Orit Tykocinski

Decision making plays a major role in our lives. We make decisions all the time, whether we are deciding on a professional career, choosing a vacation package, or buying breakfast cereals at the supermarket. For better or for worse, our lives reflect choices that we made in the past. In making these daily decisions we may strive for systematic, deliberative, logical decision procedures, but more often than not, decisions are taken intuitively, based on habitual thinking patterns, concrete associations, and a host of emotional reactions.

In recent years I have been investigating several defensive tactics that people use to help them cope with the consequences of poor decisions. For example, I have found that we sometimes evade taking action to avoid the bitter psychological experience of regret, an effect which I name “Inaction Inertia”. To cope with failure or disappointing outcomes, I show that people use “Retroactive Pessimism” and manipulate their perceptions of past opportunities post-facto, so that now they can find solace in the belief that the disappointing outcomes were inevitable.

My current research program focuses on emotion-based risk assessments. I show that sometimes people use their sense of apprehension to evaluate the probability of different perils. If thinking about earthquakes, for instance, evokes a great deal of worry and apprehension we are likely to infer that such an event is highly probable.  Because of the intuitive nature of emotion-based risk analysis the process is highly susceptible to bias stemming from external and often irrelevant concerns, and magical belief patterns. For example, in one of my recent studies I show that when people are reminded that they possess medical insurance they tend to believe that they are less likely to suffer from medical problems in the future.

Whether we are dealing with business decisions or decisions concerning our family life, we bring to the process our cognitive limitations, our thinking patterns and emotions, and our unique ability to create for ourselves a world we can successfully negotiate.  I believe that we cannot fully understand decision making without taking such psychological processes into account.

See Orit at: Psychology and investments conference December 2009