Why Perception of Long Term Outcomes Should Be Influenced First?

There are different types of psychological distance, each with interesting implications for decision making. 

“Psychological distance is a subjective experience that something is close or far away from the self, here, and now. Psychological distance is thus egocentric: Its reference point is the self, here and now, and the different ways in which an object might be removed from that point – in time, space, social distance, and hypotheticality – constitute different distance dimensions.” [1]

Temporal distance as a type of psychological distance, and specifically when we are interested in decision making, refers to the subjective perception of the decision maker, of the distance between their current time and the time they predicted they will experience the outcomes of a decision. 

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.

If the decision maker thinks options have outcomes which will be observed in the distant future, then preferences over these options will be less variable (more stable) than preferences over options which have outcomes that will be observed sooner. This is because options with distant outcomes will be based on high-level construals, which are less variable as they are based on more abstract, less detailed information that is consequently less likely to change frequently, while options with immediate outcomes will be based on low-level construals, which are concrete and can change more easily.

If temporal distance does in fact matter when deciding, and there is evidence that it does [1,2], then does this matter for decision governance? 

If we have a decision situation in which the decision will lead to both immediate and distant outcomes, then options with more attractive distant outcomes and less attractive immediate outcomes should be preferred, all else being equal, to those with less attractive distant outcomes and more attractive immediate outcomes. 

If we want to influence preferences away from specific options, we should invest more effort to change high-level construal of their distant outcomes, rather than low-level construal of their immediate outcomes.

If we want to mitigate the impact of temporal distance, we may want to provide more concrete information about distant outcomes, and provide supporting information to increase the confidence in the prediction that these concrete outcomes will materialize. Richer information about distant outcomes should change how they are perceived, and how they relate to preferences, perhaps to the extent that they change preferences because of the additional detail.

We can introduce, through decision governance, steps in the decision process to document key abstract ideas that lead the decision maker to preferences over distant and immediate outcomes – this may involve principles, for example, that the decision maker considers important for the decision, and values they believe outcomes need to be aligned to. In the firm, some of this information that influences principles, values, and goals, will appear in documentation of strategy, long term plans, mission, and vision. This investigation of abstract ideas influencing choice can be done indirectly, by having steps where they may reveal preferences, or by eliciting them in a more direct way, such as by asking for explanations for preferences.

Temporal distance can be influenced by designing the decision process to have steps in which we need to derive decision criteria from principles that the decision maker needs to provide. In addition, to understand their perception of immediate outcomes, we can require them to collect themselves information about these outcomes – this would lead them to highlight what is salient to them, rather than what we may assume matters to them.

References and Further Reading

1. Trope, Yaacov, and Nira Liberman. “Temporal construal.” Psychological review 110.3 (2003): 403.
2. Trope, Yaacov, and Nira Liberman. “Temporal construal and time-dependent changes in preference.” Journal of personality and social psychology 79.6 (2000): 876.

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