By – Kayode Ipadeola
Factors affecting decision making
I like to think of myself as a rational person, but Im not one. The good news is its not just me or you. We are all irrational.
For a long time, researchers and economists believed that humans made logical, well-considered decisions. In recent decades, however, researchers have uncovered a wide range of mental errors that derail our thinking. Sometimes we make logical decisions, but there are many times when we make emotional, irrational, and confusing choices.
Psychologists and behavioral researchers love to geek out about these different mental mistakes. There are dozens of them and they all have fancy names like mere exposure effect or narrative fallacy. But I dont want to get bogged down in the scientific jargon today. Instead, lets talk about the mental errors that show up most frequently in our lives and break them down in easy-to-understand language.
Common mental errors
Survivorship Bias: Survivorship bias is a term I refer to as the tendency to focus on the winners in a particular area and try to learn from them while completely forgetting about the losers who are employing the same strategy.
You know, there might be thousands of footballers who train in a very similar way to Christiano Ronaldo, but never made it to the top. The problem is nobody hears about the thousands of footballers who never made it to the top. We only hear from the people who survive. We mistakenly overvalue the strategies, tactics, and advice of one survivor while ignoring the fact that the same strategies, tactics, and advice didnt work for most people.
Another example: Richard Branson, Bill Gates, and Mark Zuckerberg all dropped out of school and became billionaires! You dont need school to succeed. Entrepreneurs just need to stop wasting time in class and get started.!!!
Its entirely possible that Richard Branson succeeded in spite of his path and not
because of it. For every Branson, Gates, and Zuckerberg, there are thousands of other entrepreneurs with failed projects, debt-heavy bank accounts, and half-finished degrees. Survivorship bias isnt merely saying that a strategy may not work well for you, its also saying that we dont really know if the strategy works well at all.
When the winners are remembered and the losers are forgotten it becomes very difficult to say if a particular strategy leads to success.
Loss Aversion: Loss aversion refers to our tendency to strongly prefer avoiding losses over acquiring gains. Research has shown that if someone gives you #100 naira, you will experience a small boost in satisfaction, but if you lose #100 you will experience a dramatically higher loss in satisfaction. Yes, the responses are opposite, but they are not equal in magnitude.
Our tendency to avoid losses causes us to make silly decisions and change our behavior simply to keep the things that we already own. We are wired to feel protective of the things we own and that can lead us to overvalue these items in comparison with the options.
For example, if you buy a new pair of shoes it may provide a small boost in pleasure. However, even if you never wear the shoes, giving them away a few months later might be incredibly painful. You never use them, but for some reason you just can’t stand parting with them. Loss aversion.
Confirmation Bias: The Grandaddy of Them All. Confirmation bias refers to our tendency to search for and favor information that confirms our beliefs while simultaneously ignoring or devaluing information that contradicts our beliefs.
For example, Person A believes climate change is a serious issue and they only search out and read stories about environmental conservation, climate change, and renewable energy. As a result, Person A continues to confirm and support their current beliefs.
Meanwhile, Person B does not believe climate change is a serious issue, and they only search out and read stories that discuss how climate change is a myth, why scientists are incorrect, and how we are all being fooled. As a result, Person B continues to confirm and support their current beliefs.
Changing your mind is harder than it looks. The more you believe you know something, the more you filter and ignore all information to the contrary.
You can extend this thought pattern to nearly any topic. If you just bought a Honda accord and you believe it is the best car on the market, then youll naturally read any article you come across that praises the car. Meanwhile, if another magazine lists a different car as the best pick of the year, you simply dismiss it and assume that the editors of that particular magazine got it wrong or were looking for something different than what you were looking for in a car.
It is not natural for us to formulate a hypothesis and then test various ways to prove it false. Instead, it is far more likely that we will form one hypothesis, assume it is true, and only seek out and believe information that supports it. Most people don’t want new information , they want validating information.
Where to go from here…
Once you understand some of these common mental errors your first response might be something along the lines of, I want to stop this from happening! How can I prevent my brain from doing these things?
Its a fair question, but its not quite that simple. Rather than thinking of these miscalculations as a signal of a broken brain, its better to consider them as evidence that the shortcuts your brain uses arent useful in all cases. There are many areas of everyday life where the mental processes mentioned above are incredibly useful. You dont want to eliminate these thinking mechanisms.
The problem is that our brains are so good at performing these functions they slip into these patterns so quickly and effortlessly that we end up using them in situations where they don’t serve us.
In cases like these, self-awareness is often one of our best options. Hopefully this piece will help you spot these errors next time you make them.