Why Do We Make Irrational Decisions?

Why do we make irrational decisions? Sometimes even when we know they’re irrational. Well, it turns out they’re only irrational if you overlook the mechanics behind the decision making process. Not only are a lot of our decisions heavily influenced by unconscious bias, our emotions make us weigh identical outcomes differently depending on whether we feel like we’re winning or losing at the end:

Under rational economic theory, our decisions should follow a simple mathematical equation that weighs the level of risk against the amount at stake. But studies have found that for many people, the negative psychological impact we feel from losing something is about twice as strong as the positive impact of gaining the same thing….

As convenient as it would be if we could weigh up our options as calm, reasonable human beings, the fact is, it’s quite rare that we make decisions this way. But understanding the mechanisms at work increases our ability to avoid the traps our natural irrationality creates.