‘Happy endings’ could lead to bad decision-making

Our brain constantly updates its internal logbook as we go, with each new experience being condensed and then ranked against the previous few for context.

“People’s natural inclination towards a ‘happy ending’ means that we often ascribe greater value to experiences than they are worth,” say researchers.

It means that we end up overvaluing experiences with a final uptick over those that taper at the last minute, despite being of equal or even lesser overall value, and make our next moves on their basis.

“Most people we tested fall foul of the ‘banker’s fallacy’ and make poor, short term decisions as a result,” said Martin Vestergaard from the University of Cambridge.

The experiment involved participants trying to accumulate money by gambling between two sets of gold coins of varying sizes at high reactions times.

The researchers said that the most immediate experiences carry much more weight in decision making than they should — meaning a recent happy ending has a hugely disproportionate influence.

It led to false and delusional beliefs that led to wrong decisions despite historical experience that could convince us of the contrary.

The study was published in the journal Proceedings of the Royal Society B.