Mental shortcuts work — until problems get complex

Franck Schuurmans, a guest lecturer at the Wharton Business School at the University of Pennsylvania, has captivated audiences with explanations of why people make irrational business decisions. A simple exercise he uses in his lectures is to provide a list of 10 questions such as, “In what year was Mozart born?” The task is to select a range of possible answers so that you have 90 percent confidence that the correct answer falls in your chosen range. Mozart was born in 1756, so for example, you could narrowly select 1730 to 1770, or you could more broadly select 1600 to 1900. The range is your choice. Surprisingly, the vast majority choose correctly for no more than five of the 10 questions. Why score so poorly? Most choose too narrow bounds. The lesson is that people have an innate desire to be correct despite having no penalty for being wrong.

Gary Cokins

Labels can be People Shortcuts

Labels are shortcuts. They allow us to easily dismiss the people we associate them with. They give us an excuse not to invest in others because we think we already know them. We avoid treating them as people.

If you ask a blind person what he would like more than anything else in the world (aside from regaining his sight) you’ll invariably get an answer like this: “I want people to accept me as a person in spite of my handicap. I don’t want to be defined as a blind person. I want to be known first as a person — a person who happens to blind. 

What the blind person is asking sounds like something from the Sermon on the Mount”: “Don’t label, and then you won’t be labeled.”  

Labels not only can be turned outward, but they can also be turned inward. Labeling ourselves can propel the user down a pessimistic spiral. “I can’t tell good jokes at parties” soon becomes “I’m no fun at parties” and eventually “People don’t want me around.”  

People who overeat soon find themselves saying, “I’m the kind of person who overeats.” Or it might be, “I’m the kind of person who has to keep smoking.” The shift toward letting a label become our identify is a subtle but damning shift. The label becomes a shortcut way to deny the possibility of change.

Stephen Goforth

Self-Doubt

If you find yourself asking (and your friends), “Am I really a writer? Am I really an artist?” chances are you are. The counterfeit innovator is wildly self-confident. The real one is scared to death.

Steven Pressfield, The War of Art

Happiness + Courage

Happiness is not enough to insure a fulfilling life. It is imperative to have courage, not merely happiness. To be fulfilling, happiness must derive from the courage that leads one to face stressful circumstances and to do the necessary hard work of transforming them from potential disasters into growth opportunities.

One particularly relevant study by my research team and me showed that hardiness was more effective than optimism (happiness) in helping people cope with stresses by growing through them, rather than stagnating. This showed how happiness, devoid of courage, can be laced with naive complacency.

Salvatore R. Maddi

The Upside of Impostor Syndrome

In workplace settings, at least, those harboring impostor-type concerns tend to compensate for their perceived shortcomings by being good team players with strong social skills, and are often recognized as productive workers by their employers.  “People who have workplace impostor thoughts become more other-oriented as a result of having these thoughts,” says Basima Tewfik, an assistant professor at the MIT Sloan School of Management and author of a new paper detailing her findings. “As they become more other-oriented, they’re going to be evaluated as being more interpersonally effective.”

She adds, “What I don’t want people to take away is the idea that because people with impostor thoughts are more interpersonally effective, it’s not a problem.”

Peter Dizikes, MIT News

Seeing Victory

A plank 12” wide laying on the floor would be easy to walk. Place the same plank between two ten story buildings and “walk the plank” is a different matter. You “see” yourself easily and safely walking the plank on the floor. You “see” yourself falling from the plank stretched between the buildings. Since the mind completes the picture you paint in it, your fears are quite real. Many times a golfer will knock a ball in the lake or hit it out of bounds and then stop back with the comment, “I know I was going to do that.” His mind painted a picture and his body completed the action. On the positive, side, the successful gofer knows that he must ‘see’ the ball going into the cup before he strokes it. A hitter in baseball sees the ball dropping in for a base hit before he swings at the ball, and the successful salesman sees the customer buying before he makes the calls. Michelangelo clearly saw the Mighty Moses in that block of marble before he struck the first blow.

Zig Ziglar, See You at the Top

Wired to blunder

We're hardwired to make blunders and avoiding them requires nearly superhuman discipline. Four tendencies conspire to sabotage our decisions at critical moments:

OVERCONFIDENCE.

We think we're smarter than we are, so we think the stocks we've chosen will deliver even when the market doesn't. When evidence contradicts us, we're blinded by...

CONFIRMATION BIAS.

We seek information that supports our actions and avoid information that doesn't. We interpret ambiguous evidence in our favor. We can cite an article that confirms our view but can't recall one that challenges it. Even when troubling evidence becomes unavoidable, we come up against...

STATUS QUO BIAS.

We like leaving things the way they are, even when doing so is objectively not the best course. Plenty of theories attempt to explain why, but the phenomenon is beyond dispute. And supposing we could somehow fight past these crippling biases, we'd still face the mother of all irrationalities in behavioral finance...

LOSS AVERSION (and its cousin, regret avoidance)

We hate losing more than we like winning, and we're terrified of doing something we'll regret. So we don't buy and sell when we should because maybe we'll realize a loss or miss out on a gain.

These tendencies are so deep-rooted that knowing all about them isn't nearly enough to extinguish them. The best we can do is wage lifelong war against them and hope to gain some ground.

Geoff Colvin writing in Fortune Magazine