Are we crazy? Why do we do things which we know aren’t a good idea?

Behavioural Economics tells us that we can often be motivated by some ‘nudge’ or other to act in a way that doesn’t fit with the stereotype of economic self interest. In other words, we can be tempted by alternative upsides.

But to do things when we know there is a very obvious downside – that’s something else entirely. Let’s say we are talking about unwise or apparently illogical actions in our non-work life. Some of these wayward deeds will not even be the result of considered decisions: not so much mistakes, more instinctive errors.

But in other cases there will have been a decision to ignore a fairly obvious downside, and go ahead anyway with a course of action that doesn’t seem to make a lot of sense.

Now, if we can do that when we are not at work, are we also capable of poor decision making and unwise actions in working hours? The answer has to be ‘yes’. Illogicality and poor decision making process is unlikely to be compartmentalised in a pigeon hole marked ‘evenings and weekends only’.

We have also to add poor performance to bad judgement. Every day, it seems, the transmission system between brain and body fails us to lesser or greater degree. We can fail to do the right or logical thing through a failure of dexterity or memory, just as easily as through lack of will or good decision making.

Neither the great philosophers, nor you gentle reader, should be even remotely surprised by the above. After all, we are talking about human beings, where genius and frailty are equally distributed – often to the same person.

Nor would if faze religious people. Christians, for instance, are well aware that in the Ten Commandments there are only two positive injunctions (keep the Sabbath day holy, and honour your father and mother), while the other eight are all ‘Don’ts’, suggesting that God had no illusions about our likely behaviour.

My message, I suppose, is that there are so many possible ways in which we can take poor decisions or make mistakes, that if we do seriously want to be successful, it is imperative to take decision making seriously. To recap, making decisions in a better way is all about:

  • Clarity on your goal
  • Best data and intelligence – and keep looking for more
  • Frame – and if necessary keep on framing till the problem is well and truly defined
  • Structure the most viable options for solving the problem
  • Identify upsides and downsides in each option
  • Reward / risk analysis, ensuring that you are not swayed too much by the attractiveness of an option if it has a dangerous downside
  • Carefully weigh reward and risk
  • Then make the decision.

We only need rules when something is difficult, and when there is a big difference between doing it well and doing it badly.

To try and ensure we make the best possible decision, we need rules, and should you doubt it, the justification is above!