A new research from the University of Minnesota provides further insight into the way ‘rational’ decisions are made. The research was set to explore the apparent lack of applied rationality when faced with binary choice tasks, where one choice has a higher probability of being correct than the other.
Lets’ take for example a situation where we are introduced to a coin which is known to be biased such that on an average 70% of the times it will land on heads and 30% on tails. The logical thing to do when using such a coin would be to always call the option with the higher probability of occurring, i.e. heads, irrespective of how many times that option has occurred in the immediate past.
Empirical trials suggest that this is not quite the case and human tendency is to incorporate information gathered from immediate past experience and attempt to incorporate it as part of an overall understanding of world around. So, in the case of the biased coin, the human instinct will dictate that the decision regarding the next throw of the coin will be dependent not only on our knowledge about the coin itself (i.e. the 70/30 bias) but also based on the results of previous throws.
The research interprets this tendency as an attempt to see order when one is not readily apparent. We know that the coin is biased but we just can’t ignore the information we’ve just gathered regarding previous throws, assuming that not incorporating this additional and newly available information will be an illogical thing to do.
We, human beings, are structure seeking animals and when such obvious structure and order are not readily available out mind simply creates one for us – nice and simple!
Another interesting observation published in the above research is that education can mitigate the illogical behaviour, i.e. subjects who were let to understand that the outcomes were completely independent (implying that past observations are not a reason to change future behaviour) did change their behaviour and chose the options reflecting how the world really is as opposed to how they wanted it to work.
This last observation nicely integrates with the Dunning-Kruger Effect where it was found that education is a key to altering and ‘correcting’ people’s attitudes, such that people with limited understanding of a certain subject area were found to exhibit higher levels of (mistaken) confidence while those with a better understanding were found to exhibit lover levels of confidence.
Knowledge acquired through education seems to enable us to make better decisions while somehow causing us to acquire some level of humility in acknowledging that we still don’t know it all and there’s more to learn.
This is fascinating stuff. Think about it!