The Saturday Evening Post just published my latest column, How Do We Humans Ever Make Good Decisions. The article explores why we are so bad at making good decisions (hint: paradoxically, it's evolutionary), the cognitive biases that distort our thinking, and how you can take steps to improve your decision making, especially when you are faced [...]
Is there anything more important to the success of a company than decision making? And is there any other process that occurs so often in a company that is accomplished so haphazardly? The decisions that are made, from the boardroom and the corner office on down, dictate the direction that the company goes. Yet, decision [...]
I was recently interviewed on Fox Business News on the topic of the Psychology of the Stock Market. In this interview I discuss the three reasons why many people are afraid to invest in the stock market.
The conventional wisdom in classical economics is that we humans are “rational actors” who, by our nature, make decisions and behave in ways that maximize advantage and utility and minimize risk and costs. This theory has driven economic policy for generations despite daily anecdotal evidence that we are anything but rational, for example, how we invest and what we buy. Economists who embrace this assumption seem to live by the maxim, “If the facts don’t fit the theory, throw out the facts,” attributed, ironically enough, to Albert Einstein. But any notion that we are, in fact, rational actors, was blown out of the water by Dr. Daniel Kahneman, the winner of the 2002 Nobel Prize for economics, and his late colleague Amos Tversky. Their groundbreaking, if not rather intuitive, findings on cognitive biases, have demonstrated quite unequivocally that humans make decisions and act in ways that are anything but rational.
It’s a wonder that good decisions are ever made by the species known as Homo Sapiens. The reality is that the cards are stacked against us whenever we are faced with choices, especially when the decisions are of consequence. Think about all of the horrendously bad decisions that have been made in recent history and [...]
