Why do smart people make irrational decisions every day? The answers will surprise you. Humans are a bit quirky in our decison-making. It's more of an art than a science.
In fact, we make decisions based to a large extent on our survival instincts, ego, emotions - ANYTHING but logical anaylsis.
This week I review Predictably Irrational by Dan Ariely to deep-dive into how we make decisions. You will be amazed!
Predictably Irrational by Dan Ariely
Hi everyone, my name is Dex Randall, and this is the Burnout to Leadership podcast, where I teach professional men to recover from burnout and get back to passion and reward at work. Hello, my friends, this is Dex. I'm glad you could join me on this episode, which is about being predictably irrational. And it's really about the way that we make decisions. And I think it's very, very pertinent because mostly we think of ourselves as very kind of ordered, analytical, dependable decision makers, both as adults in our lives and also as professionals. We think we've been trained to make good decisions, and we've been making them all of our lives, often with excellent results. Here's the thing. We make decisions based on how we think we're going to feel afterwards. That's the reality of it. And logic, reason, analysis, comparison and rationale, all play second fiddle to our emotions. Because how often have you known you should pick one choice, but felt impelled or even compelled to make another? I often think about when I'm thinking about decisions, about buying a car. So we actually don't decide on features versus price, even if we think that's what we're doing. We probably... You know, most people will probably decide based on how we're gonna feel when we see the car in our driveway, or how we think other people will think when they see it in our driveway. What status is it going to confer on us? Or what car we envy that our mate has? Or simply, how we'll feel when we're driving the thing. And that's not to say that rational thinking plays no part. If you've got mobility issues, or seven kids, or 15k in the bank, or nowhere to charge an EV, for sure, you're gonna factor that in, but begrudgingly, probably. And if you're a person disposed to burnout you might be stuck right now between kind of righteous indignation that have condemned your decision making skills and this tiny flicker of recognition that indeed decisions are giving you trouble right now. It's okay, right? It's okay. Stay with me on this. You're just a human with a brain that you will understand a little more deeply as we go along, and such an understanding really might be very helpful and empowering for you. And after all, that's why this podcast exists, to empower you and to help you make friends with what is, inside your head, at work, in your relationships and in your life. I wanna help you be the captain of your ship in the exact way that you'd like the best. I've got a fundamental belief in you without even meeting you, simply by the fact that you're here. You're all good and I invite you to share that belief. And besides, no one knows you're listening to this, doing this great thing for yourself. It's just between us. And I'm never gonna judge you for having a human brain. After all, I've got one too. So let's begin. Yesterday, I was out kayaking on Sydney Harbour, and it's very beautiful out there, by the way. I can really recommend it if you're in this neck of the woods. Anyway, I'm kayaking and this guy I've never met before, spent much of the trip trying to convince me to believe a bunch of things that he believes on various subjects. But one thing he said that intrigued me, was that I should read a book called Predictably Irrational by Dan Ariely. I don't know how to pronounce that, but I'll link to it in the show notes for you. Anyway, I read the book, and in this episode, I'm reporting back to you, because it's really important that we all understand what our brains are doing. What choices they are making for us without our really noticing. And I do coach on decision making a lot, which you might find surprising, really, considering I deal with burnout professionals. But... Excuse me. It's often when people are struggling to make a decision or they're making decisions from fear of the consequences rather than from the upside they might get. So anyway, what I'm gonna do now is, I'm gonna take a selection of the points in the book and kind of review them with you, and necessarily, I'm putting my own interpretation slant on each of these from a coaching perspective. I'd really love you to go and find Dan Ariely's book and read it for his original thoughts and all the stuff I won't have time to cover today. You can't help but learn something new and probably quite fascinating. I know I did. So anyway, here we are. Point number one, relativity. And this is all about decision making, right? Everything I'm talking about here is about decision making. So relativity, we don't know what's the right choice when we're making a decision because if we did we wouldn't need to make a decision. So we weigh up the relative advantages and disadvantages, but really that's an irrational comparison because we don't have all the information. We're basically led by whatever information is presented to us, which in the case of advertising or marketing, is clearly biased. So that's one, relativity. Number two, anchoring. Anchoring is, for example, making the first price we hear about a product, making that into our benchmark and judging all other prices against it, or maybe we do that with the first meal we sample at a new restaurant. So what we do is we really anchor on something quite arbitrary; It just happens to be the first thing we learn. And then we make it our own and we invest belief in that. So that's number two, anchoring. Number three, free things. Okay, we all know about free stuff. When we're weighing up the pros and cons of a purchase, for example, if something is free, well, we imagine it has no cons, it's only got pros. So the downside risk of choosing something free has gone, and then... What happens then is, we automatically upgrade the upside, whatever that is, again, not entirely rational. That's number three, free things. Number four, strong emotion. When we are in strong emotions such as anger or fear, we make decisions from survival modes, often choosing instant gratification. And of course, that makes evolutionary sense. For example, eating the food while you can or avoiding danger. But in a modern life those things can lead us astray. So when we're in strong emotion it's possibly good to delay the decision if it's not an urgent one, or really just be aware that our anger or fear, for example, our strong emotion might be making the decision for us. In survival terms, we might be in fight or flight. So that's number four, strong emotion. Number five is essentially sunk