decision making

Decision-making under adversity - AusIMM Bulletin

Featured in October 2016 in the Australian International Mine Management Bulletin.

Decision-making Under Adversity - By Amanda Blesing and Russell Boon

Learning how the brain interprets and processes stressful situations can help the decision-making process in high-pressure environments

We initially became interested in decision-making as a topic because of insights and evidence from the gender diversity debate. Organisations with both women and men on the leadership team in relatively equal numbers perform better on a range of measures including profitability, productivity, risk, customer satisfaction and staff engagement. And the reasons why? Researchers put it down to better decision-making:

  • ‘companies with strong female leadership deliver a 36 per cent higher return on equity, according to the index provider MSCI’ (World Economic Forum, 2015)
  • ‘companies ranked in the bottom quarter in terms of gender diversity on their boards were hit by 24 per cent more governance-related controversies than average’ (World Economic Forum, 2015).

However, women are frequently criticised for their decision-making. They’re allegedly slower at making decisions, wanting more evidence and are more risk averse. This is seen as a negative by organisations that are used to more masculine models of leadership.

Complexity vs Uncertainty

Complexity vs Uncertainty

On the flipside, we know that testosterone drives a bias toward action, competitiveness and risk taking, so men tend to make decisions faster. However, a too-fast decision isn’t always a better decision, and certainly a too-slow decision doesn’t get anyone anywhere fast. Additionally, when stress, anxiety or fear is added into the mix, no one is great at making decisions. In fact, we’re wired to bypass the logical parts of our brain when under pressure, which makes great decision-making really challenging.

 

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Three part series on gender differences in investing behaviour

As I trawl the archives for information and research that help us understand, interpret and apply the research on the differences between male and female brains, Nelli Oster provides us with some fascinating reflections the topic with regard to investor behaviour.  Extrapolate as you will.

Author: BlackRock, Director, Nelli Oster, PhD 

1. Men vs Women: Risk Aversion - 7 November 2013

In the first of a three-part series on gender differences in investing behavior, Nelli Oster, an investment strategist and specialist in behavioral finance, examines why women tend to be more risk averse and what this means practically for their portfolios.  You may have heard about the structural differences that have been discovered between men and women’s brains. What you may not know, however, is that differences in brain activity may lead the genders to perceive risks in life differently, which also has implications on investing behavior. READ MORE ...  

2. Men vs Women: The Confidence Gap - 24 December 2013

In this post, the second of her series on ways women and men investors behave differently, Nell drills down into the research behind the gender-related confidence difference and what people can do to mitigate its potential negative financial impact. Here are her responses to three questions you may have about what she's calling “the gender confidence gap.”    READ MORE ...

3. Men vs Women: Investment Decisions - 27 February 2014

In this post, the latest in her series on ways women and men investors behave differently, she drill down into the research behind gender-related differences in investment decision making, answering three key questions.   READ MORE ...