How To Make Rational Decisions And Sidestep Your Cognitive Biases

Your brain is wired for efficiency, for shortcuts, so making rational decisions may not as easy as you think.

man in a red hat in a cafe thinking for article titled “how to make rational decisions”

Photo by @plqml | on Unsplash

Your brain is wired for efficiency, for shortcuts, so making rational decisions may not as easy as you think.

Elliot was a thirty-something father and husband, held down a well-paying executive position with his employer, and provided well for his family. But things changed dramatically after undergoing surgery to remove a benign tumour from the central area of his prefrontal cortex — that area of the brain primarily responsible for executive decision making and cognition.

The operation was technically successful; however, upon his return to work, his previous high performance began to decline. He could no longer seem to make rational decisions because he couldn’t decide what was most important to do. Deliberating for hours over menial tasks, his previously sharp appraisal of conditions and reliable decision making seemed to be absent. A series of poor decisions turned into more dramatic ones, and soon he was fired from his job. He had some savings and a severance package from his prior employer, but he soon lost his money in a risky business venture and became bankrupt.

His private life also suffered. His wife divorced him, then he remarried, and soon after that, his second wife divorced him also. He had no home of his own, his financial situation was dire, and to make matters worse, he failed to qualify for disability benefit because there was no proof that his brain was not working normally. Standard neuropsychological tests did not reveal any significant pathology. Elliot’s cognitive abilities, his motor and linguistic abilities seemed not to be adversely affected by the operation some eight years earlier. He tested well on standard IQ tests of intelligence; his long and short-term memory and perception were intact. But the problems Elliott was experiencing showed that something was wrong.

A Closer Look At Elliot’s Neurology

Doctors could not understand how when Elliott tested well on standardised tests of cognition, that his life had fallen apart so dramatically. In search of answers, doctors referred him to Neurologist, Antonio Damasio. Damasio writes in his 1994 book, Descarte’s Error;

The tragedy of this otherwise healthy and intelligent man was that he was neither stupid nor ignorant, and yet he acted often as if he were… The machinery for his decision making was so flawed that he could no longer be an effective social being.

Antonio Damasio, Descarte’s Error

Damasio realised that perhaps it was not a deficiency or a malfunctioning intellect that was the cause of Elliot’s real-life trauma, but maybe an emotional deficiency. Damasio put Elliot through a series of tests designed to measure his emotional reaction. Damasio exposed him to emotionally charged images of burning buildings, gruesome accidents, and people drowning and asked Elliot to report how he felt. Elliot stated that he remembered how similar images used to bring about strong emotions, but now he couldn’t feel anything. He had no emotional response.

I began to think that the cold-bloodedness of Elliot’s reasoning prevented him from assigning different values to different options, and made his decision-making landscape hopelessly flat”

Antonio Damasio

Damasio’s experience working with Elliot led him to conclude that the apparent schism between emotions and logic is illusory and unhelpful to our understanding of the human brain. Emotions, it seems, are crucial to decision making and reason, especially when it comes to personal values and social interaction. And while it seems clear that all too often heightened emotion can negatively affect sound decision making, Damasio posits that a reduction in emotion can be an equally important source of irrational behaviour.

When we think, we think with our entire psycho-physical organism which extends beyond the boundary of our skin

Often we read, that the so-called emotional brain is an ancient, primitive area, over which the analytical prefrontal cortex of healthy functioning people can, and should, exercise control. To express oneself stably, we must exercise control over our emotions. However, this idea presents an inaccurate view of the structure and functioning of the brain. Separate areas of the brain such as the prefrontal cortex, and amygdala — which is often called the brain’s emotional centre — do not have sole control over decision making. Making decisions is a vastly complex process that involves many areas of the brain, body and environment working in unison. When we think, we think with our entire psycho-physical organism which extends beyond the boundary of our skin.

How Rational & Irrational Decision Making Looks In the Real World

I wonder if we are at all capable of making rational decisions. Often we abdicate our responsibility to others such as doctors, economists and politicians. It’s as if their social position or education makes them any better at making rational decisions than the rest of us mere mortals. But this may be a poor decision in its own right. Consider the following example.

