A choice architect

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.

Optimize for defaults - Shift your environment so that the good behaviors are easier and the bad behaviors are harder.

Design your life like a choice architect:

• Encourage smarter decisions you want to do by making them more accessible.
• Add friction to habits you want to quit, making them less accessible, or remove the option to perform them completely.

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

When consumers are faced with many alternatives, they often experience choice overload that increases anxiety and hinders decision-making.

Consumers try to reduce this anxiety by selecting only a couple of criteria (say price and quantity) to determine the best value for money.

A decoy steers you in a particular direction while giving you the impression that you are making a rational, informed choice.

Consider the price of drinks at a well-known juice bar: a small (350 ml) size costs $6.10; the medium (450 ml) $7.10; and the large (610 ml) $7.50. The medium is a slightly better value than the small, and the large better still. The medium is designed to be the decoy, steering you to see the biggest drink as the best value for money.

If you buy the biggest, was it because you made a sensible choice, or have you been manipulated to opt for bigger than intended?

The mind seems to involve various simple systems throughout the body that are not always in agreement. Some systems are shortsighted, some care about relationships, and some prioritize the future of humanity.

We are not always aware of each mechanism. Sometimes we make decisions carefully and other times intuitively.

• Highlighting the decisions of others you consider influential. Reading “Most other guests staying at this hotel reuse towels,” may make you feel compelled to align your behavior with the majority.
• “Injunctive norms” focus on how one should act in a particular situation. “Reusing towels meets a high standard for environmental responsibility,” highlights self-imposed standards. It involves a belief about right and wrong that consider abstract concepts.

• Your goals are like the rudder on a small rowboat. They set the direction and determine where you go. 
• If you commit to one goal, then the rudder stays put and you continue moving forward. 
• If you flip-flop between goals, then the rudder moves all around and it is easy to find yourself rowing in circles.
• If the rudder is your goal, then the oars are your process for achieving it. While the rudder determines your direction, it is the oars that determine your progress.

Example: If you’re a writer, your goal is to write a book. Your system is the writing schedule that you follow each week.

1. Ruthlessly Eliminate Your Goals. Consistently prune and trim down your goals. If you can muster the courage to prune away a few of your goals, then you create the space you need for the remaining goals to fully blossom.
2. Stack Your Goals. Make a specific plan for when, where and how you will perform this."Networking: After I return from my lunch break, I will send one email to someone I want to meet."
3. Set an Upper Bound. Don't focus on the minimum threshold. Instead of saying,  “I want to make at least 10 sales calls today.” rather say, “I want to make at least 10 sales calls today, but not more than 20.”

The brain creates shortcuts in order to make fast decisions when it hits information or inspiration overload. 

These shortcuts form unconscious biases so it’s easier for your brain to categorize information and make quick judgments over and over again.

This means that when something good happens, you take the credit, but when something bad happens, you blame it on external factors.

Self-serving bias may manifest at work when you receive critical feedback. Instead of keeping an open mind, you may put up a defense when your manager or team member is sharing feedback or constructive criticism.

It's a thinking mistake and it occurs when we confuse selection factors with results. 

Professional swimmers don't have perfect bodies because they train extensively. Rather, they are good swimmers because of their physiques.

It plays on this tendency of ours to emphasize loss over gain.

The term sunk cost refers to any cost that has been paid already and cannot be recovered. The reason we can't ignore the cost, even though it's already been paid, is that we're wired to feel loss far more strongly than gain.

• One common explanation: we that if everyone else is choosing to do one thing, it is probably a good thing to do.
• Another common explanation: we fear that failing to follow a norm may have negative social consequences.

The idea of the self-categorization theory is that people conform to the norms of certain social groups whenever they have a personal desire to feel like they belong.

It is irrelevant whether a norm reflects people's preference, as long as the behavior is associated with the group.

It's a tendency to heavily weigh the moment which is closer to the present, as compared to something in the near or distant future.

Example: If you are offered a choice of $150 right now or $180 after 30 days, you would be more inclined to choose the money you are offered right now. However, if we take the present moment out of the equation, and put this offer in the distant future, where you are offered $150 in 12 months or $180 in 13 months, your choice is likely to be the latter one.

• Actor-Observer Bias: the way the explanation of other people’s behaviour tends to focus on the influence of their personality while being less focused on the situation while being just the opposite while explaining one’s own behaviour.
• Zeigarnik Effect: when something unfinished and incomplete tends to linger in the mind and memory.
• The IKEA Effect: when our own assembling of an object is placed at a higher value than the other objects.
• Optimism Bias: makes us underestimate the cost and duration for every project we try to undertake or plan.
• Availability Bias: makes us believe whatever is more easily available to our consciousness, and is more vivid (or entrenched) in our memory.

Part of the expected value is estimating the chance or probability of the situation.

Many people have poor judgement calculating real probabilities. They overstate the chance of rare events and underestimate the possibility of common events.

For example, many people don't like to fly on planes because they are scared they might be in a crash, yet the actual chance is close to zero.

The cost or payoff is not always clear.

For example, people feel more pain from the loss of a dollar than pleasure from a dollar gained. It is called loss aversion. 

The prospect theory combines the ideas of loss aversion and over- and under-weighing the odds. It helps to calculate the real expected value.