What's happening at the
Thursday 24 Aug 2017 | 05:28 | SYDNEY
Thursday 24 Aug 2017 | 05:28 | SYDNEY

Test your risk quotient

By

COMMENTS

25 May 2012 15:22

We all want leaders to make smart decisions. Maybe you fancy yourself as one of those leaders; someone who can make smart calls even when the evidence is inconclusive, as it usually is.

Well, here's an interesting little online test to see how good you are at estimating probabilities. It asks a series of general knowledge questions designed not to see how much you know, but how certain you are about what you know. If you're too confident about your knowledge or not confident enough, your RQ will suffer. Give it a try.

The test was created by Dylan Evans, author of a new book about 'risk intelligence', a concept the author defines in this interview as 'the ability to estimate probabilities accurately, it's about having the right amount of certainty to make educated guesses.' On his blog, Evans distinguishes this from probability analysis: 'Risk intelligence is not about solving probability puzzles; it is about how to make decisions when your knowledge is uncertain.'

The relevance of this stuff to political and corporate leadership is obvious, and what fascinates me particularly is a single line in Evans' interview with Slate in which he talks about the worryingly low risk quotient of doctors: 'One explanation is that doctors have to make so many different decisions about so many different things they don't get a chance to build up a good model.'

Another explanation is that doctors, political leaders, CEOs and in fact human beings generally suffer from decision fatigue. Here's a long NY Times article on that subject, which ends with this counsel:

“Good decision making is not a trait of the person, in the sense that it’s always there,” Baumeister says. “It’s a state that fluctuates.” His studies show that people with the best self-control are the ones who structure their lives so as to conserve willpower. They don’t schedule endless back-to-back meetings. They avoid temptations like all-you-can-eat buffets, and they establish habits that eliminate the mental effort of making choices. Instead of deciding every morning whether or not to force themselves to exercise, they set up regular appointments to work out with a friend. Instead of counting on willpower to remain robust all day, they conserve it so that it’s available for emergencies and important decisions.

“Even the wisest people won’t make good choices when they’re not rested and their glucose is low,” Baumeister points out. That’s why the truly wise don’t restructure the company at 4 p.m. They don’t make major commitments during the cocktail hour. And if a decision must be made late in the day, they know not to do it on an empty stomach. “The best decision makers,” Baumeister says, “are the ones who know when not to trust themselves.”

Photo by Flickr user Tiago Daniel

 

You may also be interested in...