Why your decisions may not be as rational as you believe

Datablog_decision

If you believe your decisions are rational, you’re probably not listening to reason. Hidden biases and faulty thinking unbalance the decision-making process without us being aware of their influence.

Who shot JFK? Was it Lee Harvey Oswald, alone in the Texas School Book Depository? Was it the Cubans? The Soviets? The CIA? Or could it have been Lyndon Johnson, who succeeded JFK and therefore had the most to gain? Since Kennedy’s assassination in 1963 a small industry has grown up dedicated to unravelling the circumstances of his death. According to ABC, in the last 50 years more than 2,000 books have been written on the subject. Each amasses an argument and presents the evidence to support its case. Or, more accurately, each begins with a conclusion and then seeks the evidence to support it.

We are Pleased to Confirm

This is an example of confirmation bias and it illustrates a startling flaw in our reasoning. A large proportion of our decisions are based not on a clear reading of the facts, but in hidden biases and dodgy reasoning. And if you think that only applies to our private decisions, think again. Decision-making in business can be just as irrational, and is subject to a whole range of factors that distort our better judgement.

In his book Thinking Fast And Slow, the Nobel Prize-winning behavioural psychologist Professor Daniel Kahneman notes that we have two modes of thought. One is logical, analytical and unhurried, and we’re aware of its gears grinding away whenever we approach a complex problem. The other is fast, intuitive and hidden from us. Bad decisions and the biases that drive them are a result of us thinking fast when we need to think slow.

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