Explaining Decisions

Explanations of decisions are central to decision governance: before changing how decisions are made, you need to explain how they are made; you need to explain why they need to be changed; and, you need to explain how changes that governance brings should lead to better decisions. So the question is: What is a good explanation of a decision? Which leads to many others. How are decisions explained usually? What is wrong with such explanations? How can we improve them? How much do we need to invest to improve them until there’s no more benefit to continuing? And so on.

This text is part of the series on the design of decision governance. Decision Governance refers to values, principles, practices designed to improve the quality of decisions. Find all texts on decision governance here, including “What is Decision Governance?” here.

In another text, here, I related in a simple way outcomes to actions, actions to decisions, and wrote that there is always an explanation for a decision. The figure from that text is below, where the explanation, labeled with circle 6, is what we need to unpack.

Are there patterns in how people explain decisions?

There are well-documented patterns in how people explain decisions, and these patterns have been studied across psychology, behavioral economics, and decision science. Understanding these patterns is useful for decision governance as they suggest what to look for in explanations, and raise questions as to whether these are useful or not and therefore, if we need to target them through decision governance.

Illustration of the patterns on a single decision

Below is an example of a decision. How would you explain it in order to emphasize each of the patterns from Table 1? 

In The Iliad by Homer, Achilles, the Greek hero, decides to withdraw from battle after a dispute with Agamemnon, the leader of the Greek forces during the Trojan War. Agamemnon, having been forced to return his war prize, Chryseis, to appease the gods, demands Achilles’ prize, Briseis, as compensation. In response, Achilles, feeling dishonored and enraged by Agamemnon’s actions, chooses to withdraw himself and his troops from the fighting, despite the consequences for the Greek army.

Table 2 shows alternative explanations for Achilles’ decision to withdraw from battle, each emphasizing one of the patterns in Table 1.

What is common across good explanations of decisions?

The characteristics of good explanations are well-supported by research in cognitive science, psychology, and decision theory. These characteristics ensure that explanations are clear, effective, and relevant to their audience, especially in decision-making contexts.

1. Causal Clarity: Good explanations clearly establish cause-and-effect relationships, allowing the audience to understand why an outcome occurred. This involves identifying the specific factors that led to the decision or outcome and linking actions to consequences. Research by Lagnado and Sloman (2006) emphasizes that people prefer explanations that trace a clear causal path from events to outcomes.
2. Simplicity: Good explanations are concise and avoid unnecessary complexity. Research by Lombrozo (2007) shows that simpler explanations, which minimize extraneous details while maintaining accuracy, are often preferred because they are easier to process and understand. This principle is related to Occam’s Razor, which suggests that the simplest explanation is often the best.
3. Coherence: A good explanation should logically fit with known facts and established beliefs, forming a consistent narrative. Thagard (1989) discusses how explanatory coherence enhances the acceptability of an explanation, as individuals are more likely to accept explanations that align with their prior knowledge.
4. Specificity: Effective explanations are detailed and specific, addressing the core elements of the issue at hand. Vague or general explanations are less satisfying. Research by Williams and Lombrozo (2013) indicates that explanations with more relevant details are perceived as more informative and useful for decision-making.
5. Pragmatic Value: Good explanations are practical and offer actionable insights. Keil (2006) argues that explanations should not only clarify what happened but also provide guidance for future action or decisions. This is particularly important in business and organizational settings, where explanations are used to improve decision-making processes.
6. Consistency with Evidence: Explanations grounded in empirical evidence or reliable data are considered more credible and trustworthy. Koehler (1991) found that explanations supported by factual information are rated as more convincing and are more likely to be accepted by others.
7. Counterfactual Plausibility: Good explanations often consider alternative scenarios—what could have happened if different decisions had been made. Roese (1997) highlights the importance of counterfactual thinking in evaluating decisions, as this helps people learn from mistakes and think critically about how different choices might have led to different outcomes.

These characteristics help ensure that explanations are not only understandable but also relevant and useful, especially in decision-making contexts where we want to achieve these properties of explanations through governance.

References and Further Reading

• Zuckerman, M. (1979). Attribution of success and failure revisited: Or, the motivational bias is alive and well in attribution theory. Journal of Personality, 47(2), 245-287.
• Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.
• Loewenstein, G., & Prelec, D. (1992). Anomalies in intertemporal choice: Evidence and an interpretation. Quarterly Journal of Economics, 107(2), 573-597.
• Festinger, L. (1957). A Theory of Cognitive Dissonance. Stanford University Press.
• Janis, I. L. (1982). Groupthink: Psychological Studies of Policy Decisions and Fiascoes. Houghton Mifflin.
• Haidt, J. (2001). The emotional dog and its rational tail: A social intuitionist approach to moral judgment. Psychological Review, 108(4), 814-834.
• Roese, N. J. (1997). Counterfactual thinking. Psychological Bulletin, 121(1), 133-148.
• Lagnado, D. A., & Sloman, S. A. (2006). Time as a guide to cause. Journal of Experimental Psychology: Learning, Memory, and Cognition, 32(3), 451-460.
• Lombrozo, T. (2007). Simplicity and probability in causal explanation. Cognitive Psychology, 55(3), 232-257.
• Thagard, P. (1989). Explanatory coherence. Behavioral and Brain Sciences, 12(3), 435-467.
• Williams, J. J., & Lombrozo, T. (2013). Explanation and prior knowledge interact to guide learning. Cognitive Psychology, 66(1), 55-84.
• Keil, F. C. (2006). Explanation and understanding. Annual Review of Psychology, 57, 227-254.
• Koehler, D. J. (1991). Explanation, imagination, and confidence in judgment. Psychological Bulletin, 110(3), 499-519.

