Thinking Slow About Thinking Fast – Part Iby Nisha Cooch, PhD | July 3, 2014
In recent years, our so-called irrational behavior has become a popular topic, and research from behavioral economics, psychology, and neuroscience has begun to be applied to marketing, finance, and political science. At the same time, many consumers and citizens, reading popular books such as Predictably Irrational, Thinking Fast and Slow, and Nudge, have begun to appreciate that their own decision making may be influenced in ways they had not before recognized.
Though a heightened understanding of the nature of human behavior has the potential to improve certain industries, translation of information about decision making to effective business strategies and governmental policies is in its infancy. So too is consumer education on how to use such information to make more effective choices in day-to-day life.
Over the past few decades, elegant experiments have helped determine the ‘whats’ of our behavior (i.e. what we do in certain situations) and continue to delineate both the factors that affect our behavior and the patterns of the behaviors themselves. As we attempt to operationalize this information, we may be aided by some understanding of the ‘why’ of our behavior.
In the coming months, I’d like to discuss some of these behavioral observations from the perspective of a neuroscientist. I will argue that if we contemplate what may be surprising behavior in light of the operations of our brains, the behaviors are not as irrational as they may seem. I will discuss topics including the framing effect, the status quo bias, and that popular idea that we are risk averse with respect to gains and risk seeking with respect to losses.
My aim is to demonstrate that though these effects refer to behaviors that occur in distinct contexts, they are all manifestations of a single principle: the brain has a limited computational capacity. If we consider potential strategies for dealing with the massive amount of information with which we are constantly bombarded, we may come to view our predictable behavior as the rational result of a system that prioritizes efficiency over precision.
Ariely, D. (2008) Predictably Irrational. New York: HarperCollins.
Kahneman, D. (2011) Thinking Fast and Slow. New York: Farrar, Straus, and Giroux
Thaler, R.H. and Sunstein, C.R. (2008) Nudge: Improving Decisions About Health, Wealth, and Happiness. London: Penguin Books
No future articles scheduled.
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