Strategy (109 page)

From all of this a complex picture of decision-making emerged. It was at all times influenced by the social dimension and emphasized the importance of familiarity; the effort required to understand the distant and menacing; the inclination to frame issues in terms of past experiences, often quite narrowly and with a short-term perspective; and the use of shortcuts (heuristics) to make sense of what was going on. None of this fit easily with descriptions in terms of the systematic evaluation of all options, a readiness to follow an algorithmic process to the correct answer, employing the best evidence and analysis, keeping long-term goals clearly in mind. Yet at the same time, and despite the regular derision directed at decision-making that relied on
hunch and intuition, apparently instinctive decisions were often more than adequate and at times even better than might be managed by intensive deliberation.
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It was even relevant to academics in their choice of theories. As Walt observed, the time spent learning the complex mathematics demanded by some formal theories was time spent not “learning a foreign language, mastering the relevant details of a foreign policy issue, immersing oneself in a new body of theoretical literature, or compiling an accurate body of historical data.”
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As a combination of neuroimaging and experimental games illuminated the areas of the brain activated by different forms of cognition and decision, the sources of the tension between the bottom-up, instinctive processes and the top-down, deliberative processes could be detected. The parts of the brain associated with earlier evolutionary stages, the brain stem and the amygdale, were associated with choices defined by feelings and marked by instincts and mental shortcuts. Dopamine neurons automatically detected patterns in the stimuli coming in from the environment and matched them with stored information derived from experience and learning. These were connected by the orbitofrontal cortex (OFC) to conscious thought. It was the expansion of the frontal cortex during evolution that gave humans their comparative advantage in intelligence. Here could be detected the influence of explicit goals (such as holding on to a good reputation or making money). When trying to understand other people and what they might do, the medial prefrontal cortex and anterior paracingulate cortex became activated. These were not activated when playing a computer game because there was no point in trying to assess a computer's intentions. Yet compared with the notionally more primitive brain, the prefrontal cortex appeared limited in its computational capacity, barely able to handle seven things at once.

Jonah Lehrer summed up the implications of the research:

The conventional wisdom about decision-making has got it exactly backward. It is the easy problems—the mundane math problems of daily life—that are best suited to the conscious brain. These simple decisions won't overwhelm the prefrontal cortex. In fact they are so simple that they tend to trip up the emotions, which don't know how to compare prices or compute the odds of a poker hand. (When people rely on their feelings in such situations, they make avoidable mistakes, like those due to loss aversion and arithmetical errors.) Complex problems, on the other hand, require the processing powers of the emotional brain, the supercomputer of the mind. This doesn't just mean
you can just blink and know what to do—even the unconscious takes a little time to process information—but it does suggest that there's a better way to make difficult decisions.
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When the actual processes of decision-making were considered, there was therefore very little relationship to the formal model of decision-making. Emotion could no longer be seen as something separate from reason and apt to lead reason astray, so that only a dispassionate intellectual discipline, the sort displayed by Plato's philosopher-kings, could ensure rational control. Instead emotion appeared as bound up with all thought processes.
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Neuroimaging of the brain confirmed the extraordinary activity involved in evaluating situations and options before the conclusions reach human consciousness. The revelation lay in just how much computation and analysis humans were capable of before they were really aware of any serious thought underway at all. Here in the subconscious could be found the various heuristics and biases explored by the behavioral economists, or the repressed feelings that fascinated Freud and the psychoanalysts. It was here that decisions took form, and where people and propositions acquired positive or negative connotations.

Human beings did what felt right, but that did not mean their behavior was uninformed or irrational. Only when the circumstances were unusual did they have to ponder and wonder what to do next. Then thought processes became more conscious and deliberate. The conclusions might be more rational or they might be more rationalized. If the instinctive feelings were trusted, the natural course was to look for arguments to explain why they were correct rather than subject them to truly critical scrutiny. Two distinct processes were therefore identified, both capable of processing information and formulating decisions. Their combined effect was described as a “dual-process model of reasoning.” Their least loaded labels were System 1 and System 2.
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The distinction between the two may be drawn too sharply, as they clearly feed off each other and interact. The value for our purposes is to allow us to identify two distinctive forms of strategic reasoning which at least have some basis in cognitive psychology.

The intuitive System 1 processes were largely unconscious and implicit. They operated quickly and automatically when needed, managing cognitive tasks of great complexity and evaluating situations and options before they reached consciousness. This referred to not one but a number of processes, perhaps with different evolutionary roots, ranging from simple forms of information retrieval to complex mental representations.
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They all involved the extraordinary computational and storage power of the brain, drawing
on past learning and experiences, picking up on and interpreting cues and signals from the environment, suggesting appropriate and effective behavior, and enabling individuals to cope with the circumstances in which they might find themselves without having to deliberate on every move. Here could be found a grasp of how society worked and individuals operated, what had been internalized about societies and a variety of situations, bringing it together in ways faster and more focused than possible by more explicit and deliberate means. The outcomes were feelings—including strong senses of like and dislike, signals and patterns—with scripts for action that might be difficult to articulate but were followed without always understanding where they came from. What emerged out of System 1 did not need to be contrary to reason and could involve calculations and evaluations far exceeding those that could be accomplished with the more cumbersome and limited processes associated with System 2. In some ways, the modeling associated with game theory captured both the potential and limitations of System 2 thinking. If there was no System 1, that was probably how individuals might think, though without the prompts of System 1 they might find it difficult ever actually to reach a conclusion.

