How Most People Make Bad Decisions…How You Can Be Different.
I’m at the blackjack table sitting next to an Asian woman who has been complaining for 20 minutes. She’s pulled more money out of her little purse than most ATM machines keep in stock.
I’m dealt a 12, dealer has a 4. The rule here is you don’t hit. 4 is a good break card for the dealer. The dealer from Belarus has watched how I play and she passes me thinking I won’t take the card. “Hang on.”
The floor manager is at the little computer next to the table. He comes over to the table. I’ve literally told him I’m counting and so he sticks around but isn’t asking me to leave because my bets are pretty modest in size. “You hit against a 4?”
If I do I pick up about 2% advantage, which is a huge advantage, because 10’s have been extracted from the deck and fives have barely touched the table.
“You crazy?” Lady next to me is now my mother. I’ve already given her that look that says “quiet!” a few times in the evening. The question was all I needed.
IT LOOKS LIKE A STUPID DECISION BUT….
I scratched the table, the dealer deals me a 6. Now 18 and I stand. 18 is not a great hand but it should beat the 4. She has 15, which she should not hit and doesn’t. The dealer flips a 9 for a 13 total. Has to take a card. Ace, then another ace, and then another! Then a King. He breaks. I win the hand, she wins the hand. Then the woman made my day. She took her winnings and left the table. I was soooo joyful. “You don’t take that you both lose.”
“I don’t care what the result is, just that I make the right decision.” He laughs.
“Doesn’t winning mean you made the right decision?”
I started laughing as if watching Kevin Hart.
“Making the wrong decision doesn’t mean you lose, making the right decision doesn’t mean you win. It’s the decision made on the facts in the moment. I can’t control what happens when my hand is over and it doesn’t matter how anyone else plays.” He pays me.
“I’ve got to use the restroom, watch my chips?” He nods.
“But you’re just getting lucky?”
He just got 3 aces in a row, the deck is packed with 5’s. I will make more money in the restroom. No one can beat a deck of fives with aces and 10’s drained.
I smile.
I spent some extra time in the aisle by the restroom waiting.
Then I realized… I could have simply grabbed my money, dropped it on another table that was shuffling and then faced a fresh shoe/dealer upon returning. It’s fricking contagious. Apparently I felt lucky at that table. And where is the math to support “feeling lucky.”
Look at these scenarios and see if any of them look familiar. Think about how you dealt with the situations in the past.
Lesson: There is pressure in decisions you have that don’t (whether they think soon or not!) impact others. In general, don’t allow pressure to impact you in your decisions.
A friend asks you to give them $5 and tells you they’ll give you back $20 Wednesday.
“Oh just take the money, don’t worry about paying it back.”
Probably an easy decision and not one you’re going to go asking for the money to be returned.
Same best friend asks you to borrow $5000 and they’ll give you $10,000 back in 30 days.
What do you say? What do you do?
If you are multi-millionaire and your friend has never asked for money in the past, you figured out that most people never repay loans especially when they have a delusional return on investment calculated.
There are no “investments” or logical reasons to believe that someone who’s asking for $5000 today is really going to be capable of giving you back $10,000 in 30 days. There aren’t a lot of good reasons for making such a request.
You pretty much have to ask, “what’s the challenge?”
Then they will tell you what’s happening and why they have made what appears to be a ridiculous offer to give you a 100% 30 day principal + interest loan.
“Can’t make my payments this month.”
“And you want to pay me back $10,000?”
“I owe you for other times in the past you’ve given me money.”
Now you have a 5 second pause. They’re obviously in a worst, not better spot than in the past. That means that the $10,000 is almost certainly wishful thinking. Your decision is going to come down to saying,
“No, can’t do it,” or “sure but I don’t expect anything in return.”
“I’ll pay you back.”
They might wish they could, but if you pay their bills this month, they’ll be back to even on a monthly situation. In other words their income is likely to be exceeded by their expenses, which means you won’t be able to recoup your money.
Let’s say you are then debating whether you want to part with the $5000 permanently as that is the most likely long term result.
