Psychological mechanisms that fuck with your ability to make good decisions
By Annika Lagoni, Consultant, proacteur
It is important to be able to make the best possible decisions based on the available information. Unfortunately, a number of psychological mechanisms prevent this. These so-called biases cause us to make bad and irrational decisions. The good news is that the more you are aware of the potential pitfalls, the easier it is for you to see through, and navigate around them in your decision-making processes.
Our brains are programmed to make several mental errors that impact our rationality. Examples of our irrationality are not hard to come by in our everyday lives: We eat too much, we spend too much money, and save too little. We make decisions based on immediate needs – even important decisions about the future.
The reason is that we are constantly faced with many decisions, but we simply do not have enough mental capacity to reflect on all possibilities and their outcomes. Instead we use heuristics, emotions and experience to make decisions – also known as cognitive biases. A cognitive bias is a sort fallacy that makes us prone to make a certain decision in a specific situation. There are more than 180 cognitive biases that influence the way we process data, think critically, and perceive reality.
The psychological illusions of your brain
This knowledge about our mildly peculiar – and often inadequate – ability to make decisions stems from the Nobel prize laureates Daniel Kahneman and Amos Tversky, who for several decades have studied human decision making and proven the existence of several biases.
Below you can see an overview of some of the most frequent biases that influence your decision-making processes. Once you are aware of which biases you make and why, you can deliberately work around them and make better decisions.
How do our biases arise?
To answer the question, we need to address the difference of fast and slow thinking, also known as the Dual Process Theory.
The human brain operates based on two different systems, known as System 1 and System 2. Basically, System 2 is what we use for mentally demanding tasks, while System 1 is used when we shoot from the hip.
If you are about to get run over by a car, you will automatically throw yourself away to avoid the situation. That is your automatic System 1 at work, since it is responsible for everything you do by intuition. System 2, on the other hand, gets activated if you have to solve a complicated calculation, such as 5735 x 390.
System 1 operates way faster than System 2, because you make decisions based on habits, heuristics and past experience. In turn, the quick choices result in you not thinking about the long-term consequences and making poor decisions based on cognitive biases.
Cognitive biases happen because System 1 gets tricked. And because System 1 operates subconsciously, we do not detect when it happens. But as a rule of thumb, we use System 1 around 80-95% of the time we make decisions. Thus, one way to prevent cognitive biases is through consciousness (“Now I will not be tricked by Loss aversion”), as the very awareness of it activates your reflective thinking in System 2. With this knowledge you are now far better off to make decisions without anything fucking with your brain.