Story
Sometimes we don’t know which way to go. Unfortunately, the more options there are, and the more decisions we have to make, the worse we get at making decisions. When if comes to decision making, too many decisions and too many options are bad things.
There are 5 things we will cover:
- Limited Amount of Will
- Depletion & Decision Fatigue
- Effects of Decision Fatigue
- Heuristics & Judgment
- Cognitive Biases
1. Limited Amount of Will
- Volition
- Self-control
- Marshmallow Study
2. Depletion & Decision Fatigue
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Iyengar & Lepper
- more choices you have, the less you want to decide anything
- facing six options is better than facing 26
- satisfaction decreases when you have too many options
- calculate odds of happiness based on the number of options
- more options, the less likely you are to have selected the correct one
- how many is the right number? No one really knows
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Ways we handle decision making when we are fatigued
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- First, status quo; expel no effort.
- Second, default setting; expel limited effort.
- Third, event substitution; fight about what to have for lunch
- Fourth, reasoning by simplification
- Kahneman & Frederick call this attribute substitution
- make analogies
- some analogies are better than others but all serve the purpose of simplification
- Fifth, heuristics
- algorithm = will always work (even if it is not the fastest method)
- heuristic is a mental shortcut. It is fast and usually works
- rule of thumb
- readily accessible
3. Effects of Decision Fatigue
- Reduced ability to make trade-offs
- decision avoidance
- impulse purchasing
- impaired self regulation
- Analysis paralysis (over analyzing)
4. Heuristics & Judgment
- Kahneman & Tversky
- Availability
- Representativeness
- Cognitive laziness
- Problem substitution
5. Cognitive Bias
- refers to the imperfection of our information processing heuristics
- heuristics are rules used to prevent information overload
- help us sort out what is important
- fast but have systematic errors (bias)
- attentional bias – pay attention to emotional $or recurring thoughts. When we frequently think about the car we drive, we pay more attention to the cars other people drive.
- availability heuristic = overestimate our future performance when we focus on our past successes; remember wins and ignore losses
- Availability heuristic. If you can remember it, it is important or true.
- Bandwagon effect. Base your behavior on what others are doing.
- Barnum effect (Forer effect). Tendency to rate vague descriptions of personality as highly accurate if you believe they were generated specifically for you. A type of subjective validation.
- belief bias. Strength of belief is interpreted as truth
- confirmation bias = look for confirming evidence of our current beliefs and ignore contradictory evidence
- confirmation bias. Search for supporting data to reduce inconsistency.
- current moment bias. Prefer current pleasure, leave pain for the future.
- fundamental attribution error (correspondence bias). Over-emphasize personality-based explanations. Under-emphasize situational influences
- gambler’s fallacy (Monte Carlo fallacy). A type of mental averaging or limited time frame. Belief that random events currently more frequent than normal will in the short term future be less frequent than normal.
- Google effect. Less likely to remember information you believe is accessible online.
- halo effect. A form of confirmation bias combined with stimulus generalization. Throndike’s observation that positive feeling in one area tend to be transferred to other areas. If you like a person, they are good and trustworthy. If you dislike one aspect, you will dislike everything.
- hindsight bias. I knew it all the time. Post hoc ego proctor hoc.
- IKEA effect. Dan Ariely’s observation that people tend to place greater value on things they make or assemble. A type of effort justification.
- Lake Wobegone effect. Tendency to overestimate achievements (based onGarrison Keillor fictional town where all the children above average). People estimate their intelligence, driving ability, popularity and problem solving skills as being above average.
- loss aversion. Strong preference to avoid loss; twice as strong as desire for gain (Tversky & Kahneman).
- neglect of probability. Tendency to disregard probability, particularly in uncertain situations. Small risks are completely neglected or greatly overrated.
- normalcy bias. Tend to under prepare for disasters because we underestimate its probability and its effect.
- post-purchase rationalization. Find reasons for having made a decision.
- spotlight effect. The tendency to overestimate how much others notice you. Similar to the imaginary audience experienced by adolescents.
- status-quo bias. Tend to be reluctant to change. Stay with routines.
