Decision Mechanics

Insight. Applied.

The Forer effect

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Psychologist Bertram Forer gave 39 of his students a personality test. Each was given a personalised profile based on their answers.

Except they were all given the same profile…taken from an astrology book.

When asked to assess how well it described them, on a 0-5 scale, the students reported an average of 4.3.

Wikipedia describes the Forer effect as

…a common psychological phenomenon whereby individuals give high accuracy ratings to descriptions of their personality that supposedly are tailored specifically to them, yet which are in fact vague and general enough to apply to a wide range of people. This effect can provide a partial explanation for the widespread acceptance of some paranormal beliefs and practices, such as astrology, fortune telling, aura reading, and some types of personality tests.

Why is everything so complicated?

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Ever expressed frustration that stuff is unnecessarily complicated? If so, a new paper published in Nature might have an explanation.

Apparently, when solving problems, we have a natural inclination to add things. For instance, when asked to make a design symmetrical, people are more likely to do so by adding features, rather than removing them.

You can see evidence of this in a range of technical domains.

  • UX designers add more cues to address usability issues when they should make the the design less "noisy".

  • Software developers add more code to fix problems instead of simplifying existing code.

  • Data scientists chase R-squared improvements by adding more features.

Simplification is a crucial component of effective decision science. Approaches such as confrontation analysis strip away extraneous details and focus your attention on your immediate dilemmas.

It’s not all doom and gloom. You can "nudge" people to simplify using appropriate cues. For instance, maybe you could display prominent "lines of code" counts, or focus on predictive R-squared when modelling.

Given our instinctive biases we must be vigilant in the search for creeping complexity. Science is showing us that it’s more work to keep it simple.

As President Woodrow Wilson explained,

If I am to speak ten minutes, I need a week for preparation; if fifteen minutes, three days; if half an hour, two days; if an hour, I am ready now.

Photo by Gayatri Malhotra on Unsplash

The neuroscience behind bad decisions

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People often make irrational decisions. An article in Quanta Magazine describes how too much choice can often be to blame.

The article also discusses the attempts of neuroscientists to understand the mechanics underlying irrational decisions. Technologies like functional MRI (fMRI) are driving the emerging field of neuroeconomics. Neuroscientist Paul Glimcher claims to be

…aiming for a grand unified theory of choice.

One theory coming out of this research is that divisive normalization plays a role in choice. Divisive normalization comes from research into the visual system.

The brain is a power-hungry organ—consuming 20% of our energy while representing only 2-3% of our mass. It therefore makes sense for us to have energy-conserving optimizations in our cognitive processes. The visual system removes information that is uninteresting and highlights the surprising and novel.

Some neuroscientists believe that a similar process is in play when we are confronted with choices. When presented with a choice between 2 or 3 items, the process copes well. However, when faced with the myriad choices that are characteristic of the modern consumer society, the process fails us and leads to irrational decisions.

The theories coming out of neuroeconomics are controversial. It’s a young field. However, using the tools of neuroscience in this way could certainly lead to fresh insights into longstanding questions in economics.

Glimcher says that the research has already improved his own ability to make good choices.

Rather than pick what I hope is the best, instead I now always start by eliminating the worst element from a choice set. […] I find that this really works, and it derives from our study of the math. Sometimes you learn something simple from the most complex stuff, and it really can improve your decision-making.