The Hindu Business Line : Overcoming painful decisions

Consider this. You go to a restaurant with your family. In a mood to try something different, you order an exotic dish that unfortunately turns out tasteless. Will you waste the food? If you behave like a typical person, chances are you will box it and take it home. Why?

Studies in neuroeconomics have shown that two regions in our brain are activated when we purchase goods. The nucleus accumbens, the brain’s reward system, is turned on whenever you see a product that you desire.

The insula, on the other hand, is activated when you suffer from aversion, like spending money.

You buy a product when the nucleus accumbens overwhelms the insula. But when your purchase decision (ordering food) turns wrong, the insula gets activated and increases your pain. To pacify the pain, you decide to take the food home and “repair” it.

Dulling the pain

More often than not, you shove the food deep into your refrigerator and forget about it. After a fortnight, when the fossilised food turns foul, you (often, your spouse) decide it is time to bury it. So, what did you achieve by carting the food home?

You, perhaps, never really wanted to “repair” the food. But the pain of wasting was especially high when you paid for it. You, therefore, dull the activation in your insula by taking the food home.

After a couple of days, the pain from the wasted food declines. Why? Because the insula is busy getting excited with other wrong decisions you have taken since then!

Fossilising the food and then dumping it is an ingenious way of dulling the pain. But this strategy may not always work. The intensity of pain suffered from a wrong decision may have some relation to the price paid for the product.

Your insula, for instance, may be activated each time you see the frightfully expensive designer dress you outgrew five years ago. That is why it is still buried deep in your wardrobe, waiting to be “repaired”.

(The author is a self-styled investment psychologist. He can be reached at enhancek@gmail.com)

More Stories on : Trends | Simple Economics

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page