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Part 2: The Mind's Shortcuts: Harnessing Cognitive Models for Better Decisions

Writer: Dr Austin TayDr Austin Tay

Created using ImageFX
Created using ImageFX

Building on our previous discussion of rational decision-making frameworks, let's explore how our minds create and use cognitive models to navigate complex choices. Consider two pharmaceutical companies with similar strategic decisions about developing new drug candidates. Company A relied solely on traditional financial metrics, while Company B incorporated sophisticated mental models considering multiple interconnected factors. This scenario exemplifies what researchers describe as the difference between single-strategy and adaptive decision-making approaches.


The Power of Mental Models in Organizational Decision-Making


Recent research by Kahn and Daw (2025) reveals that our brains use multiple decision-making systems simultaneously. Their study demonstrates how the brain dynamically adjusts between different approaches based on their effectiveness in different situations, a finding that has profound implications for organizational decision-making.


Understanding Our Brain's Decision Toolkit


Viale et al. (2023) and Kahn and Daw (2025) identify three key mechanisms:


  1. Model-Based Planning


    • Detailed evaluation of potential outcomes based on structured analysis

    • Step-by-step analysis of consequences and potential pathways

    • Flexible but computationally intensive


  2. Successor Representation (SR)


    • Efficient prediction of future outcomes

    • Balance between flexibility and computational cost

    • Particularly effective in stable environments


  3. Quick Response Systems


    • Rapid decision-making based on embodied experience

    • Most efficient but least flexible

    • Best suited for routine decisions


Making This Work in Organizations


Strategic Framework Implementation:


  1. Decision Classification


    • Identify and categorize decision types by complexity and frequency

    • Match decision approaches to environmental stability

    • Create clear protocols for different decision categories

    • Implement systematic review processes


  2. Model Development


    • Build comprehensive mental models for key decision areas

    • Include feedback mechanisms for continuous refinement

    • Integrate multiple perspectives and data sources

    • Create dynamic adjustment capabilities


  3. Systematic Review Process


    • Regular evaluation of decision outcomes against objectives

    • Adjustment of models based on environmental feedback

    • Documentation of lessons learned and best practices


Real-World Application


Environmental Awareness


  • Monitor and assess decision environment stability

  • Recognize significant condition changes

  • Adapt models to environmental shifts


Feedback Integration


  • Implement robust feedback mechanisms

  • Measure both immediate and long-term outcomes

  • Adjust strategies based on performance data


Common Pitfalls to Avoid


  1. Over-complication


    • Not every decision requires complex modelling

    • Match model complexity to decision importance

    • Maintain efficiency in routine operations


  2. Rigid Thinking


    • Avoid single-strategy lock-in

    • Build adaptability into decision models

    • Regular review and update of approaches


  3. Isolation


    • Incorporate multiple stakeholder perspectives

    • Establish cross-functional collaboration

    • Foster collective intelligence in decision-making


In our next post : We will delve into the social dimensions of rationality and explore how organizational culture shapes decision-making processes.

 

Remember: As Pinker (2021) emphasizes, the goal isn't to eliminate uncertainty but to create better frameworks for managing it effectively.

 

References:

 

Daw, N. D., Niv, Y., & Dayan, P. (2005). Uncertainty-based competition between prefrontal and dorsolateral striatal systems for behavioral control. Nature Neuroscience, 8(12), 1704-1711. https://doi.org/10.1038/nn1560

 

Kahn, A. E., & Daw, N. D. (2025). Humans rationally balance detailed and temporally abstract world models. Communications Psychology, 3(1), 1-11. https://doi.org/10.1038/s44271-024-00169-3

 

Pinker, S. (2021). Rationality: What It Is, Why It Seems Scarce, Why It Matters. Viking Press.

 

Viale, R. (2021). Embodying Bounded Rationality: From Embodied Bounded Rationality to Embodied Rationality. Frontiers in Psychology, 12, 710607. https://doi.org/10.3389/fpsyg.2021.710607

 

Viale, R., Gallagher, S., & Gallese, V. (2023). Bounded rationality, enactive problem solving, and the neuroscience of social interaction. Frontiers in Psychology, 14, 1152866. https://doi.org/10.3389/fpsyg.2023.1152866

 

 
 
 

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