Much of the process of sound decision making rests on our ability to perform appropriate comparisons. Which is a better investment: Google or Yahoo? Which is safer: flying or driving? Which business school is best? Our answers to all of these questions hinge crucially on the basis we use for comparison. Which features are really salient, and which are just noise? Are we looking at a large, objective collection of evidence, or just the recent evidence we have at hand? Are we using our instincts, and predictions of the future, or looking at statistical data from the past? Are we focusing on the ways in which competing alternatives are similar, or the ways in which they differ? What is the relevant timeframe we’re analyzing? Do we care about absolute performance, or relative performance?

Our answers to each of these questions can radically change the outcome of a decision making process, for better or for worse. In his latest Mauboussin on Strategy article, Michael Mauboussin surveys the many behavioral factors that go into forming comparisons, and offers some advice for making comparisons which are appropriate to the situation.

Read more: Mauboussin on Strategy: How Do You Compare?

Previously:

• More Than You Know
• Mauboussin on Discounted Cash Flow Models
• Mauboussin on Strategy: Size Matters
• All posts tagged Michael Mauboussin