Why do we act against our better judgment?
/How much of what we do is dependent on what we feel? Furthermore, why do we behave in ways that is contrary to what we know is the “right” choice? Researchers Veronika Denes-Raj and Seymour Epstein decided to investigate this with a common American candy: the jelly bean.
Let’s say you are presented with the below two bowls of jelly beans.
Each bowl contains both white jelly beans and red jelly beans, with a total of 100 jellybeans in Bowl A in which 9 are red. Bowl B consists of 10 total jelly beans, in which 1 of them is red.
You can draw from either bowl of jelly beans. If you drew a red jelly bean, you’d win some money.
Which bowl would you draw from?
In the study that Denes-Raj and Epstein conducted, many people chose to draw from Bowl A. However, actually, it is more reasonable to draw from Bowl B. Why is that?
Because Bowl A contains 100 total jelly beans, 9 of which are red. Therefore, the probability of drawing a red jelly bean is 9%. On the other hand, Bowl B contains 10 jelly beans, one of which is red. Therefore, the probability of drawing a red jelly bean is 10%, which is higher than the probability of drawing a red jelly bean in Bowl A.
In fact, more than 60% of people choose to draw from Bowl A. Why is that? People tend to look at the number of colored jelly beans itself and not choosing based on the actual probabilities.
Participants in the experiment often commented that they felt they had a better chance of winning money by picking the from the bowl with more winning jelly beans. They would say, “I picked the ones with the more red jelly beans because it looked like there were more ways to get a winner, even though I knew there were also more whites, and that the percents were against me.”
We make mistakes in judgment, even though we can understand them when we think about them calmly. This is the nature of actual human beings. Thus, human beings are creatures that often engage in "irrational behavior," or in other words, often make "irrational decisions”.
Understanding why such "irrational people behave irrationally" is the essence of behavioral economics. We often act against our own better judgment in other aspects of our lives, even when we possess the necessary knowledge and information to make optimal choices. By acknowledging the potential for irrational behavior, individuals and organizations can work towards more effective decision-making.
These insights from behavioral economics underscore the reason we consult with business folks and organizations: we want to help you make better decisions and to help you better understand the decisions of those around you. If you’d like to learn more, don’t hesitate to reach out!
Source: Denes-Raj, V., & Epstein, S. (1994). Conflict between intuitive and rational processing: when people behave against their better judgment. Journal of personality and social psychology, 66(5), 819