Analysis paralysis: Why your brain can panic over a simple decision

Aunt Marilyn had many great qualities, but as a teenager making decisions under pressure didn't seem to be one of them.

In the summer of '79 on a central NSW wheat and sheep farm, a 15-year-old Marilyn was driving her younger brother, my uncle Andrew, to the bus stop in an old white and yellow striped Standard 10 (which is like a Morris Minor).

At the end of the long, dusty farmhouse driveway there was a huge old gum tree that acted as a bit of a "roundabout". You had to choose whether to go left or right around the tree. It didn't seem to be a hard choice, as it didn't matter which way you went - you'd still end up at your destination. However, this is my Aunt Marilyn we're talking about.

On that fateful summer's day, with no air-con, late for school and with her younger brother undoubtedly doing something annoying and loud, Marilyn sped down the driveway so they wouldn't miss the bus (which would result in a 30-minute bumpy drive to school if missed).

Approaching the old gum tree at the end of the driveway, she had one choice to make. Left or right? Left or right? For some reason her mind started to stall. She found herself in a binary freeze, a panic-riddled paralysis. Left or right? Left or right?

Too late.

Aunt Marilyn drove the Standard 10 straight up the guts of the old gum and knocked her brother out cold on the dash of the car (this was well before seatbelts were a thing). All were fine, but they did miss the bus that day.

We might chuckle at this story, but how many times have we been paralysed with a binary choice in which indecision has led us up the proverbial tree?

We might have trouble deciding between asking for a raise or leaving the organisation, so we do neither, and end up in a job where we feel under-appreciated and underpaid. We don't know whether to buy more of the same stocks or invest in something different, so we don't do anything and slowly watch our investment wilt away. Indecision is often the worst decision to make.

Psychologically there are often two underlying drivers behind this decision paralysis. The first is that we tend to split decisions into good or bad, right or wrong.

However, with most decisions, as eluded to in Marilyn's cautionary tale, there is no right or wrong.

They are just two options. Our brains are hardwired to avoid negative outcomes, so making it right or wrong means that we're now trying to avoid the worse option, and because we're not able to see which is worse, we hesitate and delay the decision for another day (or never).

The second reason is found in the way we attempt to judge whether a decision is good or bad, most often via a cognitive bias called "resulting". Resulting is where the outcome of a decision is used to determine whether the decision was a good one or not. A good investment choice is one that makes money in the end. Choosing to spend time at a networking event becomes the right choice if you make a good connection.

But we often can't know the result of a decision when we're at the point of making it. It's the fear of making the wrong decision that could lead to a negative result that makes us freeze.

Don't panic about making the wrong choice - any choice will often do. When you panic, you freeze, then you inevitably drive your financial car into a tree and knock out your savings.

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