Getting caught in binary group-think can make for bad investing decisions
As humans, our minds are designed to present options to us in binary terms. This is because dualistic thinking provides us with a sense of certainty.
The more complex something is, the less certainty we have, which causes anxiety about what lies ahead. We often end up overwhelmed by all the choices we must make and so we seek out comfort by narrowing it down into categories like right or wrong, black or white.
In his book Full-Spectrum Thinking, author and futurist Bob Johansen says the problem with this is that, while simplified categories may lead us toward attaining the certainty we so desire, it moves us away from clarity and understanding.
Neuroscientist and psychiatrist Iain McGilchrist takes this further by detailing the biology of our brains and the roles our left- and right-side hemispheres play in critical thinking. His book The Master and His Emissary: The Divided Brain and the Making of the Western World, is a masterpiece. It is a 600-page read but a Cole’s Notes version can be found in his paper called “Can the divided brain tell us anything about the ultimate nature of reality?”
The problem is that our left analytical side likes to think it is in charge because it is so good at analyzing various data inputs independent of one another. As a result, it isn’t uncommon for it to overrule critical thinking by narrowing down potential outcomes into binary ones simply because it is unable to do what the right brain is made for: tying all the data together into a big picture that may, in actuality, be some shade of grey.
“So the left hemisphere needs certainty and needs to be right. The right hemisphere makes it possible to hold several ambiguous possibilities in suspension together without premature closure on one
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