Zach Ware

How We Decide by Jonah Lehrer


Amazon Link

If you make things that other people buy or are in any way involved in buying or selling things, you need to read this book. A study in the elements of decision making, the role of emotion versus logic as told by studies. There are points from this book I use everyday still today.

Kindle Highlights:

The physicist Niels Bohr once defined an expert as “a person who has made all the mistakes that can be made in a very narrow field.” From the perspective of the brain, Bohr was absolutely right. Expertise is simply the wisdom that emerges from cellular error. Mistakes aren’t things to be discouraged. On the contrary, they should be cultivated and carefully investigated.


Although we tend to think of experts as being weighed down by information, their intelligence dependent on a vast amount of explicit knowledge, experts are actually profoundly intuitive. When an expert evaluates a situation, he doesn’t systematically compare all the available options or consciously analyze the relevant information. He doesn’t rely on elaborate spreadsheets or long lists of pros and cons. Instead, the expert naturally depends on the emotions generated by his dopamine neurons. His prediction errors have been translated into useful knowledge, which allows him to tap into a set of accurate feelings he can’t begin to explain.


The best decision-makers know which situations require less intuitive responses, and in the next part of the book, we’ll look at what those situations are.


While he enjoys his profits, his ungrateful dopamine neurons are fixated on the profits he missed, as the cells compute the difference between the best possible return and the actual return. (This is a modified version of the prediction-error signal discussed earlier.)


When the possible outcomes were stated in terms of deaths-this is called the loss frame-physicians were suddenly eager to take chances.


Loss aversion is now recognized as a powerful mental habit with widespread implications. The desire to avoid anything that smacks of loss often shapes our behavior, leading us to do foolish things.


Loss aversion is an innate flaw. Everyone who experiences emotion is vulnerable to its effects. It’s part of a larger psychological phenomenon known as negativity bias, which means that, for the human mind, bad is stronger than good.


How do we regulate our emotions? The answer is surprisingly simple: by thinking about them. The prefrontal cortex allows each of us to contemplate his or her own mind, a talent psychologists call metacognition.


After the three hydraulic lines failed, the pilot realized that his trained instincts didn’t know how to land the plane. Emotionsare adept at finding patterns based on experience, so that a person can detect the missile amid the blur of radar blips.


Once the plane was within twenty miles of the Sioux City airport, about twelve minutes from touchdown, the captain started to concentrate on executing the landing. He deliberately ignored everything else. According to Predmore, the ability of the flight crew to successfully prioritize their tasks was a crucial ingredient of their success.


At the same time, the rational brain must also stringently filter out all extraneous thoughts, since they might lead to unhelpful connections. Unless you are disciplined about what you choose to think about-and the pilots of Flight z32 were extremely disciplined-you won’t be able to effectively think through your problem.


Wilson argues that “thinking too much” about strawberry jam causes us to focus on all sorts of variables that don’t actually matter. Instead of just listening to our instinctive preferences -the best jam is associated with the most positive feelings-our rational brains search for reasons to prefer one jam over another. For example, someone might notice that the Acme brand is particularly easy to spread, and so he’ll give it a high ranking, even if he doesn’t actually care about the spreadability of jam. Or a person might notice that Knott’s Berry Farm jam has a chunky texture, which seems like a bad thing, even if she’s never really thought about the texture of jam before. But having a chunky texture sounds like a plausible reason to dislike a jam, and so she revises her preferences to reflect this convoluted logic. People talk themselves into liking Acme jam more than the Knott’s Berry Farm’s product.


What’s interesting is the more time people spend deliberating, the more important that extra space becomes. They’ll imagine all sorts of scenarios (a big birthday party, Thanksgiving dinner, another child) that turns the suburbanhouse into a necessity.


Since they expect cheaper goods to be less effective, they generally are less effective, even if the goods are identical to more expensive products.


This research can also help explain why we get cranky when we’re hungry and tired: the brain is less able to suppress the negative emotions sparked by small annoyances. A bad mood is really just a rundown prefrontal cortex.


