To determine what leads people to make bad decisions, it's helpful to consider what we would need to create the ideal decision-making environment. Most theories on decision-making are based on what the so-called "rational" decision-maker will do when faced with perfect information, including a complete and total knowledge of all possible outcomes with absolutely no uncertainty.
In the real world, we know that the information available to us is rarely perfect or complete, and that we can predict very little about our choices' consequences until we actually make them. Although these two factors alone are enough to explain a few bad decisions, perhaps the biggest reason for our poor choices lies in the fact that most human behavior is simply not rational.
In fact, much of our poor decision-making stems from the subconscious ways we trick our brains to make choices that we later realize are completely wrong. Take, for example, the idea of a self-serving bias, which enables humans to see themselves as much better than they are. If 80 percent of people rate themselves as "better-than-average" drivers, it's clear that a large number of us are fooling ourselves [source: Huebscher].
Humans are also irrational in how they frame information, or fail to comprehend how the sources of this information may frame it to sway their opinions. For example, most people are much more likely to undergo an operation with a reported 80 percent success rate than one with a reported 20 percent risk of death, even though these numbers represent the same level of risk [source: de Martino].
Our lack of rationality is even more apparent when one considers how people view death. When economist Peter Bernstein, author of "Against the Gods: The Remarkable Story of Risk," asked people to estimate their chances of dying of natural causes versus unnatural causes, respondents were much more likely to overestimate their risk of death by murder or accident, while vastly underestimating the risk of death from heart attacks or other natural causes. This suggests that even when information is readily available, people may still not use it to make rational, informed decisions. In the case of their health and lives, where statistics show that people are far more likely to die of natural causes, people waste time worrying about homicides or accidents instead of making conscious decisions to improve their health and maximize their life spans.
We're confronted with choices every day. Sometimes we get them wrong, and sometimes right. Wrong, of course, tends to sting more than right satisfies. Why do we sometimes decide poorly? Sometimes it's just a question of bad data or bad use of data. Consider a simple example. When we study choices for cell phone service, we may look at objective ratings for customer service, representing the average of thousands of consumer reports. However, if someone we know says he or she had a bad experience with a particular cell service provider, we tend to give that one opinion more weight than any of the thousands that have been reported by others. Likewise, a lack of good information overall can lead to bad decisions. Finding the right information to study requires several decisions regarding which source of information to believe. Sometimes, we put a higher priority on fitting in with the herd than on making a strong decision. Mental fatigue often leads to post-decision regret, as does a hard-wired enjoyment of endorphins that may result from an otherwise bad decision.
Bad, and good, decisions can get even thornier to make when they get more personal, involving ethics and morality. Neuroscientists have studied how the brain behaves when a person has to make an ethical decision. In one study, subjects were asked to consider whether they would kill someone else with their own hands in order to save a large group of people. When considering this dilemma, the area of the brain associated with emotion and the area of the brain associated with reasoning lit up, as did the area that recognizes conflict in the brain. These results seem to indicate that people could see the reason in sacrificing one person to save many, but they still had emotional guilt about doing the deed. Respondents were also asked to consider if they'd be OK with that single person dying to save the group, provided they didn't have to get their hands dirty. In that scenario, only the part of the brain associated with reasoning lit up, indicating that the subjects just weighed what was best for the group, without considering how they felt about committing such an ethically questionable act as murder.
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