A 1986 paper by Robyn Dawes (PDF) cites a newspaper article which reported a well-intended surgeon who advised 90 of his female clients whom he judged to be at “high risk” of breast cancer, to undergo a mastectomy when in fact they were at low to no risk. Despite his education and clinical experience, the doctor failed to interpret the statistical data correctly and subsequently ill-advised his clients.

This dramatic advice offered by an experienced and supposedly rational professional is not isolated. In a study by David Eddy, 100 doctors were asked to predict the incidence of breast cancer in women whose screening showed possible evidence for the presence of the disease. In consideration of the rarity of the disease (1% at the time) and other relevant data, 95 of the doctors estimated a 75% probability of the presence of cancer. The correct rate was 8%.

The problem here is that due to the amount of data that they needed to analyse, the doctors in the Eddy study had significant difficulty. Instead of thinking in terms of frequency; the number of times something will occur, the doctors were asked to think in terms of probabilities; the likelihood something will happen. An understanding of Bayesian Statistics, which take into consideration base rates is what was needed.

Consider the breakdown of this scenario courtesy of BetterExplained:

  • 1% of women develop breast cancer (and therefore 99% do not).

  • 80% of mammograms detect the illness when it is there (and therefore 20% miss it).

  • 9.6% of mammograms identify the illness when it’s not there (and thus 90.4% correctly return a negative result).

In tabular form, the probabilities look like this:

bayes table

How to read the data

  • 1% of people have the illness

  • If you already have the illness, you are in the first column. There’s an 80% chance you will test positive. There’s a 20% chance you will test negative.

  • If you don’t have the illness, you are in the second column. There’s a 9.6% chance you will test positive, and a 90.4% chance you will test negative.

Suppose you test positive. What are the chances you have the illness?

Here’s how to consider it:

  • A positive means you’re somewhere in the top row of the table, but it could be a true positive or a false positive.

  • The chances of a true positive = chance you have the illness * chance test caught it = 1% * 80% = .008

  • The chances of a false positive = chance you don’t have the illness * chance test caught it anyway = 99% * 9.6% = 0.09504

The table looks like this:

bayes table computed

The chance of an event is the number of ways it could happen given all possible outcomes:

The chance of getting a real, positive result is .008. The chance of getting any type of positive result is the chance of a true positive plus the chance of a false positive (.008 + 0.09504 = .10304).

The chance of illness is .008/.10304 = 0.0776, x 100 = 7.8%.

Read the full article from betterexplained

How We Assess Frequency & Probabilities

Adults and children appear to judge frequency accurately and almost automatically. This type of cognitive processing seems to occur naturally. However, in calculating the probability of a thing happening, we don’t perform as well. When the doctors in the above example were presented with the data in terms of frequency; 10 out of 1000 women, as opposed to in terms of probability; 1% of women, it led to 46% of the doctors gave the correct answer compared to only 8% when the problem was presented in terms of probabilities.

What interesting in terms of frequency judgements, however, is that 54% of the doctors still got it wrong!

Decision making can be the difference between life and death and although not every decision we make will potentially save or end our lives, it is prudent to be forearmed with the right information and know-how to read it. We’re going to get things wrong, but at least when we do, when we make informed decisions, we can take responsibility for the outcome. To place your fate in the hands of someone who you believe knows better than you, as per the above breast cancer example, can be the rock you perish on.

Regardless, in taking personal responsibility for our decisions, there are several almost certain flaws in our thinking that we must become aware of. Availability bias, Conjunction fallacy and framing effects are just a few of the blockades to our rational decision-making processes.

Amos Tversky and Daniel Kahneman in 70s

Amos Tversky and Daniel Kahneman in 70s. Image courtesy of Vanity Fair

Availability Bias

Availability bias is a term coined by Daniel Kahneman and Amos Tversky in their landmark 1973 paper on the judgement of frequency and probability (PDF). It identifies a flaw in human cognition that brings us to the often incorrect assumption that things occur more frequently than they actually do. Take the following example;

Below is a list of names. Read through the list then looking away, estimate the number of women’s names to men’s names. Don’t count, that’s cheating!

  • Jennifer Aniston

  • Judy Smith

  • Frank Carson

  • Liz Taylor

  • Daniel McGrew

  • Henry Vaughan

  • Agatha Christie

  • Arthur Hutchinson

  • Jenifer Lopez

  • Allan Nevins

  • Jane Austen

  • Joseph Murphy

  • Robert Kingston

  • Gilbert Chapman

  • Gwyneth Paltrow

  • Martin Mitchel

  • Thomas Hughes

  • Michael Drayton

  • Julia Roberts

  • Hilary Clinton

  • Jack Lindsay

  • Richie O’Shea

  • George Boyle

  • Britney Spears

Did you notice the women’s names were that of celebrity and the men’s names were not?

