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Personality & Self-knowledge

How to Make Better Decisions - The Psychology of Decision-Making

Picture yourself standing in a supermarket in front of a shelf with 24 varieties of jam. Sheena Iyengar from Columbia University actually ran this experiment in 2000 and found that customers facing that many choices bought jam ten times less often than those choosing from just six options. More choices don't mean better decisions. They often mean no decision at all.

And that was just jam. What about choosing a school, a career, a partner, or whether to quit your job?

Why Decision-Making Is So Exhausting

You make roughly 35,000 decisions every day. Most of them happen below the surface of awareness: what to wear, which route to take to work, whether to reply to that email now or in an hour. But your brain spends a small amount of energy on each one. Psychologist Roy Baumeister calls this decision fatigue: the more decisions you make throughout the day, the worse the later ones get.

That's why Mark Zuckerberg wears the same T-shirt every day. That's why judges in Israel approved parole in 65% of cases in the morning but only 10% in the afternoon (Danziger, Levav & Avnaim-Pesso, 2011). The quality of your decisions isn't just a matter of intelligence. It's a matter of timing and mental reserves.

But fatigue is only the beginning. Far more dangerous are the systematic thinking errors you usually don't even know about.

Two Systems in One Brain

Daniel Kahneman, Nobel laureate in economics (2002), described two modes your brain operates in, in his book Thinking, Fast and Slow.

System 1 is fast, automatic, and intuitive. It works effortlessly. When you dodge a car at a crosswalk, read a colleague's mood from their facial expression, or instinctively know that 2 + 2 = 4, that's System 1.

System 2 is slow, analytical, and deliberate. It kicks in when you calculate 17 x 24, plan a vacation, or weigh whether to accept a job offer in another city. It requires focus and burns through a lot of energy.

The problem? System 1 makes decisions far more often than you realize, including in situations where System 2 should be in charge. You feel like you carefully weighed that job offer, but in reality you decided in the first second based on a gut feeling and then spent your time looking for arguments to confirm it.

Cognitive Biases That Sabotage You

System 1 uses shortcuts known as heuristics. Most of the time they work well. But sometimes they lead to systematic errors called cognitive biases. Here are three you run into almost daily.

Anchoring: the first number wins

If someone tells you a house was originally listed at $800,000 and is now priced at $500,000, it feels like a great deal. If you then learn that the house next door sold for $400,000, suddenly it doesn't seem so great. Nothing about the house changed. The only thing that changed was the anchor your brain was calculating from.

Tversky and Kahneman showed in 1974 that even completely random numbers (generated by a roulette wheel) influenced participants' estimates in an experiment. Anchoring works even when you know about it. Real estate agents, negotiators, and car salespeople all understand this well.

Confirmation bias: you only look for what you want to find

You're thinking about changing jobs. You pull up articles about how your field is overpaid, read stories from people who left and are happier, and notice every comment from a colleague that confirms the company is doing poorly. Information that argues against leaving? It just doesn't sit right, so you skip it.

That's confirmation bias: the tendency to seek out and favor information that supports what you already believe. You don't do it on purpose. Your brain does it for you, automatically and silently.

The sunk cost trap: I don't want it to have been for nothing

You've spent three years studying a subject you don't enjoy. Walk away now? That would make those three years a waste. So you push through another five years in a profession that suffocates you, because you don't want to "throw away" the time you already invested.

But that time is gone regardless of what you do next. Your decisions should be based on future benefits, not past investments. Economists call this the sunk cost fallacy, and it's one of the most expensive errors in decision-making. How many people stay in the wrong relationship, job, or apartment simply because they've "put too much into it already"?

Personality and Decision-Making

Not everyone falls into the same traps with equal ease. A lot depends on how you naturally process information and draw conclusions.

In the MBTI framework, two dimensions directly shape your decision-making style:

Thinking (T) vs. Feeling (F) describes how you evaluate information. Thinking types decide based on logic, consistency, and objective criteria. Feeling types weigh the impact on people, personal values, and individual circumstances. Neither approach is better. But if you're a strong T and you're making a decision that affects people, you might overlook the emotional consequences. And if you're a strong F, empathy can lead you to ignore hard data.

Judging (J) vs. Perceiving (P) describes how quickly you want to close a decision. Judging types tend to decide early, make a plan, and stick with it. Perceiving types prefer to keep options open as long as possible, gather more information, and stay flexible.

AdvantageRisk
Thinking (T)Objective, consistent decisionsOverlooking the human factor
Feeling (F)Sensitivity to impact, empathetic choicesDeciding based on momentary emotions
Judging (J)Quick closure, clear planPremature decisions without enough data
Perceiving (P)Flexibility, better-informed choicesPostponing and analysis paralysis

What's your natural style? If you're not sure, the MBTI personality test will show you where you fall on these scales. The result might explain why some decisions feel effortless and others feel unbearable.

Analysis Paralysis: When Thinking Replaces Doing

You know the feeling: you deliberate for so long that the train leaves without you. You read reviews, compare options, build spreadsheets, and end up buying nothing. Or worse: someone else makes the decision for you because you waited too long.

Barry Schwartz described this precisely in The Paradox of Choice (2004): more options don't lead to greater satisfaction. They lead to more anxiety, more regret, and less happiness with whatever you finally pick. Schwartz distinguishes two types of people: maximizers (who seek the absolute best choice) and satisficers (who seek one that's "good enough"). Satisficers are consistently happier, even though they sometimes make objectively worse choices.

Analysis paralysis hits maximizers hardest. But everyone gets stuck sometimes, especially with decisions that feel irreversible. Choosing a college. Buying an apartment. Getting married. Your brain locks up because it perceives an enormous risk of choosing wrong.

Yet most decisions are far more reversible than you think. Jeff Bezos distinguishes between Type 1 decisions (one-way doors, truly irreversible) and Type 2 decisions (two-way doors, easily changed). He argues that most decisions are Type 2, but we mistakenly treat them as Type 1.

Practical Frameworks for Better Decisions

You can't eliminate cognitive biases entirely. But you can significantly reduce their influence. Here are five approaches that work.

The 10/10/10 rule (Suzy Welch): How will you feel about this decision in 10 minutes? In 10 months? In 10 years? This simple exercise pulls you out of the emotion of the moment and forces you to consider long-term impact.

Premortem analysis: Before you decide, imagine you already made the decision and a year later it went catastrophically wrong. What happened? Psychologist Gary Klein developed this technique, and research showed it increases the ability to identify risks by 30%. It's easier than trying to "think objectively" because it gives System 1 a concrete task to work on.

Devil's advocate: Actively search for arguments against your preferred choice. Ask someone you trust to tear your decision apart. Confirmation bias is best countered by deliberately exposing yourself to the opposing view.

The two-minute rule: For small decisions (where to eat lunch, which color to pick, whether to reply now or in an hour), decide within two minutes. Save your decision-making capacity for the things that genuinely need it.

Write down your criteria in advance: Before you start evaluating options, write down what matters to you and in what order. This protects you from anchoring and confirmation bias because you have a clear framework before the first option has a chance to influence you.

None of these frameworks relieve you of responsibility for your decisions. But each one does the same thing: it slows System 1 down just enough to give System 2 a chance to step in. And that's often the difference between a decision you'll regret and one you'll stand behind.

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