Why we make bad decisions in our lives.
This answer could begin with the following sentence because every person I know wants to know the formula for happiness. It is quite natural that a person wants to be happy, but why do we still act against our wishes. Is it human? Great, yes, I say.
If you quote Thomas Hobbs, then we all know what the formula for happiness is. I have known since time immemorial that our most significant ancestor has been the survival formula. According to him, life was brutally lonely, dirty, very poor, and shirt. Mortality was high, and 70% of people did not reach the age of majority, which meant that the only purpose of life was to survive in the evening.
Since then, there have been several revolutions in human development, first in agriculture, then industrial, and last in technological development. Why then are we not happy and think about the things we had 10,000 years ago and how much we have evolved, yet we are sometimes unhappy and cannot allow everything we want and make bad decisions.
However, the answer to this is quite the same: we are all someone’s mother’s fathers, sisters, brothers, grandmothers, colleagues, friends, and so on. Each has their own opinion about being happy and the opinion that we know what makes us happy. And I can say for sure that your mother and friends may not know precisely what makes you happy.
General reasons for making wrong decisions.
How many decisions do you think you will make in the average day? Ten? Hundreds, maybe? Psychologists believe that the number is actually in the thousands. Some of these decisions have a significant impact on our lives (such as going to college, getting married, or having children), while others are relatively minor (such as a ham or turkey sandwich for lunch).
Some of these options turn out to be good (you choose a college that leads to a successful career), while others are not so good.
If you look at yourself in your life and think about some of the poor choices you have made, you may be wondering why you made a decision that seems as foolish as you feel now. Why did you marry someone who was all wrong to you? Why did you buy a too expensive boat when you have four children and need a much larger vehicle? What did you mean when you bought those terrible earrings jeans last fall?
While you are likely to continue to make bad decisions, you can gain a deeper understanding of their sometimes unfair choices. You may help make poor choices in the future by making better choices and knowing how these processes work and affect your thinking.
Why using internal shortcuts sometimes leads to a wrong choice.
If we had to think about every possible scenario for every possible decision, we probably wouldn’t be able to do much work a day. To make decisions quickly and economically, our brains rely on several cognitive shortcuts known as heuristics. These psychological rules allow us to make decisions fairly quickly and often quite accurately, but they can also lead to incomprehensible thinking and bad decisions.
One example of this is a vile little spiritual shortcut called anchoring prejudices. In many different situations, people use the initial starting point as anchors, which are then adjusted to obtain a final value estimate. For example, if you buy a house and know that homes in your destination neighborhood typically sell for $ 358,000 at an average price, you would probably use that figure to start negotiating the purchase price of the house of your choice.
So, what can you do to minimize the impact of these heuristic potential negative impacts on your decisions? Experts believe that just their awareness can help. Deviations in anchor adjustments can help to identify various possible estimates. So when you buy a new car, offer reasonable prices rather than focusing on the overall average price of a particular vehicle. If you know that a new SUV costs anywhere between $ 27,000 and $ 32,000 for the size and features you want, you can make a better decision about how much to offer for a particular vehicle.
Anchoring effect that brings you out of bad decisions.
The anchoring effect is cognitive bias, i.e., a person’s natural ability to stick to the first information (anchor) when making decisions. That can be, for example, the price of a product/service or some other arbitrary (numerical) quantity. Anchorage and stereotypes about someone or something can also be considered anchoring.
In 1974, Amos Tversky and Daniel Kahneman were the first to describe the anchoring effect in more detail. According to them, the anchoring result is the disproportionate effect of the initial value on the decision-maker.
Amos Tversky and Daniel Kahneman conducted a survey asking respondents to answer what percentage of UN countries are African countries. Before that, however, participants had to pull a lottery wheel with numbers from zero to one hundred (0-100). The lottery wheel always stopped at specific predetermined numbers (e.g., 10 or 65 for one group of subjects). When the bike stopped, people asked if they thought the percentage of African countries was above or below the number on the bike, and then they were asked to give an exact percentage estimate. The median score for people whose stopwatch stopped at number 10 was 25%, while the median score for those whose stopwatch stopped at 65 was 45%. Here is a classic example of how a person is “anchored” to the information received first or very close to that information.
We are perhaps more familiar with these terms of reference, which reads 1 + 1ón 2. The children of kindergarten already know this. But for some reason, in our adult lives, we tend to rationalize this simple fact very often.
Terrible comparisons that lead to wrong choices.
How do you know you just bought a lot on this digital tablet? Or how do you know the price paid per gallon in the grocery store was fair? Benchmarking is one of the main tools for decision-making. You see the price of a regular tablet or a gallon of milk, so you can compare deals to find the best possible price. We gave a value depending on how the objects do compare to others.
But what happens when you make wrong comparisons? Or if the elements you are comparing your choices to are not representative or equivalent? Think about it – how far would you go from saving your way to $ 25?
If I tell you that you can save $ 25 by 75 euros on a 15-minute drive, you’re likely to do so. But when I tell you you can save $ 25 on a $ 10,000 item, are you still ready to save money? In most cases, people are less willing to travel to save money on a more expensive item. Why? Twenty-five dollars is still worth the same amount in both cases.
In such cases, you have just fallen victim to an erroneous comparison. Because you compare the amount you save, you pay; $ 25 seems much better than comparing it to a 75-cent item when it’s comparable to a $ 10,000 thing.
When making decisions, we often make quick comparisons without thinking about our choices. To avoid bad decisions, the logic of options and thoughtful investigation can sometimes be more important than relying on your immediate “gut response.
Bad decisions that are too optimistic.
Surprisingly, people are naturally born with optimism, which can hinder decision-making. In one exciting study, researcher Tali Sharot asked participants that they thought the probability was that several unpleasant events would occur – such as a robbery or the onset of a final illness. After the subjects had made their predictions, the researchers informed them of the actual probabilities.
When people tell that something is wrong and expectations are lower. They tend to adjust their forecasts to match the latest data. When they discover that something terrible happens to be much greater than estimated, they tend to ignore the newest information. For example, if a person predicts that the death rate from smoking cigarettes is only 5 percent, but then it is said that the actual risk of death is 25 percent, then people are likely to ignore new information and keep their existing knowledge.
Part of this overly optimistic view stems from our natural tendency to think that bad things happen to other people, but not to me. When we hear something that has happened to another person or is unpleasant, we often tend to find things that they could have done to cause the problem. This tendency to blame the victims protects us from acknowledging that we are as tragic and receptive as anyone.
Sharot refers to this as an optimistic prejudice or tendency to overestimate the likelihood of good events occurring while underestimating the probability of bad events. He suggests that this does not necessarily mean believing that things will magically get better, but instead of trusting our ability to manage good things.
What is the impact of this optimism on the decisions we make? Because we may be too optimistic about our abilities and prospects, we are more likely to believe that our choices are the best. Experts may warn that smoking, sitting, or overeating sugar can kill, but our optimistic prejudices lead us to believe that it usually kills other people, not us.