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I enjoy reading technical books. After I finish a textbook, I go to the library and walk around, purposefully getting lost amongst the 6 (is that right?) floors of Newman Library here on campus. The last time I did this, August 18 according to my check out slip, I found a wonderful read: Straight Choices: The Psychology of Decision Making.

It’s British-written, thereby justifying the use of “straight choices” whereas the American connotation clearly would suggest some type of modern-day, sexual choices advise guide. Anyways. The subtitle “the psychology of decision making” is what this book boils down to. It’s a remarkable read for a university textbook, summarizing a field rather new to me without sugarcoating any of the complexity of probabilities and field-related jargon.

You hear frequently that people aren’t logical and that emotion plays an important role in our decision making. In fact, this is correct but doesn’t even approach a full assessment of why we spit out illogical decisions left & right. Take, for instance, decision weighting, a phenomenon illustrating that we evaluate the probability of an outcome to extremes when the likelihoods are minimal. Here’s their example:

Problem 1: Choose between (i) a 0.001 chance of winning $5,000; (ii) $5 for sure.

The probability calculation for this works out to: (i) 0.001 * $5,000 = $5; (ii) 1 * $5 = $5. However, the book shows that 72% chose option (i), indicating “risk-seeking”. Then here’s the second part:

Problem 2: Choose between (i) a 0.001 chance of losing $5,000; (ii) losing $5 for sure.

In this case, the probability calculation is still the same. But, here, 83% of people chose (ii), showing “risk-averse behaviour”. Way to go, human brain - “changing your mind” has never been easier. This quick study proves the viability (and profitability) of the lottery systems worldwide. (Here’s the lottery calculation: (i) a 0.000 000 000 1 chance of gaining $5,000,000 (0.000 000 000 1 * $5,000,000 = + $0.0005); (ii) losing $1 for sure (1 * -$1 = - $1); and those are the good odds).

I really enjoyed the chapter on “Decisions over time” that suggests our remembered decisions tend to make us feel better about ourselves even if we remember them incorrectly, or, conversely, justify a bad decision with some sort of excuse that it was inevitable or not our fault. And, “Predicting pleasure and pain” is amazing, or at least amazing because it shows how terribly illogical our decisions are.

Suppose you are asked to decide between the following two alternatives:
A: submerge your hand in very cold water for 60 seconds, or
B: submerge your hand in very cold water for 60 seconds, and then in mildly cold water for 30 seconds.

Well, obviously, you’re going to chose alternative A. But, people actually don’t prefer that choice. In a study that did not alert people to how long their hands were submerged, but used the same time frames as mentioned above, people rated alternative B as less painful and more likely to be chosen for another round. But this entirely contradicts with how painful the alternatives actually are when you integrate over time. Eventually, it was discovered that two very key factors are in play when experiencing pain: peak level & end level. Alternative A’s peak level is the same as its end level, but not so with alternative B; thus, B was rated as less painful if the experience had to be repeated.

It’s long been agreed that we don’t make very rational decisions and are prone to changing our minds, but, it’s practically impossible ever to reverse this type of decision making. Even the authors pointed out how, in several of their own examples or own studies, they simply couldn’t help but chose the “illogical” choice. There are a mryiad of psychological effects and relations occurring when we make decisions. Take, for instance, how our brains break down with optical illusions.

Rationality and irrationality are both distinctly human - our unshakable curse.

This entry was posted on Tuesday, November 6th, 2007 at 9:50 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.