ESSA

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Should you read this?


Lachlan Walden

By

June 12th, 2013


Walden explores what goes on behind every decision. Have you made yours yet?


Good choice! What caused you to click through though? Was it a conscious decision? Also, if you think it was an intentionally conceived action, how do you actually know?

While you may not have spent several minutes comprehensively analysing the costs and benefits of reading this article in order to make an entirely rational choice, there was, if only subliminally, some form of decision-making process behind your decision.

This decision-making process pertains very closely to economics (behavioural economics to be specific) because all decisions fundamentally come down to an evaluation of ‘cost’ and ‘benefit’. We may not consider our judgement to be always this sophisticated – but how else can it function?

The amount of time spent making decisions tends to vary quite considerably based, seemingly at least, on their importance. Interestingly however the study “Decision Quicksand: How Trivial Choices Suck Us In” suggests that the more difficult a decision is to make (regardless of its significance), the more important an individual is likely to believe that choice is for them.  Ironically, this often results in the decision becoming increasingly difficult because of human intuition to identify further options. Sometimes, particularly when it comes to decision-making processes, we seem to be our own worst enemies.

Choosing to read this article may have ostensibly been a relatively simple choice. Is life not simply an endless compilation of similar seemingly insignificant selections though? It is often very difficult to quickly determine whether a decision is of importance.

The most rational decision is made where an outcome is determined based on analysis of valid, accurate and complete information. This information needs to be indicative of what the end result is likely to be (expectancy theory). The problem with choosing between alternatives, however, is that in most circumstances these information characteristics are lacking – often to a significant extent. So, what is a rational individual to do then? Well, in the absence of having the capacity to make the most rational decision, one can always fall back to making the best rational decision given the circumstances. After all, even if extrinsic conditions make decision-making tough, it should not follow that rationality is impossible to achieve.

It is worth keeping in mind perhaps that frequently there is no ‘right’ course of action and so making the best rational decision without over-analysing and wasting time in a state of paralysis – essentially ‘satisficing’ – is a worthwhile skill to acquire.

I hope that this brief exploration of individual decision-making processes has answered more questions than it has unintentionally posed. Yet I would not be surprised if you choose to believe otherwise – behavioural economics tends to only partially explain the unanswerable questions and dilemmas of life.

Do you think you made the right choice by reading this piece by the way? If you have managed to get this far, hopefully the answer is ‘yes’. Then again, research shows that a fair proportion of individuals read the bottom paragraph of articles first and then skim up.

Regardless, I can say with certainty that you definitely made the right choice. Why? Because as outlined above, you made the best decision possible. The only uncertainty now is whether you regret the parameters on which you made the decision. That depends primarily on the opportunity cost of time allocated – are exams anytime soon?

Follow me on Twitter: @lachlanwalden

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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