How to pave the way for better decisions

The decisions we make are a function of the environment that we are in, according to behavioural economists. Put in a different environment, or faced with a set of choices presented in a different way, we would make very different decisions.

Just look at a simple example such as your interaction with your mobile phone. Turn off your Facebook notifications and notice how your focus shifts to other content of interest.  

If we understand how our environment shapes our behaviour, we can pave the way for better decision making.

The path of least resistance
World-renowned professor of psychology and behavioural economist Dan Ariely conducted an experiment on chronic medication users in the US who receive their medication via post. Their supplier was disappointed that an offer to switch users from expensive branded medication to much cheaper generic medication had yielded low results – despite an offer of free generic medication for the first year. The supplier had come to the conclusion that people dislike generics so severely that even making them free couldn’t convince the user to change.

Read full article: https://www.allangray.co.za/latest-insights/personal-investing/how-to-pave-the-way-for-better-decisions/

November 25 2022 By Mthobisi Mthimkhulu - Allan Gray