How does the context impact our choices?
Every day, we make countless decisions; some are crucial, others less so. But how does the brain process these decisions? Are our choices consistent over time and context? What do human decision-making and artificial intelligence programs have in common? How do marketing techniques impact our choices? And why are our actions sometimes not aligned with our principles?
In this series of six articles on cognitive science, we will examine the decision-making process, the economic theories that help explain it, and a few of its business and real-life applications:
1- How does the context impact our choices?
2- Are you a rational human being? Let’s see what cognitive science says about it
3- Are you a risk taker? Long answer short: it depends!
4- Nudging: the mechanisms of influence
6- Between human and artificial decision-making processes
Let’s get started!
The prefrontal cortex: the bandmaster of our choices
The brain is composed of different parts, each responsible for specific cognitive functions; amongst them, the prefrontal cortex is the bandmaster that orchestrates the choices we make, from relatively easy ones (should I continue reading this article, or am I already bored?), to more potentially life-changing decisions (should I buy a house? Should I move to another country?)
The decision-making process involves different functions: integrating different pieces of information from our environment, comparing the values of available options, anticipating a reward from a specific option, weighing the costs of choosing between different options, etc. Depending on the function, different parts of the prefrontal cortex can be activated.
Is all processed information reliable?
To make decisions, the brain must process and analyze information. However, it can be tricked into evaluating the received information incorrectly.
See the example below. At a glance, you think that the middle line is the largest, and the upper is the shortest, although all three have the exact same length (I personally used my pen to make sure all of the edges were aligned when I came across the picture). An optical illusion is created by positioning the arrows either inwards or outwards, altering our perception of the options and leading the viewer to think of the second line as longer than the first one.
Known as the Müller-Lyer illusion, this example illustrates how the brain processes information in its specific context rather than at an absolute level. By adding context to options, each option is assigned a greater or smaller value, illusory or not.
While errors in evaluation are not limited to sensory perception, they can impact decision-making on a broader scale.
How can context alter our choices?
Consider the questions below:
- A bat and a ball cost $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost?
- If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets?
- In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake?
They constitute a classic psychological test known as the Cognitive Reflection Test (CRT).
These questions share a particularity: they have intuitive wrong answers (100 minutes for question 2, for instance), and require thorough reasoning to give the correct answer (5 minutes for question 2).
In 2007, Alter & al performed an experiment where they presented participants with this test. Half were issued a “fluent” version, with questions printed in a clearly readable font, whereas the other half got a “disfluent version,” printed in a smaller, less clear, italicized font. The results may come as a surprise: the “disfluent” version prompted more correct answers!
The questions were the same for everyone, fluent or disfluent versions assignment was random, and yet surprisingly, a simple font manipulation led to different results. This example illustrates how presenting information can easily alter our choices.
System 1, System 2: dual system thinking
Daniel Kahneman, a Nobel prize-winning economist, defines two modes of thought: System 1 and System 2.
System 1 thinking is defined as the process by which we make fast, automatic decisions in our everyday lives, mainly driven by the willingness to consume as few cognitive resources as possible (cognitive ease). System 2 thinking, on the contrary, relies on the slow, thorough decision-making process required for more complex and important decisions. In the CRT dual experiment above, the fluent version created a familiar context for participants, leading to cognitive ease and the use of System 1 thinking for many of them. Meanwhile, the disfluent version created a sort of cognitive strain with its unfamiliar, difficult-to-read font. This strain was extrapolated from reading the questions to answering them, and led more people to switch from System 1 to System 2 thinking, thereby answering the test correctly.
Framing effect in marketing
Brands are well aware of these mechanisms and know-how information presentation can impact our ability to evaluate different options. Therefore, they pay close attention to how their offers are presented to potential customers to ensure a higher conversion rate. For instance, studies have shown that people are more likely to complete a purchase when shipping is free. Instinctively, buying a $12 t-shirt with free shipping seems more appealing than a 10€ t-shirt with 2€ shipping fees.
Likewise, dairy companies would rather mention “25% fruit” on a fruit yogurt container than “75%” yogurt, as people would believe the first option to be superior.
Stay tuned for the second part of the article!
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Originally published at https://www.fifty-five.com.