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.