“First, never underestimate the power of inertia. Second,... - Deepstash

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How to Make Smarter Decisions by Designing Your Defaults

Richard Thaler

“First, never underestimate the power of inertia. Second, that power can be harnessed.” 

Richard Thaler

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SIMILAR ARTICLES & IDEAS:

Position of products influences our decision of buying
We don't just buy products because of what they are, but we often buy them because of where they are. For example, items on store shelves that are at eye level tend to be purchased more than items on ...

Optimize for defaultsShift your environment so that the good behaviors are easier and the bad behaviors are harder.

Optimize for defaultsShift your environment so that the good behaviors are easier and the bad behaviors are harder.

Default decisions and their influence

Although we usually have the freedom to make a wide range of choices at any given moment, we often make decisions based on the environment we find ourselves in:

  • If you sleep with your phone next to your bed, then checking social media and email as soon as you wake up is likely to be the default decision.
  • If you keep a water bottle with you throughout the day, then drinking water rather than soda is more likely to be the default decision.
The Default Choice
The Default Choice

While prompted to make a decision with a given set of options, a person has the freedom to refuse to actively make a choice.

The decision-making process of the person is affected by the

How Economic Incentives Affect Our Choices

If a person is told about the economic incentives of their selection, they are more likely to make an active choice.

If the person is told about the pros and cons of their decision, they have a logical reason to make the desired choice, as it can minimize any potential loss.

Rewards And Penalties

Organizations need to understand when to provide a reward to the person making the choice to promote active choice-making, or to initiate a penalty to make them provide a concrete answer.

Default options

Deciding is too much effort so we’re likely to just stick with the default or safer option if it’s already been chosen for us. 

When we get offered too many choices, the same...

Best decision making happens in the morning

This is when serotonin is at it’s natural high, which helps to calm our brain. Thus, we feel less risk averse and so we can face risks and make harder choices.

The part our bodies play in decision-making

If we’re feeling hunger, thirst or sexual desire, that can actually spill over into the decision areas of our brains, making us feel more desire for big rewards when we make choices. 

This can lead us to make higher-risk choices and to want for more.