Photograph by: Sherene Hustler

When we think of descriptors for good decision makers, words like "smart" and "intelligent" will probably be near the top of the list. If this were true, all one would need to do is find the smartest investor in the city and give him all your investible money and sit back and watch him beat the market and make you rich.

But we have seen some seriously bright people make awful and costly bad decisions (think long-term capital management, which included two Nobel laureates; Nasa and the Columbia disaster; and the recent failure of Iceland's largest banks, and you get the gist.) Some of the biggest and most consequential mistakes are made by people who are very intelligent, and it certainly wasn't because they wanted to make mistakes; quite the contrary, they had every incentive and desire to succeed.

The fact is that the factory settings on their mental software are the same as those of average people and are simply not designed for many of today's problems. The title, Think Twice, is what we have to do to overcome our mental programming. We evolved from people who responded fast, not from people who thought carefully and twice. Those were the ones who got eaten by the lion, and didn't make it to being our ancestors.

In each of the chapters, a category of mistakes is presented, from a range of professions with quality academic research to explain why they occur. The category of mistakes is then explained by recourse to the mismatch between the complex reality you are facing and the simplifying mental routines your brain is designed to use to cope with them.

Finally, there are the tools to build the capacity to cope with the decisions we need to make.

The categories of mistakes were chosen because they are common, you will recognise them everywhere, and they are preventable.

The chapter titled Open to Options is subtitled How your telephone number can influence your decisions. Write down the last four digits of your telephone number. Now estimate the number of doctors in Gauteng. We all know that the telephone number has nothing to do with the number of doctors, but the act of thinking about an arbitrary sum prior to making an estimate has been shown to unleash a powerful bias in the number you guess. So strong is the bias that even if the bias was explained first, research has shown it still applies to estimates given directly afterwards.

Our minds are simply trying to get an answer and have routines for getting this quickly and efficiently, but this does require leaving out a host of issues. So we start with an anchor and move towards the right answer, but stop adjusting once we reach a value we deem plausible or acceptable.

In a study of estate agents, the group was given exactly the same background material on the house: size, amenities, and recent comparable sales. The agents were given different listing prices and asked to appraise the property. Agents who saw the higher price appraised the house at substantially more than those shown a low price, despite less than 20% saying they used the price data in their evaluation.

The bias is particularly dangerous just because we are so unaware of it. The chapter titled The Expert Squeeze is subtitled Why Netflix knows more than clerks about your favourite films. Best Buy, like every retailer, tries to predict holiday trade accurately. Too little stock and you lose out potential sales, too much and you have to discount it later. You can imagine the executive's joy at discovering The Wisdom of Crowds by James Surowiecki - the notion that a large group of lay people can predict better than the company's experts. At Best Buy, the experts' forecast was 5% off the actual - and the crowd's 0.5% off!

Netflix, a web-based DVD rental firm, realised that matching subscribers to movies was central to customer satisfaction and so they launched Cinematch, a program of algorithms that pairs views to discs. The predictive quality of the program is vastly better than the guy in the video store.

So will the expert disappear in favour of crowds and computers? Ask any experts if they are feeling the effects of computer-based replacements for their service and most will admit they are. Technology is enabling decision makers to gain valuable insights on their own.

The fact is that crowds, intuition, technology and experts have unassailable domains of relevance. Experts retain an advantage in crucial arenas - the challenge is to know when and how to use them. It requires experts to set up the systems that technology uses. We need experts for strategy, and we need people to deal with people.