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How do we really make decisions?

Economics, Psychology, decision making, rationality

With every decision you take, every judgement you make, there is a battle in your mind – a battle between intuition and logic.

And the intuitive part of your mind is a lot more powerful than you may think.

Most of us like to think that we are capable of making rational decisions. We may at times rely on our gut instinct, but if necessary we can call on our powers of reason to arrive at a logical decision.

We like to think that our beliefs, judgements and opinions are based on solid reasoning. But we may have to think again.

Prof Daniel Kahneman, from Princeton University, started a revolution in our understanding of the human mind. It’s a revolution that led to him winning a Nobel Prize.

His insight into the way our minds work springs from the mistakes that we make. Not random mistakes, but systematic errors that we all make, all the time, without realising.

Prof Kahneman and his late colleague Amos Tversky, who worked at the Hebrew University of Jerusalem and Stanford University, realised that we actually have two systems of thinking. There’s the deliberate, logical part of your mind that is capable of analysing a problem and coming up with a rational answer.

This is the part of your mind that you are aware of. It’s expert at solving problems, but it is slow, requires a great deal of energy, and is extremely lazy. Even the act of walking is enough to occupy most of your attentive mind.

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