Certainty has me thinking today:

I think the financial crisis has helped expose a powerful bias in human decision-making, which is our abhorrence of uncertainty. We hate not knowing, and this often leads us to neglect relevant information that might undermine the certainty of our conclusions. I think some of the most compelling research on this topic has been done by Colin Camerer, who has played a simple game called the Ellsberg paradox with subjects in an fMRI machine. To make a long story short, Camerer showed that players in the uncertainty condition – they were given less information about the premise of the game – exhibited increased activity in the amygdala, a center of fear, anxiety and other aversive emotions. In other words, we filled in the gaps of our knowledge with fright. This leads us to find ways to minimize our uncertainty – we can’t stand such negative emotions – and so we start cherry-picking facts and forgetting to question our assumptions.

It is particularly relevant to me right now because I have just recently emerged from a highly uncertain state to a relatively bad, but certain state, regarding my bar and art gallery business, McLeod Residence.  In particular, I was uncertain about how much debt I was going to be in, due to being tied to a long term lease in a building that I couldn’t run my business in.  Yesterday, this situation came to a resolution and I now know exactly how much in debt I am, and even though it’s a big number, it’s a solid number, and won’t grow by $4,000+ every month.

So, yes, I can relate to the abhorrence of uncertainty.  Not knowing, and feeling like things are a little out of your own control, is not enjoyable.

What I haven’t fully explored yet is just how much our abhorrence of uncertainty causes us to make mistakes of judgment.  In other words, how much does the desire to avoid uncertainty cause us to avoid reality, and make decisions based on fiction, hopes, dreams, positive thinking, etc.

I love Wikipedia’s list of cognitive biases, and return to it frequently over the last couple years when trying to think about how my own decision making process is affected by my biases.  How many of them are related to the desire to avoid the uncertain:

Base rate fallacy — ignoring available statistical data in favor of particulars.

Expectation bias — the tendency for experimenters to believe, certify, and publish data that agrees with their expectations for the outcome of an experiment, and to disbelieve, discard, or downgrade the corresponding weightings for data that appears to conflict with those expectations.

Mere exposure effect — the tendency for people to express undue liking for things merely because they are familiar with them.

Pseudocertainty effect — the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes.

Status quo bias — the tendency for people to like things to stay relatively the same.

Ambiguity effect — the avoidance of options for which missing information makes the probability seem “unknown”.

And perhaps the most relevant:

Ostrich effect — ignoring an obvious (negative) situation.

The reason I like studying cognitive biases is that by studying them, and becoming more aware of our own biases (and the biases that we are pretty much all influenced by), we avoid the most meta of all biases:

Bias blind spot — the tendency not to compensate for one’s own cognitive biases.

Merlin Mann has me thinking about patterns for creativity. Then, the other night at Jonah Lehrer‘s talk, someone from the audience asked him if he had applied any of his learning about decision-making towards influencing his own life. The joke was whether he had begun to give his hypothetical 3-year old child random rewards, since we know those are most likely to trigger our dopamine reward buttons the most effectively. Hypothetical child aside, he said that the main new practice he had begun in his life, which is only tangentially related to decision-making and creativity, is to study his own mistakes.

He mentioned how some of the most skilled and productive people he knew were diligent studiers of their own mistakes… from football players to public speakers to people in any area of performance or skill-based work.

Fast-forwards the learning process

If random rewards are known for their ability to give us little jolts of enjoyment, like candy for the brain, random punishments are even more powerful.  Most of us have very strong loss aversion (wikipedia) and feel more pain at losing $10 than winning $10.  This helps keep most of us out of the casinos and out of other risky situations.

Studying mistakes is like self-surgery — a delicate procedure

However, most of us don’t use this to its full advantage, knowing also that making mistakes is a frustrating and sometimes humiliating feeling.  The key is to find that balance between acknowledging your mistake and taking it as a personal hit against your own self-worth.  The touchiness of this exercise probably explains why this pattern isn’t used very much.  Assuming you can find your own way into this tangle, the value will more than pay back for the effort.

Balances the ego

The ego has no problem seeking out ways to make itself stronger.  And yet, a balanced ego that has love for itself as well as love for others is the healthier route to take.  Finding healthy ego-weakening exercises isn’t an easy task though… studying your own mistakes, without broadcasting or glorifying them, could do the trick.  On the other hand, if your ego is down in the dumps and can barely look itself in the eye without feeling contempt for itself, this pattern is probably not the first pattern you should adopt.

How to practice this pattern

1 – The first task is to become more attentive and accepting of mistakes.  Our tendency is to spend so much time hiding our mistakes that we can often trick even ourselves into thinking that a mistake isn’t a mistake.  This is perhaps the most difficult step in the pattern… becoming mindful of your mistakes without leveling harsh judgment on yourself is a pretty powerful skill.

2 – Assuming you can discover, acknowledge and accept a particular mistake, the next step is to figure out why the mistake happened.  Was it an error in intention (did you have the wrong intention?) or an error in execution (did you choose the wrong way to bring the intention to fruition?) or an error in results (did something unexpected turn good intentions and good actions into the wrong result?).

3 – Depending on where the mistake has occured in the anatomy of the full event, you can then determine if there’s anything to learn from it.  Often, there may be nothing to learn from it, especially if it was an error of innocence where a previously unknown element surfaced and produced unpredictable results.

Caveat: Don’t try to learn too much about your mistake simply for the sake of creating new rules.

Note that this pattern isn’t about learning from your mistakes, but simply studying them.  Becoming aware of them, accepting them, shifting them in your hands like a hot coal until it cools down, and setting it on the ground.

I saw Jonah Lehrer speak last night at Seattle’s Town Hall and got to learn a bunch of new stuff about decision making, one of my favorite topics of study.

I will most likely be referring to notes I took during his talk for several posts this week, but I wanted to first comment on what I thought was the most interesting “actionable” take-away from his talk.

He referred to a study I was familiar with regarding people who were confronted with 4 decks of cards of subtley different quality.  Turning over cards in each deck would tell you to gain or lose a certain number of dollars or points.  The goal of the game was to turn over enough cards to know which deck was stacked to be the “best” in return.

On average, it took about 50 card turns for most people to determine the best card deck.  However, they were also hooked up to stress sensors on their hands, measuring the alkalinity of the surface of your palms.  It turns out, your hands became “stressed” when choosing cards from the wrong deck after an average of 8 cards had been turned over.

In other words, our hands (in this case an extention of our subconscious) is about six times faster at finding patterns than our conscious minds.

Poker players, therefore, are encouraged to become students of their hands when playing a game.

Our subconscious is great at finding patterns where patterns exist.  Especially really complicated patterns (as our conscious minds are also good at finding simple patterns, just not as good).

Something we can do

First we should know that our subconscious minds, and our hands, are only going to be able to find patterns where patterns exist.  For example, in card games.  They will NOT help you play slots, or other games of chance.  Perhaps the stock market is sufficiently complex and pattern-driven to benefit from our hands?  Perhaps studying statistics, metrics, and such are another relevant field.

Second, we should become students of our stress responses in situations of extreme complexity.  I almost think some small startup should help devise a stress-sensing ring.  A modern mood ring that responded to alkalinity on our hands.  Until then, though, simple awareness is the trick.  I’m not even sure I can tell when my hands are sweaty with any consistency… so I have a long journey ahead of me.

Any tips or tricks along these lines would be appreciated.