We are not as rational as we think, book says | CITIZEN-TIMES.com | Asheville Citizen-Times

We are not as rational as we think, book says CITIZEN-TIMES.com Asheville Citizen-Times

We are not as rational as we think, book says
Paul H. Jacques
• published March 29, 2009 12:15 am

Excerpts:

.... These factors also affect choices of those of us who are not as well-known. That includes the friendships we develop and investments we make, and, in our professional lives, employee selection and decisions at the tactical and strategic levels in organizations.

If you've found yourself purchasing loss/damage waivers, trip insurance or unlimited calling plans, making multiple purchases of stocks each at a share price lower than the previous purchase, or simply having made some bad decisions, Ori and Rom Brafman offer a book that you'll find quite handy.


“Sway” is about decision-making and the biases that each of us brings to the process. The book presents compelling evidence that the rational decision-making model, a fundamental assumption underlying many processes and disciplines, is flawed because humans are, by nature, subject to biases and hence not rational.

Biases are referred to as “sway” factors in that they sway our thinking away from rationality, and these factors permeate virtually all our decisions. One sway factor is loss aversion, the idea that humans disdain losses more than we love gains. The authors argue that in order to preserve our self-image, we are reluctant to assume risks that might lead to the loss of investments involving money, effort or emotions.

These factors also affect choices of those of us who are not as well-known. That includes the friendships we develop and investments we make, and, in our professional lives, employee selection and decisions at the tactical and strategic levels in organizations.

Read Full Article: http://www.citizen-times.com/apps/pbcs.dll/article?AID=2009903290331
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.