Why we make bad decisions
Dan Gilbert, a behavioral psychologist explained in his video how we are terribly accurate in making poor decisions. According to him, as a result of our “lazy thinking”, we consistently make value judgments based on past decisions even when it’s contrary to our well-being. For example, when considering purchasing a trip to Hawaii, we will often think back to that last trip we took to the Caribbean islands. Even though they are two completely separate decisions with our own set of pros and cons, re rely on past experiences for our decision-making in the present. The problem is, in real life the examples aren’t so simple and we make mistakes when we estimate the odds and the value (even after watching his lecture on how bad of decision makers we are). We overestimate or underestimate the odds of success and we overestimate or underestimate how much we will actually value the gain. According to Dan Gilbert, estimating odds is a piece of cake compared to estimating the value. We also make a couple of mistakes by comparing the scenario to the past instead of the possibilities and by comparing at the time of purchase not our actual experience. For example, at the music store, the stereo might sound better compared to another one. When we purchase the “better sounding” one at home though, we will never compare that experience again (because there is no better or worse on besides the one that we purchased).
Apparently there are 3 ways to make better decisions and we can use these whenever we need to make a decision: 1. Ask yourself how you can check or better assess the actual odds of success. 2. Compare things to the possibilities and net results.
3. Do not compare against the immediate options on the spot, test the value against the actual experience. When we cannot easily verify the odds, we can sometimes just ask some questions to ourselves. For example, if a doctor wants to figure out which intervention (out of several he...
Please join StudyMode to read the full document