Then this becomes an easy decision. Either it’s not a big bite for you, or it is. You think to the last couple of years and consider how they have been valuable to you and how you have been valuable to them. This is an emotional decision if you have 50 times that amount in short term investments. It’s harder if you don’t have a spare $5000, you simply, say so.
What if they don’t mention the ridiculous $10,000 repayment aspect. They simply ask to borrow $5,000. It’s a similar situation because they can’t afford to pay it back.
Can you make everything in life perfect because you decide that is what you wish?
Of course not.
But your decisions and their implementation are the most important CONTROLLABLE factor determining your destiny in all aspects of life.
Write that down.
Your life experience is largely a brew of your state of mind, communication with others, your relationships, your actions and most importantly, your decisions.
If you want to achieve greater success in some area of life, making more decisions and making the right decisions is critical.
Learning how you make decisions and how others make their decisions allows you to become a more influential person. Making excellent decisions beginning today means fewer regrets and a lot more wins!
Is it time for a change in how you earn income?
Which job or project should you take?
Should you marry this one?
Should you divorce this one?
Should you buy this car?
Should you buy that home?
People blow big decisions every single day. These screwed up decisions often change a life path for months or years. It’s not worth making real decisions as if you were choosing what to have for dinner.
Humans have metaphorical databases of rules in their brain that make up algorithms or sub-routines that then determine decisions and behavior. These algorithms are the methods by which decisions are made. Unfortunately the rules and the algorithms that follow are reactionary in nature and developed by design.
Before I tell you that this is a big problem, take a look at what it has done for you to date.
The decision making processes that you have used for a few decades have gotten you to where you are today and you are alive.
In other words these presets in the brain do a decent job at keeping you breathing here on planet earth.
That’s a good thing.
But the presets don’t have achievement, accomplishment, success, solid relationship strategies coded into them. In fact, the opposite is the case.
I’ve released a number of audio programs where you can learn in depth about how people make decisions and how you can influence those decisions.
For today let’s begin by observing how people make decisions that keep them alive…but do little else.
1. People evaluate their own decisions in a faulty fashion.
People assume that when they decide on something and it turns out good, that they made a good decision when it easily could have been attributed to chance (luck).
Then they assume that if something turns out bad that they made a bad decision.
The first key concept here is that good decisions can’t always lead to good results and bad decisions can’t always lead to bad results.
The fact is there are a number of bad decisions that lead to good results and this experience convinces the brain that you are good at something, or that you make good decisions about something, when in fact…it’s not the case.
Get in the habit of saying, “That turned out well (poorly).” Don’t say, “that was a great (poor) decision I made.” This keeps your brain in a constant learning state. People who make consistently good decisions are honing the PROCESS and not focusing on the RESULT.
Imagine you are given “the choice” of deciding whether a face down card is red or black. It’s a 50/50 chance if you say red, that you are correct. Let’s imagine that you guess five in a row correctly.
This causes your brain to believe it is lucky, smart, psychic, or that it makes good decisions.
And this is where people are swindled by any of the millions of swindlers on the planet.
Here they say, “put your money where your mouth is.” Now you are going to lose your shirt. You were convinced of brilliance when in reality you were lucky or dealt cards with the intention of swindling you.
Similarly, if you bought five mutual funds this year and all five lost money, it doesn’t mean you made a bad decision, or that you chose bad funds.
We’ll tease out how to know the answer to that conundrum in Decision Point.
2. People factor pain, fear and discomfort in foolish proportions when decision making.
People tend to overemphasize the importance of pain by about 2.5:1 in decision making. (People may not need to feel great, but they don’t want to hurt at all.)
People will do anything to not look bad to others. Even when something is very likely to turn out well if they will JUST DO IT, they will still say “no” if there is even a tiny chance it will fail. People don’t want to look bad. They don’t want to be embarrassed. They don’t want to be uncomfortable and they certainly don’t want to take on that which is unfamiliar. 
And this problem all by itself means people will on average make poor decisions or what they consider to be “no decision.” But as you will see, “no decision” is typically a poor decision all by itself… 3. People rationalize their emotional decisions instead of making rational decisions.
Your gut and neural networks buried deep in the brain causes instant reactions to become permanent answers to life’s most important questions.
