10 Effects Affecting Your Decision Making

People often wonder why things do not go the way they plan. It turns out that this may not be their conscious guilt. Psychologists have identified several phenomena that influence the process of decision-making and explain the psychological paradox. Knowing these things will allow you to avoid wrong decisions.


1. Ambiguity effect

Ambiguity effect is a phenomenon in which people make decisions based on what they know about the results. If one is presented with a choice and knows the result of one of the options, he/she will choose it regardless of how advantageous the other option may be. For example, when it comes to investing in the stock market, people will first invest in the old, well-known campaigns, and not in the new technologies that could bring unprecedented revenues or fail completely.

2. IKEA effect

Another horrible sweater, knitted by your grandmother for the New Year holidays, is perceived with a smile and warmth. It is the most striking example of the so-called IKEA effect. This phenomenon is reflected in the fact that people often estimate the value or meaning of things disproportionately high, even though they are not related to the creation of these things. The name of this phenomenon is derived from the Swedish IKEA company, which sells furniture to be assembled manually. This furniture is often more expensive than the already manufactured furniture.

3. Rhyme

According to a survey conducted by the Lafayette College, people regard phrases that rhyme as more truthful and more accurate. It is also true of the catchphrases that literally “stick to your tongue.” When the slogan of any product rhymes, this product seems more credible.

4. Clustering illusion

Clustering illusion is the name that was given to a delusion, in which people see certain patterns in a set of random accidents, even when there is no correlation between them. The illusion is produced when a person says something that is completely random and begins to build some regularity. An example is the lottery when number “1” comes three draws in a row, so during the next draw most people select this number in their tickets.

5. Asymmetric domination and the bait effect

This effect manifests itself when people choose one of two options, comparing them both with a third variant. Here is an example of choosing between two restaurants. In one of them, the food is very good, but it is a long way to get there. The other restaurant is near, but the food is not so good there. Quite a difficult choice? Until the third option appears – a restaurant with really bad dishes at the distance somewhere between the two original restaurants. Comparing the first two options with the third one changes the result completely. Initially, the question was as follows: the quality of food or the distance to the restaurant. When we have three options, the question is “what restaurant is better than the other two,” and the choice of a restaurant becomes obvious, where the food is better than in the average restaurant, and which is more convenient to get to than the remote restaurant.

6. Empathy deficit

It is a well-known problem. People judge about everything and do not just try to put themselves in the other person’s shoes. Such an effect is often caused by parents’ underestimating their children’s needs. Children perceive the world differently than adults, but adults can easily forget to take this into account.

7. Peltzman effect

Named after Professor Sam Peltzman from the University of Chicago, this effect leads to the fact that too many devices are connected with increasing security. An excessive amount of the required safety rules causes more accidents and injuries due to a false sense of invulnerability. When a person feels invulnerable, he/she starts to make more risky decisions. For example, wearing seat belts and helmets can lead to more dangerous driving because people begin to feel more secure when wearing protective “ammunition”.

8. The just world hypothesis

Terrible things happen every day, and very often there is no way to help. This leaves only one option to ordinary people – to explain everything by putting the blame on the general atmosphere of our time, which many bad notions are often attributed to. That is why people assume that the women who are victims of sexual abuse or domestic violence provoke it, so it is “their own fault”. Believing in the just world means that people have to justify some pretty awful things.

9. The effect of saving time

It is logical to assume that if you drive faster, you will reach the destination more quickly and save a lot of time. The reality is actually much more complicated. Psychological studies have revealed the following: when people drive at a reasonable, relatively low speed and realize that they are late, they increase the speed. The problem is that people tend to greatly underestimate how much time they will save at the expense of even a small acceleration. This effect changes dramatically when the speed is already reached – this causes people to overestimate the amount of the time saved.

10. Dunning-Kruger effect

Dunning-Kruger effect is a psychological paradox. The people who have a low level of qualification draw wrong conclusions and make unfortunate decisions. However, they cannot realize their mistakes because of their low level of qualification. This lack of understanding mistakes leads to the fact that erring people believe in their own being right. Accordingly, this leads to the increased self-confidence and sense of superiority. Paradoxically, competent people tend to hesitate about themselves, their abilities and decisions.