How does our brain see reality and what implications does this have?

Recently I watched a presentation by a scientist whose research has fascinated me for some time. He is a neuroscientist by the name of Vilanayur Ramachandran with the Department of Psychology and Neurosciences at the University of California, San Diego. One of his areas of research has to do with what he calls "phantoms" in the brain. There are a few kinds of brain "malfunctions" he describes under this heading but one in particular is fascinating and I will try and describe it here. I do not purport to know how this relates to decision making as we study it but I think there must be links since his findings have implications for human cognition- or maybe I'm just plain barking up the wrong tree. You tell us Tom.

All of you have probably heard of people who have lost a limb and still feel sensation in the phantom limb which no longer exists. So for instance, take a guy who went to Iraq and came back with his left arm missing but he senses intense pain from the limb. Dr. Ramachandran has had such patients and hypothesizes that the brain pathways sending signals to the limb are still functional and responsible for this sensation. He devised a simple experiment where he devised a box with a mirror in it. The patient who lost his left arm is asked to put his right arm in the box. The brain sees the mirror image and even while the patient is completely conscious of the fact that it is right hand that is mirrored in the box, he also simultaneously senses the phantom limb respond to brain signals to move the left arm and this relieves the pain. See the talk here.

What gets me going about this experiment is that even as a part of the brain is quite aware and conscious of ground-truths, it is not able to prevent certain automatic responses. It can be retrained but this is not because it is not aware of reality. What does this mean for all those other seemingly minor foibles and cognitive errors that seem a part and parcel of human decision making? Are we wired to certain behaviors even when we might be conscious of their futility or incorrectness? If so, what is our mirrored box that can help retrain us?

I'd love to hear back whether this is way out in the ether and not relevant to this blog.

Explorations of the Mind: Intuition by Daniel Kahneman

Below is a link to Daniel Kahneman's lecture on Explorations of the Mind.
http://video.google.com/videoplay?docid=3320420692735050062