What happens is the person reacts and says “YES!” and then they try and figure out an excuse why they said “yes,” when in fact there was absolutely NO REASON AT ALL. There was no “decision.” The reaction was a stimulus/response experience.
Now the individual must rationalize WHY they said what they said. This can be tough to do because people are often under pressure to justify what they decide. So in simple terms, people make stuff up on the spot and go with whatever is made up.
These decisions can cost lives, relationships, nest eggs, retirement savings, you name it.
Our brains are wired for FAST reactions. They are also wired to JUSTIFY IMMEDIATELY after the reaction.
What happens next can be disastrous as you well know.
3. People make their decisions emotionally when the answer to a question or proposition isn’t obvious.
When faced with many choices or when enough information is not present humans tend to go with their gut instead of the best information that is in front of them.
The results tend to be predictable…and often a mess…if not disastrous.
Thousands of people go to prison every year because people make decisions based on their feelings instead of the best information that is available.
4. People make their decisions impulsively then stand by their impulse as if the decision was made rationally.
This is similar to number 2 & 3 above, but the “choice” is made by the reptilian (ancient) part of the brain and not the emotional “system.” That means it is pure reaction. This is why candy is in the check out aisle.
Humans, like most animals, are naturally impulsive creatures. They will grab now and think later.
5. People make their decisions based upon their experience and not the experience of the masses.
This is a difficult habit to break.
“I went into the military and came out a mess/in great shape.” Therefore the people they communicate with should stay out/enlist based upon their own personal experience.
“I took this medication/vitamin/supplement and I got well/sick” Therefore the people they communicate with should use/not touch the same thing.
Decisions based on personal experience are based on a sampling of ONE person. When something matters, this is a lousy way to make a decision.
6. People make decisions based upon the socio/environmental frames they put the decisions into.
For example…a woman going to Planned Parenthood for counseling will get different advice than the woman going to her conservative pastor.)
It’s very important to consider what specific criteria you want to use when making a decision. In this case the woman’s health is arguably the most important factor in the decision. Then what matters most next follows and so on.
Decide on what REALLY matters most and THEN consult your expert who has a track record in what REALLY matters most. THIS is how you seek advice.
8. People tend to make decisions on their own instead of seeking the counsel of numerous others who can give additional perspectives.
The fact is there are real experts in most areas of life. REAL experts can dissect baloney from reality.
I enjoy football and hear commentators say things like, “Teams that rush the ball 40 times per game win most of their games.”
This of course is a true statement but in no way does it imply that a team should start running the ball early in the game to insure a win.
What happens is Team X gets a significant lead and then they rush the ball more often as the game goes on to avoid throwing interceptions and making major blunders. This improves their chance of winning and is precisely whey teams that rush the ball Y number of times win more often than those that don’t.
These common errors of reasoning are completely understandable and lead to results that range from problematic to disastrous.
9. People are unaware of the enormous power of the actual words that are used to ask the Decision Making Question.
The words involved make an enormous difference in the actual decision that is ultimately made…
If someone hates their job, they could ask themselves or a friend, “I hate my job, it’s killing me, what should I do?”
Or
“My job is super stressful, it’s paying all the bills but I’m tired of the stress. What should I do?”
Imagine that YOU were giving the advice.
If the job is “killing” your friend, you probably don’t want to see them dead, so you encourage them to LEAVE.
The metaphors you use when framing decision making questions often determine the advice that is given. It also strongly influences the individual as to what they will do. Change the metaphor and you change the answer.
People are unaware as to how the influence specific questions changes their minds unconsciously. (Are you sick of driving that old junker? Vs. Are you thinking of buying a new car?)
Choose language wisely and with skill in Decision Making Questions. You’ll learn how to do this in detail in Decision Point.
10. People tend to avoid what they perceive as risky.
Earlier you saw that people avoid pain, discomfort, the unfamiliar, fear and the fear of embarrassment.
Most humans have a TERRIBLE sense of risk.
People tend to worry or be concerned about things that really make no difference in life.
They also tend to NOT worry or be concerned about the things that REALLY make a BIG difference in life.
What’s the most important risk you will take?
It’s something that involves your life. There are certain professions that are REALLY risky to enter and being alive next month is a serious REASON to make a GOOD CHOICE in career opportunities.
