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Decision Making: The tricks your mind plays

Insight

17 June 2015

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Why do we make the decisions we do?

A few days ago I was lucky enough to hear a talk from Professor Peter Ayton on human decision making. As a researcher, his hour long session was both engaging and thought-provoking, energetically presenting a wealth of evidence highlighting just how bizarre, irrational and easily influenced the human mind is.

I certainly cannot do his talk justice in a short blog but what I can do is take you on a whistle stop tour of what, in my opinion, were the best bits.

In essence what got me thinking was the extent to which research shows how the decisions we make can be influenced by context and comparison. And I’m not talking just the little day-to-day ‘what to have for dinner’ decisions, I’m talking the really big, critical ones. Read the scenarios below that explain more: 

 

Study 1. How much compensation would you reward this victim? 1

Scenario A: A man was shot in the arm during the robbery of his regular grocery store.

Scenario B: A man was shot in the arm during the robbery of a store he was visiting for the first time because his usual store happened to be closed.

Logically you’re probably thinking, “well they’ve both been shot in the arm so the compensation should be equal”. However, psychologists Dale Miller and Cathy McFarland presented participants with either scenario A or scenario B and found that the median compensation awarded to the man in scenario B was $100,000 greater. The researchers concluded that the participant’s decisions had been influenced by the poignancy of the event, even though rationally whether it was his local store or first time visit had no bearing on the victim’s injury. This study offers a great example of how our decisions are influenced by subtle factors that you may not even be aware of. 

 

Study 2. Which parent would you award/deny child custody? 2

Imagine that you are serving on the jury of an only-child sole-custody case following a relatively messy divorce. Which parent would you award custody to?

        Parent A                                                 Parent B

Average income                                    Above-average income
Average health                                     Minor health problems  
Average working hours                          Lots of work-related travel 
Reasonable rapport with the child           Very close relationship with the child
Relatively stable social life                     Extremely active social life

 

What if you had been asked which parent would you deny custody to?

Well, Shafir (1993) asked participants either one of these questions and interestingly found in both cases the majority of participants chose Parent B, making Parent B the preferred parent to both award and deny sole custody. Ultimately what this study suggests is that when we make decisions we look for enriched options, there are no compelling reasons around Parent A but Parent B on the other hand has provides good reasons for both arguments so we pick them. 

 

Study 3. How much would you pay or be paid to attend a poetry recital? 3

In our third and final study students were asked one of two question pairs:

Question pair 1:

Q1 - would you pay £2 to listen to a 15 minute poetry recital?
Q2 - would you go to the same recital for free?

Question pair 2:

Q1 - would you go to a 15 minute poetry recital if you were paid £2?
Q2 - would you go to the same recital for free?

 

 

The researchers found that the first question heavily influenced the response to the second question. Specifically, the students who had been asked whether they would pay to go to the recital were much more likely to say they would attend if it was free (with 38% reporting that they would attend a free recital). However, of the students who had been asked if they would be paid to go to the recital hardly any subsequently answered that they would attend if it was free (8% of participants). This shows how powerfully context can influence our perceptions of situations and in turn our decisions.

So what can we take away from these findings? Well, for me hearing this made me realise how easily influenced and contradictory our decisions can sometimes be. In particular, the framing and context of situations can strongly influence our perceptions, emotions and ultimately decisions with or without us even realising.

This is not something to worry about but it is something to be aware of especially in business when difficult decisions often need to be made, for example, around who to hire and who not to.

As Professor Ayton emphasised, we must appreciate the efficiency of the human brain, which has evolved to help us streamline information, understanding and decision making. However, we must also be aware that these ‘efficiencies’ can lead to, what he termed, ‘cognitive illusions’, an irrational weighting of certain factors.

 

So take time to reflect on your decisions and make sure your human brain is not pulling the wool over your thinking. 

 

 

References

1 Kahneman, D. (2009). Can we trust our intuitions? Conversations on Ethics.

Shafir, E. (1993). Choosing versus rejecting: Why some options are both better and worse than others. Memory & cognition, 21, 546-556.

3 Ariely, D., Loewenstein, G., & Prelec, D. (2005). Tom Sawyer and the myth of fundamental value. Journal of Economic Behavior and Organization, forthcoming.

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