System 2 may error in many, many ways, but so that you have a good general understanding of this type of error, I’ll only highlight a few of the most common: these are excessive cognitive load, confirmation bias and poor mental accounting. Of these, potentially the most commonly exploited is our capacity for cognitive load, which is the amount of mental effort we have available to perform a task at any given moment. Rather than explain only the theoretical implications of cognitive load theory, we’ll also look at the practical ramifications.

This is the amount of processing power required to understand the logical or instructive content of the task. At ContactEngine we heavily use the Barbara Minto principles of structure to organise ideas we want to convey – situation, complication, question/action. This helps organise intrinsic load by presenting information in a cogent, easy to understand way. When thinking about your own decisions, this can mean reducing the complexity of a decision down to its essential and necessary components, which can aid precision and reduce bias.

To influence decision making in others, you can use similar logic. One way of thinking about this, and a recurring theme within the world of ‘nudging’, is to make it easy! Making it easier to make a decision can solve a host of business and personal problems. Limit complexity wherever it is appropriate.

Germane load is the cognitive load required to process, create and automate mental ‘schema’. For long term influence and behaviour change, there is a balancing act required to both increase germane load, which aids learning, whilst also keeping intrinsic load in check! This is because there is something of an inverse relationship between germane and intrinsic loads, and a certain level of difficulty is desirable for long term learning. But in the context of influencing shorter term decision making, the key is to utilise what’s there already and to stay consistent.

Making use of common ‘schema’ stored in the long-term memory, makes decision making and recall easier, through navigating easily recognisable patterns. ‘View my basket’ and ‘checkout’ buttons are good examples of well defined, and recognisable schema used on online shopping sites. When introducing people to newer applications, attenuating a user interface to be stable and consistent is a key priority for reducing friction and optimising germane load in the future.

Understanding the relationship between these two modes of thinking is a crucial part of understanding why we approach problems the way that we do. The crux is how our experience and evaluations are constructed. Without getting too deep into this, consider the way that we represent problems: our system 2 thinking relies on the outputs of system 1, which is constantly running in the background.

This means that our evaluations are innately and implicitly biased, since our representation of the world has been constructed via probabilistic and anecdotal models, rather than by an objective system. Even when we really think about an issue or problem and are certain we have given it a rational and objective treatment; it’s possible to slip into bias when deciding. This is because of our individual differences in motivation and prior beliefs.

Confirmation bias demonstrates how human beings assign irrational value to data and evidence, which is the main downfall of system 2 – it’s vulnerability to our value system. And further evidence of this comes from ‘mental accounting’: in the same way that humans moralise data in line with ideologies, it’s also routine for people to assign subjective values to money. The study of subjective value assignment to money, was the push that catapulted behavioural economics out of the classical theories of the 70s. Kahneman’s prospect theory [1] showed that ‘homo economicus’ would never make the decisions that real people make about money!

As a species we do a very bad job at accurately assessing value. System 2 is littered with these sorts of biases, which fall into the category of ‘mental accounting’. These biases concern our handling of money, probabilities, and risk. There are many of these, but for brevity let’s look at just a few examples. The most salient of these is our sensitivity to change over levels.

Perhaps my favourite example of poor mental accounting comes from Dr. Robert Cialdini in his excellent book ‘Influence: the psychology of persuasion’ [3]. This is the contrast principle:

“There is a principle in human perception, the contrast principle, that affects the way we see the difference between two things that are presented one after another. Simply put, if the second item is fairly different from the first, we will tend to see it as more different than it actually is. So if we lift a light object first and then lift a heavy object, we will estimate the second object to be heavier than if we had lifted it without first trying the light one.”

In monetary terms, the contrast principle works similarly. We view a £100 purchase as significantly less expensive if made after a £1000 purchase. This error is exploited prolifically, perhaps most overtly within new car purchases. During these transactions, additional, high margin products are sold at rates most would not pay if they were upgrading an existing vehicle via separate transactions.