Now quickly, what do you think the most deadly professions are? What are the most dangerous professions?
Most people typically respond “firemen” or “police officers.”
But people assess risk poorly. Surely those two careers would be in the top 10 most dangerous. Right?
You might think so but you might be surprised by what you see in (h) below. This is from the BLS (Bureau of Labor Statistics, 2013)
The 16 most dangerous professions in the U.S. are…
a) Fishermen (127/100,000)
b) Loggers & Lumberjacks (112/100,000)
c) Pilots (53/100,000)
d) Roofers (40/100,000)
e) Steel Workers & Structural Iron Workers (37/100,000)
f) Refuse and Recycle Materials Collectors (27/100,000)
g) Electrical Power Line Installers (23/100,000)
h) Salespeople, Truck Drivers, Drivers (22/100,000)
i) Farmers & Ranchers (21/100,000)
j) Construction Workers (17/100,000)
The salesperson…is 40% more likely to die at work this year than a firefighter or police officer.
Fishermen and loggers are 550% more likely to die at work than a salesperson. I guess those of us in the 10th most dangerous profession are fortunate.
How is it that we have such a skewed view of the world?
Why is it that people are unfamiliar with the fact that lumberjacks are at massive risk every single day?
Media and cultural memory are big reasons that people miscalculate risk. Media report on lottery numbers and winners when they happen.
Think about it. If everyone buys a lottery ticket there are LOTS of people that want to see what balls were pulled from the drum. It has universal appeal even though it is one step short of impossible to win the lottery. Even your brain reacts, but it happens all the time!
And of course, it does not in real life.
Media only really reports on what is photo-friendly (sensationalistic).
This is what generates salience in our brains. Media love shootings, explosions and the like. And when one is reported on your brain remembers these things as being normal or common. Neither is the case.
When the fisherman or logger dies there is no one with a cell phone nearby to record the drama that happens all too often. And when the lottery winner takes home the million there are far too many media outlets covering the rare and meaningless experience. Good for them but shame on you and me for paying attention because it leads humans to believe that winning the lottery is a viable strategy for income in life.
Assessing risk requires access to solid information and the ability to think critically.
11. People tend to lack the skills to calculate the chances that events will or will not happen.
The vast majority of people have not taken a probability and statistics course in decades if ever.
That means not only do people not have the ability to calculate risk, they do not have the ability to UNDERSTAND risk.
Parents make some horrible decisions on behalf of their children. Why?? For the same reason we do not understand that sales people have a dangerous job and that loggers literally put their lives on the line daily so someone can live in a new home.
They do not access good information and if they get their hands on it they can not interpret it accurately.
Simple fact: The most successful people have the best grasp on reality.
It just makes sense. People who understand risk tend to thrive.
12. People tend to decide on the sure thing even when it does not make real sense to do so. They will take a sure $10 instead of a 50/50 chance at a $25 for example.)
This isn’t to say that there will not be a time when grabbing Ben Franklin makes the most sense. There WILL be times when it does make sense. And the example does not scale to millions. If someone offers you a million dollars or a 50/50 shot at 2.5 million and you have a net worth of less than 500,000; you should take the money and forget the 2.5 million.
Risk as you can see is more than simply evaluating ONE factor. It’s about evaluating that factor in the context of your life circumstances. But KNOWING which choice makes the most sense in most normal situations is extremely valuable information. Unfortunately no one taught this to people in high school.
13. People tend to make decisions without a solid understanding of the real life likelihood of events. (read that as mathematics, statistics and probability – sorry)
Before people do anything based on beliefs or values, they should double check the math on pretty much everything.
Beliefs and instincts HAVE caused them to survive, but those same instincts and beliefs rarely cause people to THRIVE and ACHIEVE.
Achievement comes with making and implementing good decisions.
14. Not only do most people make lots of bad decisions, people also tend to dramatically over-rate their decision making skills!
Here is our biggest enemy – overconfidence.
People go out into the world without for a second questioning and doubting what they believe to be true. They raise kids believing they are doing a good job. But are they? What evidence is there?
Humans tend to remember decisions that TURNED OUT WELL and think they are actually good at decision making.
