How to make tough decisions when things feel especially uncertain

Another impact the pandemic is having on work is our ability to make decisions. The process is more challenging when outcomes are uncertain—and we’re still living with plenty of uncertainty. To better understand how people approach decisions when they can’t predict how things will turn out, University of Cambridge researchers Barbara J. Sahakian, professor of clinical neuropsychology, and Aleya A. Marzuki, PhD candidate in cognitive neuroscience, performed an experiment that focused on how decision-making processes can go awry because of mental health conditions. The researchers asked two groups, one comprised of teens with obsessive-compulsive disorder (OCD) and one without, to complete a probabilistic decision-making task, selecting between two images on a screen. One picture was programmed to provide them points 80% of the time while the alternative picture provided points only 20% of the time. Halfway through the task, the reward probabilities associated with each option would reverse. The results, which were published in JAMA Network Open, explored humans’ disposition toward two decision-making strategies: exploitation or exploration. Exploitation involves choosing options that are familiar and provide a higher certainty of reward, while exploration involves testing out unfamiliar choices. “The ideal strategy on this task involves an amalgamation of exploration and exploitation,” says Marzuki. “It would be best to exploit the more rewarding choice early on, but then engage in exploration once you’ve noticed a shift in how often points are offered.” The teenagers with OCD, however, seemed unable to cope with uncertainty, which led them to over-explore the two task options. They switched choices and selected the less rewarding choice more often than teenagers without OCD. While the experiment was performed with participants with OCD, the findings can apply to a broader range of people, as having a tolerance toward uncertainty is necessary in making optimal decisions, says Marzuki. “This is not easy, as humans are creatures of habit and often do not cope well under uncertainty,” she says. “This is demonstrated in the current global pandemic, where people are engaging in excessive information-seeking, showing maladaptive behavior, ranging from hoarding toilet paper to deliberately ignoring government mandated safety advice and believing and spreading misinformation.” Applying the Findings to Business Organizations can learn something from this research. First, employees and leaders must be equipped to handle uncertainty to improve decision-making, says Marzuki. One method for developing resilience to uncertainty is by better informing employees, making sure all the necessary information is transparent so that they can make optimal decisions. It’s also important to understand when and why people use exploration or exploitation, she says. When people are under a greater time pressure, for example, they’re more likely to repeat choices and explore less. The outcomes of previous decisions can also have an impact. Marzuki says people are more likely to explore novel options when past experiences have been generally rewarding. (The opposite is also true and people will stick to what they know if they had experiences that were negative.) The Best Way to Make Decisions Both methods have their pros and cons. “On the one hand, exploration can be highly beneficial, as trying out novel options can enable you to potentially reap better benefits and enable you to make better choices in the future,” says Marzuki. “On the other hand, if the new option turns out to be inferior, it can be costly in terms of time, effort, and potentially monetary resources.” But neither strategy is adequate on its own, she adds. “Instead, it is important to be able to flexibly switch between using exploratory and exploitative strategies,” she says, referring to a recent study on the explore-exploit dilemma that focused on foraging. “In summer months, when food is abundant, a forager should spend more time exploring potential food sources. It is then imperative that the forager exploits this information later on in winter months when food is scarce.” The same logic can apply to organizations. “In times of stability, businesses should explore new ventures, investments, partners, and alternative working practices to gather crucial information and reap potential benefits,” says Marzuki. “In doing so, they will be better equipped to survive in periods of uncertainty and volatility by exploiting the information and benefits gathered earlier.”

How to make tough decisions when things feel especially uncertain

Another impact the pandemic is having on work is our ability to make decisions. The process is more challenging when outcomes are uncertain—and we’re still living with plenty of uncertainty.

To better understand how people approach decisions when they can’t predict how things will turn out, University of Cambridge researchers Barbara J. Sahakian, professor of clinical neuropsychology, and Aleya A. Marzuki, PhD candidate in cognitive neuroscience, performed an experiment that focused on how decision-making processes can go awry because of mental health conditions.

The researchers asked two groups, one comprised of teens with obsessive-compulsive disorder (OCD) and one without, to complete a probabilistic decision-making task, selecting between two images on a screen. One picture was programmed to provide them points 80% of the time while the alternative picture provided points only 20% of the time. Halfway through the task, the reward probabilities associated with each option would reverse.

The results, which were published in JAMA Network Open, explored humans’ disposition toward two decision-making strategies: exploitation or exploration. Exploitation involves choosing options that are familiar and provide a higher certainty of reward, while exploration involves testing out unfamiliar choices.

“The ideal strategy on this task involves an amalgamation of exploration and exploitation,” says Marzuki. “It would be best to exploit the more rewarding choice early on, but then engage in exploration once you’ve noticed a shift in how often points are offered.”

The teenagers with OCD, however, seemed unable to cope with uncertainty, which led them to over-explore the two task options. They switched choices and selected the less rewarding choice more often than teenagers without OCD. While the experiment was performed with participants with OCD, the findings can apply to a broader range of people, as having a tolerance toward uncertainty is necessary in making optimal decisions, says Marzuki.

“This is not easy, as humans are creatures of habit and often do not cope well under uncertainty,” she says. “This is demonstrated in the current global pandemic, where people are engaging in excessive information-seeking, showing maladaptive behavior, ranging from hoarding toilet paper to deliberately ignoring government mandated safety advice and believing and spreading misinformation.”

Applying the Findings to Business

Organizations can learn something from this research. First, employees and leaders must be equipped to handle uncertainty to improve decision-making, says Marzuki. One method for developing resilience to uncertainty is by better informing employees, making sure all the necessary information is transparent so that they can make optimal decisions.

It’s also important to understand when and why people use exploration or exploitation, she says. When people are under a greater time pressure, for example, they’re more likely to repeat choices and explore less.

The outcomes of previous decisions can also have an impact. Marzuki says people are more likely to explore novel options when past experiences have been generally rewarding. (The opposite is also true and people will stick to what they know if they had experiences that were negative.)

The Best Way to Make Decisions

Both methods have their pros and cons. “On the one hand, exploration can be highly beneficial, as trying out novel options can enable you to potentially reap better benefits and enable you to make better choices in the future,” says Marzuki. “On the other hand, if the new option turns out to be inferior, it can be costly in terms of time, effort, and potentially monetary resources.”

But neither strategy is adequate on its own, she adds. “Instead, it is important to be able to flexibly switch between using exploratory and exploitative strategies,” she says, referring to a recent study on the explore-exploit dilemma that focused on foraging. “In summer months, when food is abundant, a forager should spend more time exploring potential food sources. It is then imperative that the forager exploits this information later on in winter months when food is scarce.”

The same logic can apply to organizations. “In times of stability, businesses should explore new ventures, investments, partners, and alternative working practices to gather crucial information and reap potential benefits,” says Marzuki. “In doing so, they will be better equipped to survive in periods of uncertainty and volatility by exploiting the information and benefits gathered earlier.”