cost bias. When we own something, we invest belief in it being something that we want. We endorse it even when there is no actual benefit in the thing. And then what happens is we're reluctant to let it go in case we need it later, even something we've never liked or used, or we choose the same thing again next time, so sunk cost bias. And kind of in the same vein, number six, virtual ownership. And this is a trick used by advertisers to make us feel like we own the product before we even buy it. I think that's self explanatory really. So six, virtual ownership. Number seven, disappearing opportunities. I know you've all felt this one, I for sure have. It's another advertising ploy to invoke scarcity thinking in us with a time or availability limited offer. It's essentially FOMO, which is a survival instinct. Also, it makes sense, right? So this is all about getting the things that we need, getting our needs met while the going's good. So it's understandable that our brain reacts to this disappearing opportunity concept. That's number seven. Number eight, okay, possibly my favourite, we get what we expect. This falls into something that I coach on a great deal in so many different ways, but really, our perceptions and interpretation of any experience in the world are coloured by what we thought about such an experience before it took place. So we think we know. For example, if we know we don't like parties, it's quite likely that attending a party will not be pleasurable for us, because what we perceive in the world as confirmation bias, we're only going to look for and often only see evidence that confirms what we already believe. And so therefore, quite often, we get what we expect. And number nine, making decisions aloud. The decisions we make aloud in front of other people are different than the decisions we make alone in private. We might succumb to group think to gain approval and belonging and also to reduce perceived risk of disagreement and judgment and exclusion, or even attack. Or we might make a decision that's not already taken by someone else to assert our individuality, that's one of our basic human needs as well. So number nine, making decisions aloud. So I just very briefly there, I covered just a few concepts from the book Predictably Irrational, but for me, they were sufficient of themselves to reinforce my own decision that our decision making and choices are largely irrational and therefore a little bit fallible. And when I look back over my life I can find proof all over the place. I certainly do question whether those purple flares I bought were a good move. Anyhow, I believe one of the strongest and least helpful drivers we have in decision making is the urge to avoid feeling an unwelcome emotion, instead falling prey to the addictive cycle of over consuming something, anything, doesn't really matter what, to stop the feeling, change state and feel differently. Because anything, any kind of addictive cycle, if we indulge in it renders us unable to make a whole slew of positive choices to make change in our lives. It stops us making decisions to take action in a positive way that would move us in a direction that we sorely want to go to build the life of our dreams. And really, if you present me with the choice of sudden violent death or a glass of water, I might come up with the "right answer", but like anyone, I can be a victim of advertising, status, the need to belong, fear of judgment, fear of loss and so many other instinctive drivers. Unless we coach on decision making, we're pretty fallible. So I think understanding ourselves, particularly in the matter of making decisions, gives power. And also, it gives us the choice to reflect on a more helpful process for decision making. And emerging from burnout is, if you think about it, a choice to emerge from a bunch of long standing decision fails that have become habitual and painful, demoralising, disempowering, we kinda get lost in them. They keep us stuck in a situation we didn't like in the first place, for a lot longer than necessary. They keep us in pain. So in burnout recovery the reverse is true, we quickly begin to make a new set of decisions, positive, freeing decisions about ourselves, how we treat ourselves, and how we choose to respond to the world around us. We simply stop making low quality decisions that come from low self belief, low self care, low self esteem. We come out of low value cycle thinking about ourselves and our place in the world, and intentionally value ourselves more highly and begin to make new habits of higher value cycle thinking that guide us in the direction of who and how we'd like to be, who we essentially already are on the inside. We start deciding from our higher self, who's got our best interest at heart. And this alone really revolutionises our experience of the world and the people we're around each day. It lets in some really welcomed fresh air, some new possibilities for how we can live our lives. I really can't overstate how much improvement you will experience and how much joy is truly available when you do the work of recovery from burnout and anxiety and stress, chronic exhaustion, frustration and all the other symptoms of burnout. And that, my friend, is why I said at the beginning that I have a fundamental belief in you, because if you're in burnout, I already know what stamp of a person you are. It's already enough. I know you've got a good heart and good intentions. The problem is, do you know? Is that a story you're telling yourself? Or have you forgotten in the desperate exhaustion you have experienced in burnout, the general wear and tear of burnout? You might really be worn down by apparent daily evidence to the contrary, that you're not good enough. And all of that daily evidence, if I may say, it is made up, it's in your head, and it's dispensable. This is what we've seen here, which is how irrational our brains actually are. And we're relying on these things to drive our lives for us, right? But don't believe me about the decision making irrationality, please, read Predictably Irrational, the book by Dan Ariely, and for goodness sake, whatever you do, don't stay in burnout, please, just don't. Come and talk to me. Let's plot the way forward for you, and you can do that by visiting dexrandall.com, D E X R A N D A L L.com. Thank you so much for listening to this episode today. I really appreciate your time and attention, and listen on at the end for the link if you're in burnout. You must come and talk to me about how to recover quickly, sustainably, and get back to your best performance, leadership, most of all, enjoyment inside work and out. If you're in burnout and ready to recover, come and join my Burnout To Leadership program. You can book in to talk with me at burnout.dexrandall.com. Just tell me what's bugging you and let's make a plan to fix it.