Decisions Under Uncertainty

Stephen W. Hiemstra, Simple FaithBy Stephen W. Hiemstra

Decisions that we make are often assumed to be made in a context of certainty about outcomes. We use language like, if I do A, then B will follow, as if we knew the outcome with absolute certainty. This is an unrealistic assumption, but we assume it anyway to keep things easy, at least for purposes of explaining our decisions to ourselves or others.

Why Do We Assume Certainty?

Part of the reason for this simplistic assumption is that decision making creates anxiety. The future is never known for sure and important decisions can affect outcomes, our state of mind, and how others view our competency. Our anxiety levels go down when we are confident of our ability to make decisions and have experience showing that our competency is justified.

Experience with Decision Making

In my own experience, my decision skills improved greatly when I traded commodities, stocks, and options. Timely decision making was important as a trader and my decisions had previously been marked by “analysis paralysis,” a condition where the decision maker keeps procrastinating in the hope of gathering more information. In trading, analysis paralysis proved costly because buying opportunities quickly disappear in a competitive market. My training as a trader proved costly, but I learned how to assess information requirements quickly and to limit the markets that I traded so I could act quickly without a high level of uncertainty. I also learned to cut my losses when the market did not perform as expected.

Cutting one’s losses quickly is important in other contexts. Suppose that I worked in a particular field for a number of years only to find that my chosen field was no longer “hot”. If I continued to work in that field and to deny the lack of interest of my employers, my career would suffer even if I retained my position. Suppose that I reached a certain age and no longer needed to work to earn a living in a stressful job. If I continued to work anyway because the money was good and ignored the effect of the stress on my health and on my family.

Uncertainty Affects All Aspects of Decisions

Going back to our original example of a decision—if A, then B—we have at least three sources of uncertainty in this simple equation.

First, what if condition A is only partially met or if we are mistaken in our ability to trigger this condition? If I want to purchase a car, I need to have the money necessary for the purchase. What if I do not have the cash and do not know if a lender to make me a loan?

Second, what if the relationship between A and B changes? Suppose I raise the money to buy the car, but it is no longer available for sale?

Third, what if I raise the money for my car and it is still available for sale, but the dealer package does not include the features that I really wanted, like perhaps a car radio or guidance system or air conditioning, at the price originally quoted?

Uncertainty is Especially a Problem with Investment Decisions

While buying a car can raise a number of issues in itself, the uncertainty level rises when the car is needed to make an investment decision or needs to be paid out of future earnings. What if I am starting a new job as a traveling salesman, what car is most suitable for my new position? Suitability might take the form of having seats that remain comfortable after a six hour drive so that I can meet with customers in a relaxed manner. Or it might take the form of safety features that prevent accidents in the case of narcolepsy.

If my investment in a new car needs to be paid out of my earnings as a salesman and my future earnings are in question, my ability to repay my automobile loan needs to be estimated and may depend on events that I have no control over.
The same problem arises in making decisions about education. In college when I decided to study economics, I had no idea what an economist could expect to earn and whether studying economics posed a profitable investment decision, but I knew that my father had studied economics and was able to earn a living. I took it on faith that if I followed my father into the economics profession, I would earn a similar income and be able to support a family. In a formal sense, however, I did not (and perhaps could not) make a rational decision based on current expected earnings in the economics profession.

Focus on the Assurance of Salvation and Doubt

The defining characteristic of the postmodern era is uncertainty, precisely the oppose of tradition society. In traditional societies, tradition informs every important decision in one’s life—what gender roles we follow, who our friends are, who we marry, what profession we take up, and who we worship and how. Life has meaning in a traditional society because when we accept this guidance, we are rewarded with status and honor. All of this guidance has been abandoned in postmodern culture where we are responsible for every imaginable decision with little or no guidance and, in any case, given no rewards of status honor. If we succeed, we are fully employed, have a medical plan, and can buy stuff. The defining characteristic of the individual in the postmodern era is anxiety.
The church responds to the postmodern dilemma primarily by over-emphasis of the assurance of salvation in Christ and, in effect, denial of any form of uncertainty. We all know this is a highly problematic theological stance because it leaves little or no room for doubt. Jesus did not take this position. Listen to the words of Jesus spoken to the father of a boy possessed by an evil spirit:

“But if you can do anything, have compassion on us and help us. And Jesus said to him, If you can! All things are possible for one who believes. Immediately the father of the child cried out and said, I believe; help my unbelief!” (Mark 9:22-24)

The father recognizes that his faith is not sufficient for healing; Jesus accepts his prayer and heals the child notwithstanding. The father’s prayer is effectively our prayer.
God’s mercy through Christ is the only assurance of salvation that we have and Jesus knows that the uncertainty in this life, which wells up in us as doubt day to day, cannot snatch us from his hand (John 10:28).


Decisions Under Uncertainty

Also see:

A Roadmap of Simple Faith

Christian Spirituality 

Looking Back 

A Place for Authoritative Prayer 

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