Irrational Decision-Making Arising from Cognitive Biases

Sociology and Psychology

Photograph: John Lau

Have you ever been attracted by discount tags on supermarket products and bought more of a product than you needed to? Do you always go to the same supermarket for your weekly shopping? Do you always follow the crowd and buy the toothpaste brand which is labelled ‘over 1 million people have tried this toothpaste’? If your answer is yes, you are just like the many people in society who make quick decisions when shopping for necessities. This quick system-one thinking had existed since the hunt for survival when we were required to make impulsive responses to fight for scarce resources and prevent ourselves from danger. Even with evolution, this instinctive system-one thinking has remained in our brains. However, it now coexists with a newly emerged system-two thinking, which is a system that allows us to carefully think through all our choices - either through calculation or reasoning.

Returning to the aforementioned situation, what effects do discount tags have on our decision-making? Behavioural scientists can explain this through a cognitive bias, namely loss aversion. Loss aversion is the situation where people feel more pain from losses than pleasure from equivalent gains. For example, a ‘buy two to save £5 now’ creates the impression that we will lose £5 if we don’t buy one more, while other labels such as ‘xxx is only available today’ create a sense of urgency - an urge to either buy the product immediately or risk losing out. Both situations manipulate our brains to utilise system-one thinking. During primitive life, the use of system-one thinking was particularly effective, enabling us to successfully obtain scarce resources such as sustenance through quick thinking and decision-making. Our instinctive response of wanting to prevent losses ultimately results in us making bad decisions such as buying unnecessary amounts of products which we will eventually dispose of.

Our tendency to shop from the same supermarket is also a type of cognitive bias – the status quo bias. This refers to our preference to stick with the current state of affairs. We tend to go to the same supermarket because we believe that the services and products are ‘good enough’. Such a mindset can be explained through the theory of loss aversion: we do not want to lose the satisfaction gained from shopping in the same supermarket and risk a worse shopping experience in a new supermarket. Another explanation as to why we continue to shop at the same supermarket is our laziness to explore other supermarkets. We rely on our experiences from the preferred supermarket to judge whether or not another supermarket is good enough for us to shop there again. Our tendency to consider our previous experience rather than all the information available (online shop prices) is an example of availability bias.

Our inclinations towards popularity when purchasing supermarket products are also linked to another kind of social bias - the bandwagon effect. This expounds the phenomenon of how we make decisions purely by following what other people do. For instance, a toothpaste brand which is labelled ‘over 1 million people have tried the toothpaste’ generates a sense that this certain brand must be a good deal since many people buy it. This herding behaviour can also be observed in a basic study. In the Asch Conformity Experiments, experimenters disguised themselves as participants, intentionally giving out wrong answers in order to mislead the participants. Participants were subsequently asked whether lines of various lengths matched the target line. Results concluded that approximately one-third of the participants followed the answer (which was incorrect), proving that even when dealing with the simple task of judging lengths, people tend to follow the popular answer rather than making their own evidenced judgements. Therefore, our tendency to follow the social norm ultimately prevents us from using system-two thinking to analyse the product ourselves; rather, it compels us to return to our use of system-one thinking as people generally believe that it is much easier and safer to follow the popular belief.

Overall, as demonstrated by the above examples, we are highly susceptible to cognitive biases that may lead to unwanted consequences. So next time when you shop in a supermarket, be sure to take your time and use your system-two thinking. You may find yourself saving a few sterlings for an extra cup of coffee!