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Overthinking It

In his book on the neuroscience of decision making, How We Decide, Jonah Lehrer talks about the case of a patient who has damaged a part of his brain (specifically the orbitofrontal cortex) and is hence terminally unable to make any decisions. Every single decision, no matter how trivial, seems complicated to the point where it cannot be made. This is generally not a problem for most normal people, right? In fact, the accepted wisdom is that people are quite good at taking somewhat complicated decisions and simplifying them (in many cases rather efficiently) and moving on with their life.

Now there is new research from our friend Oded Netzer at Columbia and his colleagues Rom Schrift and Ran Kivetz that shows that not only do people simplify, but sometimes they also complicate the decision-making process unnecessarily. They studied this through a variety of experiments, many designed to rule out competing explanations. Let's talk about one of those to understand what they did.

Groups of respondents are asked to choose physician services, a relatively important decision. One group faced a difficult choice where the two physician offices presented were very similar on three attributes. Another group faced an easy choice where one of the alternatives was clearly superior. When facing the difficult task, as expected, the respondents simplified the decision-making. They did this by increasing the weight given to an unimportant attribute that favored the more preferred alternative. In the easy task condition, however, they gave more weight to an attribute that did not favor the dominant alternative thus complicating their decision-making.

Why would people do this? Why would they make it harder on themselves? "It is commonly thought that consumers simplify the choice they make, but we find that consumer may also agonize over the obvious choices they fake" says Oded Netzer. People try to align how difficult they expect a task to be and how much effort they actually expend. If the task is more difficult than expected they simplify the decision-making, but when it is easier than expected, then interestingly enough, they make it harder on themselves. This curious behavior happens in the case of important potentially life changing decisions, not trivial ones. The authors have a name for this: the Effort-Compatibility Principle, but what it means in layman's terms is overthinking it.

There are several important life situations (involving, love, career, homes, etc) where very attractive opportunities come our way with small windows. But just because they are important it doesn't mean they should be difficult decisions. As the authors show, there is clear potential to make the wrong choice if we unnecessarily complicate a situation.

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Guest Monday, 26 October 2020

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