With markets down hundreds of points by midday Thursday, you might be tempted to buy a boatload of cheap stocks. Maybe you want to sell and get off of the roller coaster.
Whatever you do, don’t make that critical decision in the afternoon.
That’s when you are most susceptible to a phenomenon researchers are calling decision fatigue.
The basic concept is that people have to make countless decisions in a day: some small like what to wear, and others large like what car to buy. As the day goes on and more decisions get made, people drain the mental resources they use to choose.
“Making a lot of decisions after a while, your brain gets tired,” said Jonathan Levav, an associate professor at Stanford University’s Graduate School of Business. “What does that mean? It means you don’t have the resources to figure out the tradeoffs between different attributes of product.”
The concept is the brainchild of Dr. Ray Baumeister at Florida State University. Baumeister hypothesized that making decisions depletes an executive function. Baumeister, who specializes in researching self-control, had the idea that many decisions require people to override their impulses – a task that requires mental resources.
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Subsequent research has given legs to the idea that the more decisions you make, the harder it is to make them.
Levav, for example, ran an experiment that asked people to choose from a long list of options for a new car. When people started they took their time making decisions, but as people worked through the long list, Levav found they simply chose the default option.
“You look for ways to simplify decisions,” he said.
Another study Levav did in partnership with researchers in Israel found that judges’ decisions about paroling similar convicts depended on time of day. The study shows that judges paroled people about 70 per cent of the time in the morning, but only 10 per cent of the time in the afternoon.
Levav said the research suggests the need to create systems that take decision fatigue into account. For example, he said lunch breaks changed the decision-making patterns of the judges.
He added that further research needs to be done to determine what exactly is the mental resource needed for making decisions. This will help determine whether humans can replenish the storehouse.
There are some exceptions to decision fatigue, according to Levav.
Fatigue will only sway decisions where you aren’t sure what you want, he said, but won’t change your mind about long-standing preferences.
“I love chocolate. I’m always going to choose the chocolate dessert over the fruit dessert,” he said.
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