Poor choice?

How many decisions do you believe you make on a daily basis? Hundreds? Thousands? Hundreds, maybe? According to psychologists, the number is in the thousands. Some of these choices have far-reaching consequences throughout our lives (such as whether or not to attend college, marry, or have children), while others are rather insignificant (like whether to have a ham or turkey sandwich for lunch).

Some of these decisions prove to be excellent (you select a college degree that leads to a rewarding career), while others prove to be less so (the turkey sandwich you selected was awful and it upset your stomach)

So, if you reflect on your life and consider some of the awful judgments you've made, you might find yourself asking why you made those decisions in the first place. Why did you marry someone who was completely incompatible with you? When you have four kids and require a bigger vehicle, why did you buy that costly little car? When you bought those hideous high-waisted pants last fall, what were you thinking?

While it goes without saying that you will continue to make poor decisions, you may learn more about the process that leads to these often unreasonable conclusions. There are several elements that lead to bad decision-making, and understanding how these processes function and influence your thinking may help you make better judgments in the future.

Mental shortcuts can sometimes lead to incorrect decisions.

We wouldn't get much done in a day if we had to consider every possible circumstance for every conceivable action. Our brains use a number of cognitive shortcuts known as heuristics to make rapid and cost-effective decisions. These mental rules-of-thumb assist us to make rapid and precise decisions, but they can also lead to fuzziness in our thinking and poor decisions.

The anchoring bias is a subtle little mental shortcut that demonstrates this. People use an initial beginning point as an anchor in a variety of scenarios, which is then altered to produce a final estimate or value. For example, if you're buying a house and you know that homes in your target neighborhood normally sell for $358,000, you'll most likely use that amount to negotiate the purchase price of the property you want.

Coming up with a variety of possible estimates can help with the anchoring bias. So, rather than focusing on the total average price of a certain vehicle, come up with a range of fair pricing if you're buying a new automobile. You can make a better judgment about how much to offer on a certain vehicle if you know that a new SUV with the size and amenities you desire will cost between $27,000 and $32,000.

You Often Make Poor Comparisons

How do you know you got a decent price on that digital tablet you recently purchased? Or how can you know if the price you spent at the grocery store for a gallon of milk was reasonable? When making decisions, one of the most important tools we employ is comparison. You know what a tablet or gallon of milk costs on average, so you compare the offers to pick the best deal. We assign value to products based on how they compare to others.

What happens, on the other hand, when you draw poor comparisons? Or what if the goods to which you're comparing your alternatives aren't representative or comparable? Consider the following scenario: how far would you go to save $25?

You'd probably do it if I told you that going 15 minutes out of your way would save you $25 on a $75 purchase. Would you still be ready to go out of your way to save $25 on a $10,000 item if I informed you that you could save $25? People are usually less eager to drive further to save money on a more expensive item. What is the reason for this? In either situation, twenty-five dollars is worth the same amount.

In such cases, you've simply been the victim of a flawed comparison. When you compare the amount you save to the amount you pay, $25 appears to be a lot better savings when compared to a $75 item than when compared to a $10,000 item.

You Can Be Too Optimistic

Surprisingly, humans have an inherent optimism that might make it difficult to make excellent decisions. In one fascinating study, Tali Sharot asked individuals what their chances were of experiencing a variety of unpleasant occurrences, such as being robbed or developing a fatal illness. The researchers then told the subjects what the actual probability were after they had submitted their guesses.

People alter their predictions to meet the new knowledge they learnt when they are told that the risk of something horrible happening is lower than they predicted. They prefer to ignore fresh information when they realize that the risk of anything unpleasant happening is considerably higher than they anticipated. For example, if a person estimates that the chance of dying from smoking cigarettes is about 5%, but then learns that the true danger is closer to 25%, they are likely to disregard the new information and remain with their original estimate.

Part of our natural predisposition to believe that unpleasant things happen to other people but not to us contributes to our unduly optimistic view. When we learn of a tragic or terrible event that has occurred to another person, we often look for things that the individual may have done to trigger the problem. This proclivity to blame the victims keeps us from admitting that we are just as vulnerable to catastrophe as anyone else.

This is known as the optimism bias, or our tendency to overestimate the likelihood of good events while underestimating the possibility of catastrophic events, as described by Sharot. She claims that the problem isn't so much a belief that things would just fall into place on their own, but rather an overconfidence in our own talents to make good things happen.

Although experts warn that smoking, being sedentary, and eating too much sugar might cause death, our optimism bias encourages us to believe that it is largely other people who die, not us.