Decision Governance

This text is part of the series on the design of decision governance. Other texts on the same topic are linked below. This list expands as I add more texts on decision governance.

Introduction to Decision Governance

1. What is Decision Governance?
2. What Is a High Quality Decision?
3. When is Decision Governance Needed?
4. When is Decision Governance Valuable?
5. How Much Decision Governance Is Enough?
6. Are Easy Options the Likely Choice?
7. Can Decision Governance Be a Source of Competitive Advantage?

Stakeholders of Decision Governance 

1. Who Is Responsible for Decision Governance in a Firm?
2. Who are the Stakeholders of Decision Governance?
3. What Interests Do Stakeholders Have in Decision Governance?
4. What the Organizational Chart Says about Decision Governance

Foundations of Decision Governance

1. How to Spot Decisions in the Wild?
2. When Is It Useful to Reify Decisions?
3. Decision Governance Is Interdisciplinary
4. Individual Decision-Making: Common Models in Economics
5. Group Decision-Making: Common Models in Economics
6. Individual Decision-Making: Common Models in Psychology
7. Group Decision-Making: Common Models in Organizational Theory

Role of Explanations in the Design of Decision Governance

1. Explaining Decisions
2. Simple & Intuitive Models of Decision Explanations
3. Max(Utility) from Variety & Taste
4. Expected Uncertainty to Unexpected Utility
5. Perceptiveness & Experience Shape Rapid Choices

Design of Decision Governance

1. The Design Space for Decision Governance
2. Decision Governance Concepts: Situations, Actions, Commitments and Decisions
3. Decision Governance Concepts: Outcomes to Explanations
4. Slow & Complex Decision Governance and Its Consequences

Design Parameters of Decision Governance

Design parameters of decision governance, or factors that influence decision making and that we can influence through decision governance:

• Factors influencing how an individual selects and processes information
• Factors influencing information the individual can gain access to

Factors influencing how an individual selects and processes information in a decision situation, including which information the individual seeks and selects to use:

1. Psychological factors, which are determined by the individual, including their reaction to other factors:
   1. Attention:
      • Attention Depends on Stimuli & Goals
      • Motivated Reasoning: How To Detect And Mitigate Its Risks
   2. Memory:
      • Selective Memory Can Be Desirable
   3. Mood
   4. Emotions:
      • Emotions Mediate Decisions Always and Everywhere
   5. Temporal Distance:
      • Why Perception of Long Term Outcomes Should Be Influenced First?
   6. Social Distance:
      • Increased Social Distance (Over)Simplifies Explanations
   7. Expectations
   8. Uncertainty
   9. Attitude
   10. Values
   11. Goals:
       • Goals: How Goals Shape Decisions
       • Goals: How Goals Form and Change
       • Goals: Factors That Stabilize and Destabilize Goals
       • Goals: Factors Influencing Goal Selection
       • Goals: How to Improve Alignment to a Team Goal
   12. Preferences
   13. Competence
2. Social factors, which are determined by relationships with others:
   1. Impressions Of Others: How They Influence Decisions And How To Regulate Them
   2. Reputation
   3. Social Hierarchies:
      • Social Hierarchies: Why They Matter for Decision Governance
      • Social Hierarchies: Benefits and Limitations in Decision Processes
      • Social Hierarchies: How They Form and Change 
      • Power: Influence on Decision Making and Its Risks
      • Power: Relationship to Psychological Factors in Decision Making
      • Power: Sources of Legitimacy and Implications for Decision Authority
      • Power: Stability and Destabilization of Legitimacy

Factors influencing information the individual can gain access to in a decision situation, and the perception of possible actions the individual can take, and how they can perform these actions:

• Governance factors, which are rules applicable in the given decision situation:
  1. Incentives
     • Incentives: Components of Incentive Mechanisms
     • Incentives: Example of a Common Incentive Mechanism
     • Incentives: Building Out An Incentive Mechanism From Scratch
  2. Rules
     • Rules-in-use
     • Rules-in-form
  3. Institutions
• Technological factors, or tools which influence how information is represented and accessed, among others, and how communication can be done
• Environmental factors, or the physical environment, humans and other organisms that the individual must and can interact with
  1. Detail: Level of Detail Can Influence Probability Estimates

Change of Decision Governance

1. Public Policy and Decision Governance:
   • What is the Role of Public Policy in Decision Governance?
   • Dynamics of Public Policy Development
   • How Does Public Policy Influence Decision-Making?
2. Compliance to Policies:
   • Adapting a Decision Process to Comply with a Policy
   • How a Decision Process Can Create Evidence of Compliance
3. Transformation of Decision Governance
   • Punctuated Equilibrium: How to know if a Decision Process is ready for disruption
   • Policy Windows: What They Are And When They Occur
4. Mechanisms for the Change of Decision Governance
   • Incrementalism: What it is, and when/how to implement it in decision governance
   • Governance Dynamics: Change Driven by Cases and Principles
   • Governance Dynamics: Case-Based Development of Decision Governance