Make Better Decisions Using AI

How Human Brain takes decision

If we want to understand how to make better decisions using AI, we need a crash course on human brain. If you dive deep into human psychology, you will know that our brain uses shortcuts to process information quickly. This is explained in the book Thinking Fast and Slow where it is said that our brain operates in two modes:

System 1 : Which is fast, intuitive, and automatic but relies on shortcuts called heuristics, making it error-prone.

System 2 : Which is slow, analytical, and logical but requires effort, making it unsuitable for everyday decision-making.

The fun thing is that in everyday life, we need System 1 because it is fast and efficient, but the problem is that since it uses shortcuts, it often makes errors, which are called biases. These biases are a natural part of human evolution, and no one is free from them. Every human has them, and we cannot completely remove them no matter how hard we try.

Why Bother ?

So, what’s the use of this knowledge if we can’t eliminate biases? Well, simply being aware of them can help us make better decisions in life and analyze things in a more impartial manner. This can be useful in n number of domains, such as relationships, where we sometimes forget to consider the needs of others, or in financial decisions, and even in everyday purchases. The applications are endless, and the sky is the limit.

The name’s GPT… ChatGPT

This is where AI jumps into the game and we can use it as external bias checker to help us stay objective/rational. AI can provide a structured, impartial perspective on decisions and point out biases that we might overlook. We will use ChatGPT for this example and I will address AI and ChatGPT synonymously from now on. Take note that you can use any AI tool for this use case but it might result in some variations in the output.

We will use a prompt (Instructions to AI) that I specifically designed to get the biases out our thinking process. The prompt will be provided to you guys here so you can use it or even tweak it to your liking if you want. We won't be diving into the depths of engineering a prompt from scratch but let us know in the comments sections if you want it.

Make better Decisions using AI

Now, let’s look at an example where AI can help analyse a decision.

Prompt

The following text is a thought that occurred to me, and I am considering taking action based on it. Please analyze the text from an objective perspective while also considering my human emotional, intuitive, and subjective side. Suggest any pitfalls and biases in my thinking while maintaining a proper balance between the objective and subjective aspects. Once identified, try to predict what might be causing them and suggest possible solutions.

Query

My income is 30,000 per month in India and I want to buy an iPhone worth Rs 1,00,000 ? I want that iPhone because all my friends have it and everyone on social media has an iPhone ? should I buy it using a credit card loan if I don’t have funds available with now ?

AI Response

Objective Perspective:

- Financial Feasibility: Your income is ?30,000/month, while the iPhone costs ?1,00,000—over three months’ salary. Credit card loans have high interest rates (30-40%), increasing the total cost.

- Opportunity Cost: That ?1,00,000 could be used for investments, savings, or skill development, offering long-term benefits.

- Psychological Factor - Social Proof ; FOMO: The urge to buy is driven by peer pressure and social media influence, not necessity.

Subjective / Emotional Perspective:

- Desire for Belonging Status: Wanting an iPhone to fit in is natural, but self-worth shouldn’t be tied to material possessions.

- Instant Gratification Bias: The excitement of a new iPhone fades quickly, while financial burden lasts longer.

- Self-Worth Tied to Materialism: This could lead to continuous craving for expensive items, creating financial stress.

Pitfalls and Cognitive Biases in Your Thinking

1. Herd Mentality: Following others without questioning personal needs. 

2. FOMO (Fear of Missing Out): Believing life is incomplete without the latest gadget. 

3. Hyperbolic Discounting: Overvaluing short-term pleasure over long-term financial security.

4. Justification Bias: Rationalising an emotional decision. 

Possible Solutions & Alternatives

1. Delay the Purchase: If after 3-6 months, you still want it, reassess.

2. Buy Without Debt: Save ?5,000-?10,000 per month and buy it stress-free.

3. Consider Cheaper Alternatives: A premium Android may serve the same function.

4. Reduce Social Influence: Limit exposure to luxury-driven content.

Final Verdict:

Buying an iPhone on credit is a financially unwise decision. The desire is socially driven rather than a necessity. Prioritize long-term financial health over momentary status        

From this response, you can see how AI helps separate objective facts from emotional influences and balances both perspectives. It clearly outlines why the purchase may not be a good idea from a financial standpoint while also acknowledging the emotional reasons behind wanting an iPhone.

And this is important—it is not always wise to be purely rational/objective because sometimes emotions matter too. But at the same time, it’s not smart to make impulsive emotional decisions without thinking them through. AI, of course, won’t always get this balance right (at least not yet), but it can point out biases, blind spots, and logical inconsistencies, helping you make better choices.

Make Better Decisions (In General)

And this isn’t just useful for purchases—it can be applied to any major life decision.

Thinking about breaking up with someone? Maybe you should check if it’s an emotional reaction or a long-term issue. Had a fight with your dad about money and freedom? Run your arguments through AI and see if you’re being unfair. Making a big career move? Objectively weigh the pros and cons before jumping in.Basically, the possibilities are endless, and the sky is the limit.

However, keep in mind that LLMs (Large Language Models- The Engines behind modern AI tools) can sometimes hallucinate(A word used for wrong responses generated by AI), and since they are not accountable like humans, you should not blindly trust what they say. Critical thinking is still required, and if you are struggling in some serious areas of life, AI is not the solution but seeking professional help is.