Why Smart People Make Bad Decisions

 

Our brains are overloaded.

• The average American consumes 34GB of data each day, a 350% increase over the last 28 years.
• That adds up to 11.8 hours of information per day, including 100,000 words of information across multiple platforms (War and Peace is 460,000 words long).
• People send and receive an average of 35 texts per day

Unfortunately:

• Texting reduces our capacity for information retention and recall
• Overuse of social media (how much is overuse?) leads to short-term memory loss
• The maximum number of pieces of information a human brain can handle concurrently is around seven

So when it comes to the thousands of decisions that we make every day, our brains create subconscious shortcuts and biases to conserve bandwidth. Consider the following question:

A ball and a bat together cost $1.10. The bat costs $1.00 more than the ball. How much does the ball cost?

Most people will intuitively answer, incorrectly, that the ball costs 10 cents. In fact, in a study of 248 university students, only 21 percent of participants came up with the correct answer, five cents. The same group was then asked another question:

A magazine and a banana together cost $2.90. The magazine costs $2. How much does the banana cost?

In this instance, 98 percent of participants answered correctly. When we are faced with problems that are difficult or have an ambiguous solution, our brains purposefully substitute an easier question in order to come up with an answer, even if it’s not the right one. The answer we come up with may not be optimal, but for most situations – choosing, for instance, what we eat for breakfast – it will be good enough. After all, the consequences of choosing a bowl Frosted Flakes over Fiber One are relatively small. Problem is, at work, we have to rapidly respond to dozens of difficult, ambiguous problems every day, and the cumulative result of our choices determines the course of our careers and companies.

Want to know more about how you make decisions, and how you can be better at navigating the complex web of decisions we face on a daily basis? Check out our complimentary ebook, Why Smart People Make Bad Decisions.