The intuitive System 1 thinking would still at times need to be supplemented by System 2 processes. These were conscious, explicit, analytical, deliberative, more intellectual, and inherently sequential—just what was expected of strategic reasoning. Unfortunately, System 2 processes were also slower and struggled with excessive complexity. They were also more demanding, for exerting self-control could be “depleting and unpleasant,” leading to a loss of motivation.
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The features of System 2 involved attributes that were uniquely human. Although the process may have started with chimps, they were assumed to reflect more recent evolutionary development, associated with language and the ability to address hypothetical situations, without immediate context, beyond immediate experience. The move from System 1 did not mean that feelings no longer played a part. For example, when deciding whether to cooperate or defect in the ultimatum game, players' positive or negative feelings about the options influenced their decisions. When another player was perceived to have acted unfairly, this could arouse strong feelings affecting the severity of the response.
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Whether the decisions emerging out of System 1 were good would depend on the quality and relevance of internalized information. As in other areas, instincts could often be reliable guides but a desire to believe could sometimes override best interests. Instinctive choices had features that potentially limited their effectiveness. First, shortcuts were used, turning new situations into something familiar in order to draw on apparently relevant experience
or knowledge. This was the case even when the stakes were high.
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Second, though more effort might be invested in high-stakes decisions, this could be to find evidence to support choices that seemed intuitively correct from the start.
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Third, thinking was often short term, shaped by immediate challenges. Kahneman observed that “an exclusive concern with the long term may be prescriptively sterile, because the long term is not where life is lived.” During the course of a conflict there would be responses to the “pain of losses and the regret of mistakes.”
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In this respect, the first encounters were bound to be more important, as these tested the accuracy of the initial framing and showed how issues were likely to be framed in the future. The next chapter notes the importance of considering strategy as starting from an existing situation rather than a distant goal.

Learning and training could make a difference, as was evident in those who had to work out what to do during the course of a competitive game, an intense battle, or any stressful situation without time for much deliberation. Intuitive decisions could therefore reflect strong biases, limited prior knowledge, narrow framing, and short time scales. With more deliberation decisions did not necessarily improve, especially if the extra deliberation was devoted to rationalizing intuitive conclusions. But deliberation did allow for correcting biases, more abstract conceptualizations, reconstructing the frame, and pushing out the time horizons. The evidence suggested that the more conscious reasoning kicked in when the circumstances had unique features, the information was poor, inconsistencies and anomalies were evident compared with expectations, or there was an awareness of the danger of bias. Individuals with a lack of empathy (psychopathy) were less inclined to cooperate and more likely to defect in games involving trust. When they were asked to act against type, so that the empathetic defected and the psychopathic cooperated, extra activity was observed in the prefrontal cortex because of the effort needed to exert control.
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Deliberate System 2 thinking interacted with intuitive System 1 thinking, a potential source of control that was not always controlling.

The tension was evident when evidence challenged strongly held beliefs. Experts who had a considerable stake in a particular proposition could put considerable intellectual effort into discrediting the evidence and those who supported alternative propositions. A study of pundits by Philip Tetlock in the 1980s demonstrated that their predictions were no better than might have been achieved through random choice, and that the most famous and regarded were often the worst. Because of their self-image as being uniquely expert they would convey more certainty than was often justified by the evidence. The best pundits, he noted, were those who were ready to monitor
how well their predictions were going and were not too quick to disregard dissonant findings.
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The two processes provided a compelling metaphor for a struggle that was central to the production of strategies. Simply put, strategy as commonly represented was System 2 thinking par excellence, capable of controlling the illogical forms of reasoning—often described as emotional—that emerged out of System 1. The reality turned out to be much more complicated and intriguing, for in many respects System 1 was more powerful and could overwhelm System 2 unless a determined effort was made to counter its impact. A strategy could involve following System 1 as it was posted into consciousness and appeared as the right thing to do, so that conscious effort was directed at finding reasons why it should be done—strategy as rationalization. One way to think of strategy, therefore, was as a System 2 process engaged in a tussle with System 1 thinking, seeking to correct for feelings, prejudices, and stereotypes; recognizing what was unique and unusual about the situation; and seeking to plot a sensible and effective way forward.

A key finding from experiments was that individuals were not naturally strategic. When they understood that they were taking part in a competitive strategic game and were told the rules, the criteria, and the rewards for success, then they acted strategically. They could appreciate, for example, that sticking to an established pattern of behavior just because it worked in the past would probably not work in the future because a clever opponent would know what to expect. They also realized that their opponent's future actions were likely to vary from those observed in the past. This was the essence of strategic reasoning: making choices on the basis of the likely choices of opponents and, in so doing, recognizing that opponents' choices would depend in turn on expectations about what they might choose.
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Yet when the need for strategy was left unexplained and implicit, individuals often missed cues and opportunities. Nor were they always enthusiastic and competitive when told they were playing a strategic game. Strategies were often inconsistent, clumsy, and unsophisticated; reflected shifting or uncertain preferences; responded to the wrong stimuli; and focused on the wrong factors, misunderstanding partners as well as antagonists. Players often had to be urged to make the effort to get into the minds of their opponents. This is why the next chapter argues that many everyday and routine encounters should not be really considered as “strategic.”