Why we suck at making decisions and what to do about it

You are at a mall, you went there only to buy a towel. You already had breakfast and lunch, so there’s no need (physiologically at least) to get an extra snack.

You walk towards BB&B and you glimpse a Starbucks on the other side.

Evil Self: “Maybe I want a coffee”
Rational Self: “No. Let’s get the towel hangers”

Suddenly your coffee craving is gone. You are looking at towels , comparing prices, trying to make the best decision, until you get to the cashier.

There are two exits from Bed Bath and Beyond:
Far from the Starbucks
Close to the Starbucks

Your brain tells you: Let’s walk next to the Starbucks. It doesn’t mean you’ll buy anything ”

All of a sudden, the beautiful smell of roasted beans is traveling to your nose, triggering your brain’s prefrontal cortex occasioning a glitch in your well intentioned behaviour of not buying a coffee.

This simple example is representative of many others. You feel motivated and inspired right before the actual action or event, but in the execution, you ask yourself:

Why did I chill on the sofa instead of going to the gym? 
Why did I buy this if I didn’t want it?
My favorite candies are M&M’s but why did I buy a Snickers?

We as humans often make bad decisions. We weigh up our decisions on past experiences (how our behaviour is established), our created habits (correlated to our past decision behaviour) plus circumstantial variables that we are faced with before we make the decision.

Decisions = Past Experiences Decisions (behavior)(habits) x variables in front of us (15%discount)+(bundle gift).

Looks complicated, doesn’t it ? Making a decision is not black or white, but traditional economic models follow this straightforward thinking:

If you prefer X vs Y the logical intuition suggest you will choose X. People assign a value to each choice — say, X: 10, Y: 5 better known in economy as utility.

Coffee Issue

So back to our Starbucks example, the moment you get there, you already know your favorite coffee, let’s say a Flat White = 10 vs a Latte = 5; ok bear with me. If the barista tells you “Hey! The Latte is 15% off only for today” You recalibrate your decision Latte = 9 vs Flat White 8 or whatever utility you denominate in your final purchase decision. You drink the latte and you aren’t 100% satisfied, in the end, it’s not a Flat White.

I know you are hating me with x = 10 and all this mumbo-jumbo, but let’s think of another user case.

Donut Issue

This has also probably happened to you. You are with your friend at the mall trying to get a towel (I know it looks likeI need one), same as before you’ve already eaten, you aren’t hungry, no need for a snack. Your friend tells you “hey let’s go for a donut (or any other snack)”, you love donuts, but you don’t want one. The moment you get there your brain starts savoring the amazing donuts, you see 20 different donut options, different prices, different flavors, different doughs; your brain is having a glitch, you didn’t want one, but now you are craving one.

A second before ordering, your friends asks you “What do you want”? One of the most difficult questions in this world… What do I want? Let’s say your favorite donut flavor is Strawberry, with an utility = 8
but you can have: Powdered Strawberry Filled = 8
and Powdered with Strawberry Kreme Filling = 8
and Strawberry iced = 8 
and Strawberry Shortcake Eclair = 8
and Glazed Raspberry Filled = 7 
and Powdered-Blueberry-Filled = 7.

The “ands” continue, pricing, promos, combos, the nice ads, your mind starts getting confused, so you say “I’ll get the pumpkin one”. What? But your favorite flavor is Strawberry?

Decision making is a tough subject, amazing behavioral economists and psychologists are trying to understand how our brain work every time we face decisions. Interestingly enough, there’s a new wave trying to solve such issues call Neuroeconomics. According to the Center for Neuroeconomics Study at Duke University:

Neuroeconomics is an interdisciplinary field that seeks to explain human decision making, the ability to process multiple alternatives and to follow a course of action. It studies how economic behavior can shape our understanding of the brain, and how neuroscientific discoveries can constrain and guide models of economics.

Paul Glimcher leader in this field argues that a neuroscience-based model he proposes actually outperforms the standard economic theory by explaining how people behave when faced with lots of choices.

This model is based on the brain’s ultimate energy eater. The brain tissue is the most expensive bill the body has to pay everyday, it consumes 20 percent of our energy even though, it is only 2 to 3 percent of our mass. So think about it this way, our neurons are so energy-hungry. Suddenly, we were faced with a decision to make, and let’s say it triggers a neuron, we make the call no big deal, but then you have multiple and multiple options and choices and decisions all day long, each choice triggering and triggering neurons; leading you to make a bad decision, or facing what is called cognitive effort or decision fatigue.

To represent our Starbucks-Donut model with the Glimcher brain’s decision-making model. Imagine a simple decision-making scenario as the coffee drinker we are. A person gets two cups of coffee. To keep things simple we’ll assume this man’s brain represents each choice with a single neuron. The more awesome or attractive the choice is, the faster the neuron fires. The user basically compares neuron-firing rates to make his choice . Simple isn’t? If your favorite coffee is a Flat White, your neurons get excited, and so you would choose that one against others.

The same man (flat white lover) now gets a short Flat White cup vs a big aka venti Moka Cappuccino, the man doesn’t know what to choose (Strawberry vs Pumpkin), because his neuron could compute the newest offer with 85 spikes per second, and it’s harder for the user to distinguish 85 spikes vs 100 spikes (as original flat white spike).

According to Glimcher, what happens is that the brain recalibrates so it can avoid that problem, and it does so by changing the scale to best represent the new choice. So if Flat White taste is what matters to you, your brain will decrease to a lower firing rate of the Venti Moka, allowing you to make a decision easier. The tricky part is when your brain increases the values of the other choices. Let’s say, you don’t really like Moka Cappuccino, but on the firing & spike time you value a bigger size as a cost benefit, and the offer is a Venti vs a half Flat white, it will increase the value of that choice, decreasing the value of what you really like. Glimcher model predicts the firing rate decreasing when the increase of another value has been added.

Ok. So what can I do ?

As Glimcher has taught us, our brain can sometimes trick us, and fool us into making bad decisions. The way I see it there are three ways to go:

  1. Avoidance: If you know you don’t have the willpower when you are in front of the Starbucks, or the moment when you see your bed. Avoid it. Go to the gym directly from the office, don’t wait until you get home. Take the exit away from the Starbucks. It’s just easier to avoid temptation before it happens.
  2. Exclusion: Rather than pick what you hope is the best, instead just start eliminating the worst element from the choice set. So, if you couldn’t avoid walking next to Krispy Kreme, and now you have different choices to select; just ask yourself, what is the worst cost-benefit option? This will help, because reducing the number of options will give you clarity.
  3. It’s a Process: Better decision-making is not an event, but a process of learning more about yourself. So just relax, and eat that donut.

Personally, my goal is not to change every decision that I make, but to question “why?”, and maybe improve little by little my future choices. I hope this article will help you consider how to do the same.

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