This principle also explains why car dealers are able to tack on unwanted and expensive extras and why luxury hotels can get away with charging six dollars for a can of peanuts. Because these charges are only small parts of much bigger purchases, we end up paying for things that we wouldn’t normally buy.


This is known as the anchoring effect, since a meaningless anchor-in this case, a random number-can have a strong impact on subsequent decisions.


Consider the price tags in a car dealership. Nobody actually pays the prices listed in bold black ink on the windows. The inflated sticker is merely an anchor that allows the car salesperson to make the real price of the car seem like a better deal. When a person is offered the inevitable discount, the prefrontal cortex is convinced that the car is a bargain.


As a result of all the extra input, these students engaged in far more buying and selling than the low-information group. They were convinced that all their knowledge allowed them to anticipate the market. But they were wrong.


The prefrontal cortex can handle only so much information at any one time, so when a person gives it too many facts and then asks it to make a decision based on the facts that seem important, that person is asking for trouble. He is going to buy the wrong items at Wal-Mart and pick the wrong stocks. We all need to know about the innate frailties of the prefrontal cortex so that we don’t undermine our decisions.


The reason a proposer makes a fair offer in the ultimatum game is that he is able to imagine how the responder will feel about an unfair offer. (When people play the game with computers, they are never generous.)


psychologist Simon Baron-Cohen puts it, people with autism are”mind-blind.” They have tremendous difficulty interpreting the emotions and mental states of others.*


These two brain deficits-a silent mirror-neuron circuit and an inactive fusiform face area-help to explain the social difficulties of people with autism. Their “extreme aloneness” is a direct result of not being able to interpret and internalize the emotions of other people. Because of this, they often make decisions that, in the words of one autism researcher, “are so rational they can be hard to understand.”


When the dictator cannot see the responder -the two players are located in separate rooms-the dictator lapses into unfettered greed. Instead of giving away a significant share of the profits, the despots start offering mere pennies and pocketing the rest.


(Scientists estimate the heritability of autism at somewhere between 8o and 9o percent, which makes it one of the most inheritable of all neurologic conditions.)


“Voters think that they’re thinking,” Bartels says, “but what they’re really doing is inventing facts or ignoring facts so that they can rationalize decisions they’ve already made.”


Tetlock notes that the best pundits are willing to state their opinions in “testable form” so that they can “continually monitor their forecasting performance.”


The only way to counteract the bias for certainty is to encourage some inner dissonance. We must force ourselves to think about the information we don’t want to think about, to pay attention to the data that disturbs our entrenched beliefs. When we start censoring our minds, turning off those brain areas that contradict our assumptions, we end up ignoring relevant evidence.


“The moral of this researchis clear,” Dijksterhuis says. “Use your conscious mind to acquire all the information you need for making a decision. But don’t try to analyze the information with your conscious mind. Instead, go on holiday while your unconscious mind digests it. Whatever your intuition then tells you is almost certainly going to be the best choice.”


As long as someone has sufficient experience in that domain-he’s taken the time to train his dopamine neurons-then he shouldn’t spend too much time consciously contemplating the alternatives.


When choosing a couch, or holding a mysterious set of cards, always listen to your feelings. They know more than you do.


Ironically, it’s those moments when emotions seem most persuasive-when the brain is completely convinced that it’s time to go all in-that you should take a little extra time to reflect on the emotional decision.


The best way is to ask yourself if the decision can be accurately summarized in numerical terms.


Think less about those items that you care a lot about. Don’t be afraid to let your emotions choose.


“Tell me what you know,” he told his advisers. “Then tell me what you don’t know, and only then can you tell me what you think. Always keep those three separated.”


Whenever you make adecision, be aware of the kind of decision you are making and the kind of thought process it requires.


There is, of course, a lot of work that has to be done before the sudden epiphany (“I should write a book about decisions!”)


First published on March 5, 2013