With the changing lifestyle, we are moving towards making the irrational decisions that are actually not good for us and for society. How can we approach rational thinking ? What are the reasons for making irrational decisions ?
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1 Answer
The brain is a machine that automatically processes information. Optical illusions hardwired processing and emotional reactions helps us to make quick decisions but these mental shortcuts can also lead to errors in judgement called cognitive bias. These cognitive biases can cause investors to make irrational financial decisions. Irrational decision making will give you easy and short ways to do the things. This is called Heuristics.
1. When we have limited time and limited sources of information to make decisions then the decision making becomes irrational.
2. Availability of too much information also prevent us from making effective decision because too much information can cause cognitive overload.
3. Humans also tend to take the safe option while making a decision, whether it is best or not. This is called loss and risk aversions. This is generally practiced in financial decision making.
Human beings are inherited by irrationality, which cannot be changed with training.
1. When we have limited time and limited sources of information to make decisions then the decision making becomes irrational.
2. Availability of too much information also prevent us from making effective decision because too much information can cause cognitive overload.
3. Humans also tend to take the safe option while making a decision, whether it is best or not. This is called loss and risk aversions. This is generally practiced in financial decision making.
Human beings are inherited by irrationality, which cannot be changed with training.