Daily Archives: October 2, 2015

Individual Decision-Making Is a Rat’s Nest of Distortions

bad decision-making

As Daniel Kahneman describes, there are two types of thinking. The first called System 1 thinking is quick, immediate, impulsive, emotional, and reptilian. It has its foundation in our early evolutionary development and has the advantage of being responsive quickly and almost automatically. So, sexually charged messages are processed without much thought and on the basis of an immediate emotional and physiological response. System 2 thinking came later in human development and it is slow, deliberative, and reflective. This is how decisions are supposed to be made in democracies and in the context of complex data and argument.

Cass Sunstein in his work on decision-making explains how there are not enough System 2 thinkers and, moreover, there is a tendency to think decision-making is mostly subject to System 2 thinking when much of it is corrupted by the anger and emotions of System 1 thinking. This is the trap of believing that individuals mostly maximize rational preferences and are rational actors. Sunstein and his associates in a number of their publications (cf. Wiser: Getting beyond Groupthink to Make Groups Smarter) claim that groups should be more deliberative and subject to System 2 thinking and therefore make better decisions. But they don’t.

Individuals who are making decisions are a rat’s nest of biases, distortions, and prejudices. They are overconfident, emotional, and will follow the herd. Their thinking is clouded by interpersonal relations including status hierarchies they wish to respect; they repress information that might upset someone; they seek information that confirms what they believe already and they are overly influenced by other individuals who are either attractive, particularly persuasive, or maintain some psychological “hold” on the individual. People who hold on to ideological beliefs with great fortitude and refuse to budge from their belief system, who automatically incorporate every position other than their own as either a threat or something to be embraced devolve into System 1 thinkers. This describes the Congressional Republicans as well as nationalistic and religious zealots.

System 1 thinking is so typically distorted and commonplace in decision-making groups that research has shown that decisions can be improved if members don’t meet. Statistical groups are sometimes superior because they focus on the task and eliminate social influences. But statistical groups do not have the epistemic advantage of communication which, if participants can overcome their distortions and improve their argumentative skills, has the potential of producing new knowledge and creative outcomes.

Statistical non-interactive groups may offer some decision-making advantages that accrue through the cumulative effects of individual knowledge and information. But they are quite deficient when dealing with deep differences and those who are intolerant and prejudice prone. The value and effectiveness of the contact hypothesis is a well-established and even demonstrates positive results with the most intolerant and ideological. Threat and anxiety reduction are one of the theoretical benefits of contact and these apply also to the highly intolerant.


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