George S. Chua l September 20, 2023 l Business Mirror
I am sometimes appalled at why certain people come up with decisions that would seem irrational. Thinking about this thought process, it is easy to understand that making decisions is not the same for different people. On the most basic level, decisions are made based on a risk-versus-reward basis. People will evaluate the type of risk or cost they are taking against the potential reward or gain that they stand to make.
An example is a criminal who will steal something, will only do it if the item being stolen is of value and there is a chance he will not get caught. Most certainly the crime will not happen if the item being stolen is worthless because the criminal has nothing to gain, or there is a 100-percent chance he will get caught, thereby making the cost too high.
The key to why people come up with different decisions is based on their perception, desire and available knowledge. If their perception or assessment tells them that the risk is worth taking for the potential reward or return, they will do it. Is it worth spending a few pesos to buy a lottery ticket? Many people think so, which is why even though to the more rational thinker, the odds of winning are so infinitesimally small, the few pesos at risk is also so small in comparison to what you could win. This small risk, big return makes many people willing to take the gamble.
Desire is another huge motivating factor to decide to do something. People will decide to work super long hours in the hope that they catch the eye of the boss and get promoted. It could also be that the overtime pay is so much that some people want the money. Wanting to be the champion in a sport also pushes athletes to train on a superhuman level of intensity and duration. The burning desire of certain people to succeed in something affects their decision to give up family, comfort and make so many sacrifices that many people may not find acceptable.
People have different levels of knowledge, skill, education and training, therefore, their decision on what action to take is also based on these. For example, I love playing golf and I certainly am aware of my skill level and the chances of making a good shot will sometimes tell me just to play safe rather than risk the ball landing in the water or ravine. For lawyers, knowing the law and how it works, enables them to properly counsel their clients on the proper course of action that they should take.
In reality, we still come across situations that the risk reward equation is totally ignored. These would be people that would have suicidal inclinations; that the risk factor is no longer a consideration but the achievement of a goal is the only objective. Examples of these would be the Kamikaze pilots of World War II, suicide bombers and mass shooters. I suppose, it is possible that these people have been conditioned to accept what they are doing for the greater good of their country, cause or order.
Free will is what is given to us. It is up to us to use this free will to make the proper decisions that are good and fair. It is our responsibility to know the truth and to make decisions accordingly.
*** The views and comments of Dr. George S. Chua are his own and not of the Business Mirror or the Financial Executives Institute of the Philippines (Finex). The author was 2016 Finex president, 2010 to 2020 FPI president and currently an active entrepreneur with investments in fintech, broadcast, media, telecommunications, properties. He is also a regular member of the National Press Club. Dr. Chua is also a Professorial Lecturer at the University of the Philippines Diliman Campus and BGC Campus. Comments may be sent to georgechuaph@yahoo.com.