In: Economics
can mental shortcuts lead to unintended biases and judgments? what might be an example of this?
YES, mental shortcuts can lead to unintended biases and judgements
Mental shortcuts, known in psychology as heuristics, act as a way for the brain to conserve energy and work more efficiently. These little tricks and “rules of thumb” allow us to quickly make judgments and solve problems. But they don’t always work very well.
Our brains like to take shortcuts wherever they can. The brain's natural tendency to cut corners can pave the way for irrational decisions.
While emotions are often pegged as the enemy of reason, a lazy brain is more likely to blame for irrational judgments. If we’re not careful, cognitive shortcuts can pave the way for some serious thinking errors. In a recent study, psychologists at Duke University put these cognitive shortcuts to the test, and found that the brain’s use of heuristics often results in irrational decision-making.
The brain scans revealed that the participants’ brains were in a state of mental disengagement, or resting, while they made choices consistent with the framing effect. But when they made choices that overcame the framing effect, their brain activity resembled that of the brain in “working” mode, suggesting they were putting in some effort to resist the framing effect. However, the degree to which each trial’s brain activity resembled brain maps associated with emotion did not predict the participants’ choices.
This suggests that rather than emotion, it’s laziness ― or, if you like, habit ― that lies at the root of this cognitive bias
AN EXAMPLE IS GIVEN BELOW TO EXPLAIN THE ABOVE CONCEPT-
FOR THIS EXPERIMENT, the participants were asked to play an economic game.
In the first scenario, they were given $40 in house money and offered two choices: 1) Keep $20 for sure, or 2) flip a coin. If the coin is heads, you get to keep all $40, but if it’s tails, you get nothing. In this scenario, most participants preferred to take the sure bet, and went with option 1.
In the second scenario, participants were given $40 and offered two choices: 1) Lose $20 for sure, or 2) flip a coin. Heads, you can keep the whole $40. Tails, you lose everything. In this case, most participants chose to take the gamble over the sure loss
Here’s the catch, if you haven’t already figured it out: Although both scenarios carry the same level of risk, the brain evaluates them differently. In assessing these two scenarios, the participants fell victim to what’s known as the “framing effect,” which shows that the way a problem is framed influences whether we decide to take a risk or play it safe.