Tuesday, March 5, 2013

Predictable Irrationality

I've already talked a bit about love and first sight; how we are fooled into loving a fantasy we've invented in our heads of another person we just met. I've also gone on about how 'being yourself' is quite impossible in a sense. But what about our ability to decide things?

Statistics show that countries which have the lowest donor rate have only one vital difference between countries with near 100% donor rates, and it's not a matter of culture for the most part; countries nearby with similar cultures have drastically diferent rates. What it all came down to was the way the DMV form was written. In countries with very low rates, the form said 'check here if you want to join the organ donor program' and the countries with higher rates said 'check here if you do not want to join the organ donor program'. Our decisions came down to how the form was written. In this sense, our decision was completely in the control of the form author. How in control of your decisions do you think you really are?

If our brains were evolved with the occipital lobe to process vision, which we do more of than almost anything else in a day, and we are prone to optical illusions, how horribly must be fail things we were not evolved to do, like making financial decisions? Look at an optical illusion, even with the foresight that this is an illusion, yet your brain cannot see past it. Yet with many of our day-to-day decisions, we do not have a specialized part of the brain governing and dedicating to it, neither do we practice making financial decisions hours each day. It stands to reason that we are prone to making many more mistakes with financial decisions... and without an easy way to see them. With an optical illusion, you can easily see where you went wrong, perhaps by measuring the length of a part of the picture. No so with many other issues we have.

Yet, we go about our day-to-day lives as if we are the absolute decisions maker, when the DMV form designer possess powers over us. We feel we are generally rational yet we commit to fallacies, if not in this aspect, then another aspect of our lives. We are partitioned in our way of thinking.

Here's another interesting study result. This one was given to physicians. Suppose your patient has a hip problem and all medications you've tried didn't work, and following that the natural course of action is a hip replacement surgery. What would you do, if the day before the surgery, you found out you missed on medication? The majority of the doctors ended up halting the operation, which is good. But what happens if you found out you missed two medications? A much higher percentage of doctors simply let the surgery occur. It seems counter-intuitive; missing two medications means a higher chance of success. But the extra burden of decisions and choices we still have to make drives us into inaction. It goes back to my previous blog posts about participation and choices. Jobs with the most employee programs have the lowest participation rates.

Another study was done regarding choices. Suppose you had three choices: To go to Paris or Rome, both with free food and all expenses paid, or you could go to Rome, but you still have to pay for your own coffee. Quite simply put, the last option is useless as far as a rational brain is concerned. But the fact that there is a Rome option with coffee paid, the study finds out, actually pushes people to pick the Rome option.

Here's something a bit unrelated but also about our mental states. You would figure that being offered a higher incentive led to higher success. After all, who doesn't want a big commission? As studies show (and this has been replicated many times for decades), yes, that is indeed true, but only for problems with typically one solution and an obvious road of attack. If the problem requires a creative approach with critical thinking, a higher incentive actually decreases our performance because the higher incentive led to the participants being more near-sighted. it stifles creativity. This must be taken into account in a business, because business and many problems of today are not simple one-answer and done problems, like washing the dishes. The Wright brothers beat the heavy favorites of their time, who were funded and offered tons of money. Wikipedia beat out all other contenders, one notable one from Microsoft who hired proffessors to write articles. Wikipedia offered nothing to its participants. So it seems the ability to do what you want and master it to be part of something larger than yourself is a driving force. A huge chunk of what comes out from Google comes from sessions where employees were given time to work on any project they wanted. A similar approach is employed in Bethesda, who makes the Elder Scrolls series, most notably Skyrim.