Did you overestimate the number of women’s names?

Most people who take part in this test estimate more women’s names than men’s names. They do so because famous names in the above list occur in popular media more often than other non-famous names and are therefore more readily available in memory. What is happening here is greater familiarity rather than greater frequency.

Those things with which we are more familiar we tend to estimate as occurring more frequently. As you may appreciate, the availability bias can cause us all kinds of problems, although, for marketers seeking your pounds, shillings and pence, it’s a beautiful thing.

Conjunction Fallacy

The conjunction fallacy accounts for our propensity to believe that two events are more likely to occur together than separately. Consider the following two scenarios and decide which of the two proceeding statements are true.

John is 36 years old, single, outspoken and intelligent. In college, he studied economics and as a student was deeply concerned with issues of discrimination and social justice and regularly took part in student demonstrations for sexual equality. Which of the following conditions is most accurate?

  1. John is an accountant

  2. John is an accountant and active in the social reform movement

In a later study by Daniel Kahneman and Amos Tversky which looked at conjunction fallacy (PDF), 89% of participants rated option (2) above more probably than option (1) despite the fact that this is logically not possible.

Here’s why;

John has many interests, so for argument’s sake, let’s assume from all the options available to him, there’s a 20% chance he’ll dedicate his time to the social reform movement. Let’s also assume that he had more than one career choice open to him so there was a 20% chance he’d choose accountancy. The product of these separate probabilities (20% x 20%) accounts for a 4% chance John would be both an accountant and an active member of the social reform movement. So you can see the probability becomes smaller.

John would be proud of our calculations methinks.

The combination of both events occurring together in the same space and time is always less than each occurring independently. The conjunction fallacy accounts for people’s idea that the higher the number of information elements, the more likely that complex situation will exist. The truth is that it is the opposite.

Framing Effects

Very simply, how a statement or question related to a given problem is phrased or framed, will influence the answers people offer. If people are told that a given surgery has a 70% success rate, then they are usually impressed. However, tell them instead that that same surgery has a 30% failure rate then they will perceive it as risky. The information is the same, just delivered in a different way. How it’s framed will influence how rational decisions are made.

One of the most remarkable framing effects is a sunk-cost fallacy, which occurs where people make decisions about current conditions based on what they have previously invested in the condition. During the 1960s, British and French governments collaborated on the development of the first supersonic passenger aircraft, Concord. Design and construction costs soared to the point where the project was no longer financially viable. However, both partners continued to fund the venture because they had gone too far in the project to close it down.

Marketers too understand the power of framing effects and often take advantage of our limited awareness of our aversion to loss. Next time you see sales copy that tells you “don’t miss out on this never to be repeated 40% discount”, you’ll know to be on guard.

image of Spock from StarTrek

Spock: A rational being, devoid of emotion

How You Can Make Rational Decisions In Everyday Life

Poor decision making is not reserved for those with acquired brain injury such as Damasio’s Elliot. As we learned, healthy people like you and me make everyday knee-jerk decisions contrary to what the evidence would otherwise convince us to do.

We are primarily influenced by what we think we know and believe and make judgements based on automatic brain processes and established social behaviours. Despite our best efforts and attention to data, our apparent “rational” decisions are often flawed.

The big takeaway here is that rational decision making falls somewhere in the middle ground between raw emotion and cold hard rationality. The closer we are to either end of the continuum, the weaker the outcome of our decisions.

Try to remove emotion, and things won’t tend to go well.

Try to remove analysis of the data, and things may not go well either.

Fear of future outcomes is a significant factor also and can drive decisions at both ends of the continuum. So it’s best that we appraise conditions on their own merits, and try to find a clear and calm mind, balanced between emotion and rationality and go from there.

Thanks for taking the time to read my stuff. Every morning you’ll find me sharing a new thought on life, art, work, creativity, the self and the nature of reality on The Reflectionist. I write also on The Creative Mind. If you like what I’m creating, join my email list to receive the weekly Sunday Letters

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