Decisions, Decisions

More Predictable Irrationality blogging. People like to keep their options open. That's another reason that most people hate making decisions. There are many cases when keeping your options open is a good strategy, but keeping one's options open too long leaves us in the position of Buridan's Ass - starving to death between two equally tempting haystacks. The experiments of Ariely and colleagues seem to show that people, or at least university students, will tend to incur clear tangible losses to keep an option open, even when that option is completely meaningless.

There is plentiful evidence for the same kind of behavior in the real economy, as well. The tax laws have incentives for saving for retirement, but many people fail to take advantage of them even when they are so close to retirement that the money isn't really removed from their control or availability.

I tend to see this as another example of people being unwilling to expend the emotional and cognitive energy to make decisions, especially difficult decisions that require detailed comparison of options.

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