It may be convenient to think that you and I alike make rational economic decisions, always. Such as buying the cheaper option of a good that is available in the supermarket or, spreading our available funding in a manner that is proportional to what is most important to us. But you may already be thinking to yourself that this isn't always necessarily the case for yourself and much less for the wider population to be perfectly rational by always maximising your utility. If it is seemingly more sensible to take the cheaper option why is it that we as human beings continually choose to make irrational decisions that don’t always maximise our utility? Decision fatigue may play a role.
Decision fatigue is defined as the mental exhaustion experienced after intense decision-making sessions. It also depicts how the quality of decisions deteriorates after an individual is overloaded with having to make too many decisions.
An experiment conducted by Dan Ariely, Professor of Behavioural Economics at Duke University, outlined in his book ‘The (Honest) Truth About Dishonesty’ highlights how mental fatigue can influence our following decisions.
Participants were split into two conditions, depleting and non-depleting. Prior to completing a quiz, those in the depleting condition had to complete a simple task that involved deciding to repeatedly ignore their instinctive thought. Then, participants of both conditions completed the same quiz and were paid for the number of questions answered correctly. Afterwards, they would transfer their answers to a bubble sheet, and submit only that to receive their payment.
Upon completion, participants were told that they were one of two final participants for the day, and so could choose between two bubble sheets – one that has previously been marked with the correct answers, but had been erased or a blank one. Both conditions were given equal opportunity to cheat here (by choosing the previously marked bubble sheet and getting a glimpse of the correct answers). Not only did those in the depleted condition choose the previously marked bubble sheet more often, the experimenters ended up giving 197% more money to those in the depleted condition than those in the non-depleted condition.
This could be considered to be more rational – cheating and getting more money to maximise their capital gain for the time they sacrificed. Or more irrational because cheating could be considered morally wrong in all circumstances, as after all, they are claiming money that is not rightfully theirs.The effect of decision fatigue here may be impaired self regulation. As once fatigued, those in the depleting condition may not be able to judge themselves as critically for taking advantage of the situation and choosing to cheat, not only by selecting the previously marked bubble sheet, but also 'correcting’ their answers to such an extent.
When we are faced with too many decisions to make at once we become mentally exhausted and so are then less likely to make trade-offs (or may eve avoid making a decision altogether) that would result in our maximised utility, and thus make poorer choices for the allocation of our resources, including our time and money.
But can this all be down to decision fatigue alone? Some behavioural economists may suggest otherwise.
Such as Richard Thaler, who ‘argues that it is impossible for a decision to be presented in a completely neutral manner,’ because there will always be implicit influences there that may be there to purposefully change the outcome of our decision. These subtle influences are known as nudges, which are a technique used by choice architects.
Choice architecture is the design of different ways in which choices are presented to decision-makers. A recent example of a government policy utilising this is the UK government’s rollout of the policy requiring the number of calories to be presented on menus, which may have been introduced to encourage people to make a 'healthier’ decision about what they choose as it is another factor influencing their decision, from a set number of choices on the menu, however, the effectiveness of this particular policy is yet unknown.
Another example of this is in supermarkets. You start off in the fruit and vegetable aisle making many healthy decisions you are happy with, and walk past hundreds of other products to make your other selections – a lot of which require multiple decisions to be made. Finally, there are the confectionary and alcohol aisles. You may now choose to shop more in either of these, due to impulse purchasing and impaired self-regulation, which are both effects of decision fatigue, as you feel that you have made healthy and rational choices so far and deserve a little treat. This may be cleverly crafted choice architecture by supermarkets, taking advantage of their shoppers’ decision fatigue. After all, they have presented the same choices of all the goods in the supermarket, in a slightly different order which has influenced the outcome of our decision without actually changing the options available to us.
Ultimately, it cannot be denied that irrationality in economic decision-making isn't to some extent driven by decision fatigue. While it is not the sole cause of irrational decisions, after a certain time of day when we have sufficiently depleted the number of decisions we can, it is likely to be a greater driver of our, economically speaking, irrational decisions due to the fact that we are less likely to think critically about the outcome of the decisions we make and are more likely to act impulsively and have reduced self regulation. Although, other factors, such as nudges and choice architecture, can also be influencing our decision making and no one thing will influence two people in the same way.