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A decision-making is more random than you think

A flip of a coin can have the same result as overthinking the next step.

A mathematical concept called random walk is essentially a path generated via a sequence of unexpected steps. Random steps can spawn in many ways by flipping a coin, observing changes in the stock market, or using a computer-generated random number sequence.

There are numerous ways to adapt this concept to different applications (e.g., computer science, physics, finance, economics, consumer buying, and more). But why is it essential to know or even understand this concept?

“Science is a way of thinking much more than it is a body of knowledge.” Carl Sagan

When you are starting to build a new business, a new app, or a new feature, you, as PM, Manager, or Executive, will need to make decisions, several of them, along the way. As a result, you will be asking and dumped with data all the time, and you will be wondering:

What am I suppose to do with all this data?

Hey, believe me, I have been there several times, and you will not have a Data Scientist or Data Analyst available for you in your drawer to help you every time we need with all the data dumped on you. Quite possible that your company doesn’t even have one of them.

Before we jump on Random Walks, let get started with the basics.

Algorithms

The scary big word “algorithm” comes from the name of Persian mathematician al- Khwārizmī. When hearing the term “algorithm,” the first thing that comes to my mind is: I can’t even say this word. The second one usually evokes sci-fi, geniuses, big data, big government, and big business. In summary, it gets us scared.

But let me share a secret: algorithms are more embroiled in our daily lives than you believe.

When you cook bread from a recipe, you’re following an algorithm. When you knit a sweater from a pattern, you’re following an algorithm. Remember that time you cracked your head and your finger putting IKEA furniture together? You were following an algorithm as well. Algorithms have been a part of human technology ever since the Stone Age.

So, stop being scare about it, and embrace it. Are you ready for another secret? Our intuition is an algorithm.

Life will always throw us a curveball, and it will be messy, and we’ll wrongly believe that we don’t have the answer for it. Yet, culturally, we’ve been taught to think that rationality should always prevail when making decisions about anything from a new business, company mergers to simply what to eat for lunch.

But, what about that feeling inside, “inner voice,” tell us how we feel when we need to choose, make a decision, even in the most challenging situations?

Intuitions and concepts honed on the simpler forms of these problems offer us a way to understand the key issues, make the best possible decision, and move forward.

What is Intuition?

If you googled, or Ducklyed you will find several different definitions about it. Intuition is a cognition process that allows us to know something directly, without analytical reasoning, filling the gap between our mind’s conscious and non-conscious parts and between instinct and reason.

Learning about cognition to solve problems and even computational present issues in everyday life will change what we believe and think about human rationality and behavior.

The best way that I could come up with to explain, in a simple way, what Intuition is, is a simple algorithm:

Unlike a learned response, instinct is our innate inclination towards a specific behavior/response.

A gut feeling, or a hunch, is a response that quickly appears in our consciousness, as a response from our computational hardware and software (cerebrum), based on store data and previous experiences, that feels like we are not wholly aware of the underlying reasons for its occurrence.

In essence, we need both intuition and hard data to make the best possible decisions for ourselves, our businesses, and our families.

So…, how to combine those two?

Now is time to dissect the first paragraph of this article; let’s talk about the random walk.

The basic concept of the random walk started with a simple mathematical question: If a person walks randomly around a city, by deciding the next step with only the flip of a coin; Will the person ever get back to the original starting point of the walk?

Considering one dimensional, or even two, the answer for this question is: Yes, they will most probably get back to the original starting point. However, real-life is three-fourth dimensional, the probability of getting to the starting point decreased, and can get close to zero if we add even more dimensions to the problem.

“A drunk man will eventually find his way home, but a drunk bird may get lost forever.” Shizuo Kakutani, mathematician.

Brian Christian and Tom Griffiths’s book Algorithms to Live By describes how the algorithmic tradeoff between exploration and exploitation plays out in real life. In the book, exploration means seeking out new options to learn more about the possibilities. Whereas exploitation means focusing on the best option(s) that you have discovered so far.

In other words, imagine yourself on a walk to a new city. You don’t know anything, anyone, so it really doesn’t matter your next step in the walk. You can just flip a coin to decide to go right or left. So, you are in exploration mode. After a while, you start to feel hungry during your random walk, and it’s time to stop and eat something, but where?

You probably passed in front of several dinners; it means you had collect data during your random walk. Based on these data, you have a few options to decide; you are now on exploitation mode.

I know, I know, it’s time to wrap this up.

It looks random, right? But it’s not. Your intuition will be guiding you along the way, even during the flip of the coin. How? Your intuition will kick in to determine the strength you put on the flip, how high you will let the coin drop, etc. Using different wording, I talked about it in the article Decision-making.

The essential dilemma between rational and intuition in the random walk is how many opportunities to consider in the process. In our lives is the same as asking: Do we try new things or stick with what we know? Knowingly we don’t understand that life is a balance between taking risks and savoring what we know.

As human beings, we want to give meaning to everything, especially an unexpected decision/action from our lover, customer, peer, and especially ourselves. Random walk is one of the most straightforward ways to help us give meaning to these unexpected behaviors.

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Taric Andrade

Taric Andrade

Entrepreneurial minded, passionate for tech, driven by intellectual curiosity — curating knowledge to solve problems and create change.

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