Avoiding Mental Defects
For years it was assumed that we humans are ‘rational’. However our survey of our mind’s defects in the last 2 blogs clearly indicates that we do not display a logical consistency in our beliefs and actions. Although we are not irrational, most of the time neither stubbornly resistant to reasonable argument nor impulsive, we do need help to make better judgements and decisions. Self-awareness, teamwork and the courage of a lion are all great ways to stand down many of our brain’s errors.
Most of the errors and biases of our brain emanate from the subconscious. Our subconscious is not easily corrected. The voice of reason is much fainter than the loud and clear voice of intuition. Questioning your intuition is unpleasant when you face the stress of a big decision. More doubt is the last thing you need when you are in trouble. It’s much easier to recognise others wandering into a cognitive minefield than your own wanderings into one. Observers are less consumed in their thoughts and more open to information than actors. Our only option is to engage the limited resources of our conscious minds and training it to be more self -aware of our individual strengths and weaknesses.
Those less likely to commit errors are the intellectually engaged, the curious, those who read and travel widely and above all those who train themselves in self-awareness and self-analysis with the tools of reflection, philosophy, spirituality, meditation and prayer. These people are more alert, less willing to be satisfied with superficially attractive answers, and more willing to make the effort to search deeper into topics. However this type of person must beware of the curse of the expert. As we have seen in the limits of expertise in the second blog, experts are prone to arrogance and to overestimate their knowledge and expertise. To counteract the curse of the expert humility and scepticism about intuitions is also required.
“You can see the speck of sawdust in your friend's eye, but you don't notice the log in your own eye (Matthew 7:3)”. As noted above it is much easier to notice the faults of others than our own faults Being part of a team or organisation helps us avoid some of our blind spots. Organisations are much better than individuals in avoiding errors. They think slower. They have orderly procedures like checklists and SWOT (Strengths; Weaknesses; Opportunities and Threats) analyses that provide a systematic way of recognising trouble. Good team work ensures that people watch out for one another as they approach cognitive minefields. Managers hear the voices of gossipers and critics in their organisation easier than the hesitant voice of their own doubts. They will make better decisions when they listen openly to their critics.
Teams can come to better decisions than most individuals if they follow the principle of independent judgements. When many judgements are averaged the result tends to be quite accurate when the observations are independent. Police employ this principal when there are witnesses to an event. They do not allow the witnesses to discuss it with each other before giving evidence. Therefore at meetings before an issue is discussed, participants should be asked to write a very brief summary of their position. The standard practice of open discussion gives too much weight to the opinions of the those who speak early and assertively. The other practice captures the diversity of knowledge and experience in the group.
Thaler & Sunstein in their 2008 book ‘Nudge’ presented solutions to help people make good decisions without curtailing their freedom. They advocated what they called ‘libertarian paternalism’ where the state nudges people to make decisions that are good for them. Governments should legislate to protect their citizens from those who deliberately exploit their cognitive weaknesses. Contracts should be easy to read and all communications readily understood by the public. Healthy democracy depends on a free media and open and honest debate. The activities of hackers, conspiracy theorists and fake news writers on social media sites show that a completely free media is not healthy either for society and that some ‘paternal’ regulation of the media is needed for the good of informed debate and democracy. White paper recommendations need to recognise that framing proposals as losses or gains is very influential. Government bodies should designate their pension plan as the default option with an opt out option.
Take Calculated Risks
In the area of investing in shares, loss aversion unduly effects investors. Investors in shares should check their investment only once a quarter. Checking your portfolio once a day is a losing proposition. Because of loss aversion, the pain of frequent small losses exceeds the pleasure of the equally frequent small gains. The deliberate avoidance of frequent checking makes one less risk averse, improves the quality of decisions and so outcomes. Finally, the longer you can lock in an investment the better your chances of success.
Choose the lowest priced insurance policy. This will expose you to slightly more risks but you will be financially better off in the long run. This risk policy is similiar to the planning approach which shifts the planning focus from the specifics of the current situation to considering the base rates - the statistics of outcomes in similar projects in the recent past. Any one risk should not be seen in isolation. It should be considered in a set of other risky choices. The combination of this planning approach along with this risk policy are the two best remedies for the exaggerated optimism generated by the planning fallacy and the exaggerated caution induced by loss aversion.
Being lucky enough to be part of good teams in and outside work particularly a good family, in an open thriving democracy that practices libertarian paternalism, is not a bad start for avoiding some mental traps. Furthermore, the work of self- awareness, although difficult, is indispensable in keeping us on the mental straight and narrow. But to live life to its fullness we have got to have the courage to face down the fears induced by loss aversion and regularly take calculated risks throughout our lives. Be like a Lion – strong and courageous. “The important thing is this – to be able to sacrifice what we are for what we could become (Charles Frédéric Dubois)”.