FraudCaster

Cognitive laziness is simply “lazy thinking”. A disease to which many Americans suffer.

So, what is lazy thinking? And, how does it apply to being victimized by fraud?

One study from Duke University indicates that the brain “seeks out the neural path of least resistance, searching out rote responses that have worked in the past first, rather than approaching the problem critically, or anew.”

“In his own words, psychological researcher Ian Dobbins says, “It’s like you know that two plus two equals four, not because you’re working through the solution; you’re recovering the answer from memory…. These findings…suggest that the brain is set up to circumvent the algorithmic or deliberative processes of decision making wherever possible.”

Layman’s terms? We are experiencing Lazy Thinking when rather than asking all the right questions and challenging the answers, we make decisions at times based on stored information that worked in the past. We allow emotions and intuition to guide us through uncharted territory.

If we are presented with an opportunity to invest in something we know little about, lazy thinking allows us to proceed if emotions or intuition so dictate. We are excited about the opportunity – possibly for a variety of illogical reasons – so we invest. We believe the friend or relative that is “letting us in on the good deal” is smarter than us about investments.  So, we blindly jump on the bandwagon (see also Blind Trust Thinking).

Rather than moving forward blindly, we should invest in our own research and learn about the opportunity before moving forward. Let us not be lazy. Rather, let us engage our brains. If the investment opportunity is “over your head”, get financial experts involved. If it still doesn’t make sense, don’t move forward.

When it comes to investing, use this as a general rule of thumb…do not invest in what you do not understand. And, do not base your understanding on intuition and emotions.