How We Decide

Since the prefrontal cortex can handle only about seven things at the same time, it's constantly trying to "chunk" stuff together, to make the complexity of life a little more manageable. Instead of thinking about each M&M, we think about the scoops. Instead of counting every dollar we spend, we parcel our dollars into particular purc

When a subject contemplated a gift certificate in the future, brain areas associated with rational planning, such as the prefrontal cortex, were more active. These cortical regions urge a person to be patient, to wait a few extra weeks for the bigger gain. However, when a subject started thinking about getting the gift certificate right away, the b

When it comes to making ethical decisions, human rationality isn't a scientist, it's a lawyer.

anchoring effect

Once this overlapping of ideas occurs, cortical cells start to form connections that have never existed before, wiring themselves into entirely new networks.

amygdala

loss aversion, which we discussed earlier. The effect helps explain why people are much more likely to buy meat when it's labeled 85 percent lean instead of 15 percent fat.

€100,000 less than he was offered thirty seconds before. The irony is that this offer is utterly fair; Frank would be wise to cut his losses and accept the Banker's proposal. But Frank immediately rejects the deal; he doesn't even pause to consider it. After another unlucky round, the Banker takes pity on Frank and makes him an offer that's about 1

The only people who are immune to this mistake are neurologically impaired patients who can't feel any emotion at all. In most situations, these people have very damaged decision-making abilities. And yet, because they don't feel the extra sting of loss, they are able to avoid the costly emotional errors brought on by loss aversion. Consider this e

George Loewenstein, the neuroeconomist, thinks that understanding the errors of the emotional brain will help policymakers develop plans that encourage people to make better decisions: "Our emotions are like software programs that evolved to solve important and recurring problems in our distant past," he says. "They are not always we