Sometimes, after you’ve spent two hours trying to pick a film on Netflix, you begin
to wonder how the world functions when we all have so many decisions to make.
Elections, referendums, swipe left or right, sleep in or be on time, raspberry ripple or
mint choc chip, you are constantly forced to make choices about every aspect of your
life, from the big to the small.
But it’s hard, isn’t it?
You have to find a balance between what you want and what you think is good for you and
the people around you.
And there’s so much compromise because you can’t research every choice so you just
have to go on the limited information that you have.
So, if you want to know why you broke up with the love of your life, why you paid to watch
Zoolander 2 and why you got that Brony tattoo, it’s because you’re bad at making decisions;
we all are, and this is why…
History; it’s supposedly something we study so we can learn from the mistakes of the past.
The thing is, we don’t really, do we.
We have a very strong tendency to look at how things have been very recently and ignore
things that happened a long time ago.
If you got food poisoning last week from some service station sushi, you’d probably be
pretty cautious about eating any seafood right now.
But if it was a year ago, you’ll happily stuff your face with raw fish like a ravenous
seal.
This is called the recency effect.
Financial investors are a great example of this.
It was greed and wilful blindness that led the world economy to collapse in 2007, causing
the great recession.
So after such a major disaster, we surely have many more checks and balances in place
so this can’t happen again.
Yeah… about that… we don’t.
Nothing really changed, the market recovered and it’s pretty much business as usual because
the stock market, as a whole, focuses on a much shorter window.
2007 is almost 10 years ago, who cares, stocks are up now and your broker just bought a toilet
made of gold; INVEST!
Your brain is absolutely brilliant at spotting patterns, that’s a lot of its job, well,
that and remembering lines of annoying songs, mean things your ex said and places where
you haven’t left your wallet.
Think about facial recognition; you know your friends and family’s faces no matter what
angle you see them from.
You’re not matching an exact image from memory, your brain just sees the pattern of
how their features relate and makes the deduction that it’s your grandma and not your girlfriend,
thank god for that.
So we often see patterns when there are none, like spotting shapes in the clouds.
It’s called the Clustering illusion.
We don’t have a good natural appreciation of the randomness of the universe and we often
feel that events have to even out on a much shorter time scale than they actually do.
Take a coin toss for example.
On most coins it’s roughly 50/50 whether you get heads or tails and, over a long enough
time scale, the results of the flips will show that.
But the previous results have absolutely no bearing on the outcome of the next flip.
If you flipped something like this tails, tails, heads, tails, heads, heads,
tails, heads, tails, heads, …then, everyone’s happy.
But if you flipped ten tails in a row …
tails, tails, tails, tails, tails, tails, tails, tails, tails, tails.
…then there are going to be some eyebrows raised and some people may think you are actually
magic or just cheating.
But both these results actually have an equal probability but if I asked you to bet on the
next flip after, say, five consecutive tails, you’re far more likely to say heads than
after just one or two flips of tails.
This is called the Gambler’s Fallacy and is the main reason why you shouldn’t take
your credit card to the casino.
Another major part of decision making is salience.
This just means how noticeable or memorable something is and the most common area where
this is a factor is safety.
If you ask many Americans to list the biggest dangers facing their country, they are very
likely to list terrorism.
Around 3,500 US citizens have been killed by terrorism in the last 20 years, and although
this is a lot of people, it’s tiny in comparison to things like car accidents and cancer and
about the same as the amount of people who drowned in swimming pools.
But major events, such as 9/11, understandably take up a much more important and memorable
place in people’s thought processes.
No one sits down with a coffee, reads an article about lung cancer and immediately panics and
starts shooting smokers.
What happens is that extremes, both good and bad, have a much bigger influence on us than
they should.
Say you’d been drinking tequila most weekends for a few years and the worst that had happened
was a headache and the occasional awkward text.
But then one Saturday, you go a little overboard and end up dressed as Pikachu, asking random
girls to capture you in the Pokeball and suddenly it’s adios tequila for the rest of your
life.
All the good times are forgotten, and that one massive cringe moment stays forever.
This is called salience and it can majorly skew your decision making.
Since we all find decision making difficult, for wider issues we often take the easiest
option; just going along with what everyone else does, this is called the bandwagon effect.
It happens all the time and often causes people to reject their own opinion for the sake of
joining the herd.
The fashion industry demonstrates this constantly.
Your favourite outfit of ten years ago probably looks like something you’d wear to a costume
party now, and it’s not because you suddenly looked in the mirror and realised that three-quarter
length shorts and a scarf made you look like a confused sailor, you just saw that no one
else was wearing it anymore so you took it off.
But you really should have burnt it.
Politics is heavily affected by the bandwagon effect and it’s why the idea of “momentum”
is so important.
We, the voters, want to feel like we are on the winning side, so feeling that a candidate
is going to win makes people more likely to vote for them and creates a kind of feedback
loop.
You see this in the Presidential primaries in the US, and the obsession over states like
Iowa and New Hampshire since they vote before the others.
But I don’t want you to think we are complete sheep and immediately just follow what the
majority say.
We also have a donkey like stubbornness when it comes to changing our minds.
The bandwagon effect is strong when someone is undecided but, once their choice has been
made, a large opposition opinion is actually more likely to make them double down on their
choice, rather than reverse their position.
Confirmation bias is our tendency to interpret everything in a way that fits with what we
already believe, rather than using new information to change our position.
If you need an example, just look at every argument on the internet.
Rather than listening to the other person’s ideas, we just spend hours on Wikipedia trying
to find something to undermine them and then hoping that they use the wrong version of
“your/you’re” so we can throw it in their illiterate face and call their mother
a Nazi slut, or something like that.
There is a book called Dice Man by Luke Rhinehart, about a psychologist who tests if you can
give up your morals by passing your decision making over to the roll of a dice, so you
can say “hey, it wasn’t my choice to steal this bagel, the dice told me to do it”.
And if you get away with stealing the bagel then you might begin to think you have hit
on some brilliant decision making process.
This is called Outcome bias.
If you had a multiple choice test and you decided to choose by always picking the longest
answer, and then you got an A on that test, you would be inclined to think that this was
a good way to do all tests.
This positive outcome would justify your stupid tactic and you might decide to do it again
because, hey, it worked last time.
It’s similar to the idea of lucky objects; just because that underwear got you through
one exam, please don’t wear them all the way through finals, you’ll get some sort
of infection.
Outcome bias is often confused with hindsight, and although they have a lot in common, hindsight
is about memory, in that you change the story of what happened after you see the result,
making it seem like you knew what was going to happen all along; no you’re not the messiah,
you’re a very naughty boy.
And finally we come to anchoring, which is probably something truly awful on urbandictionary.com.
Basically, you are a little limpet and you like to cling to the first rock that you come
across.
The first information that you get on a subject is often likely to carry much more weight
than it should.
It’s a useful tool in negotiation since the first amount someone says is then the
starting point and then both sides dance around that number.
So if you want to haggle for a low price, make sure you are the first one to throw out
a number.
Anchoring also has a big impact in tests and surveys since if you begin the question with
something negative, you are more likely to get a negative answer.
Unsurprisingly, politicians use this to huge effect all the time, using a seemingly innocent
poll to actually influence the way people are voting.
So now you are left with a conundrum; which is more important recency or anchoring?
We talked most recently about anchoring but we anchored on recency… are you doubting
your decision making yet?