Economics-based rational choice theory frames decisions as a calculation of "expected utility," multiplying value by probability. This analogizes complex life choices—from careers to partners—to casino bets, oversimplifying non-quantifiable factors and reducing judgment to mere calculation.
When complex situations are reduced to a single metric, strategy shifts from achieving the original goal to maximizing the metric itself. During the Vietnam War, using "body counts" as a proxy for success led to military decisions designed to increase casualties, not to win the war.
When complex entities like universities are judged by simplified rankings (e.g., U.S. News), they learn to manipulate the specific inputs to the ranking formula. This optimizes their score without necessarily making them better institutions, substituting genuine improvement for the appearance of it.
Work by Kahneman and Tversky shows how human psychology deviates from rational choice theory. However, the deeper issue isn't our failure to adhere to the model, but that the model itself is a terrible guide for making meaningful decisions. The goal should not be to become a better calculator.