“Life is the sum of all your choices,” wrote Albert Camus. Unfortunately, just as we misjudge how happy we will be in the future, we misjudge how our fear of immediate loss hampers our future options. In this game recognize how that happens and make smarter choices:
Participants get $20 to place $1 bets on 20 tosses of a coin. Each losing bet costs $1. Each winning bet earns $2.50. Given the payout and the 50/50 chance of winning the smart behavior is to bet every time.
Yet most participants passed up several chances to place a bet. Why? Because fear mounts with each coin toss, making people less and less likely to take the gamble and potentially lose what they already have.
Hint: Those who can blunt their fear of loss, to rationally think of their options, win more. That’s easier to do when not multitasking or feeling distracted or rushed.
Three other ways we sabotage decisionmaking and how we can do better
- How Valuable Does it Appear to Me?
When people bought an energy drink at a discount, they actually performed worse on a puzzle-solving task than those who had paid full price for it. Why? Our unconscious belief equates low price with low quality.
Also when blind tasting wines, people most enjoy the ones they are told cost more.
“That suggests, for example, that drugs bought at a discount, such as drugs from Canada or generic versions of brand-name medications, might be less effective even when they’re otherwise identical,” observes Shiv.
Hint: Charging a premium price for your product or service – and branding it as “deluxe,” “full-service” or other upscale characterization may increase buyer’s:
• Happiness with what they bought.
• Motivation to share their choice with others.
Also, context and habit trigger perceived value. Those moviegoers who usually eat popcorn while watching, for example, are less likely to notice its quality. Since much of our everyday activities are habitual, we can see why it is difficult to change, especially when we are distracted or rushed. Relatedly sampling in context influences behavior, including buying as I discovered in my Bon Bon Bombshell experiment.
1. Leave Room in Your Brain to Make the Smart Choice
Recognizing that emotional impulse can tempt us to pick that juicy-looking bacon hamburger over the salad, here’s Baba Shiva’s way to make the better choice. Participants, in his study, who are asked to memorize a seven-digit number were much more likely to choose chocolate cake over fruit salad than those who’d been asked to memorize only a one-digit number.
Hint: Those who had more brainpower left (less to remember) were better able to think about making the healthy choice.
3. Recover From Rejection
Recognizing this tendency may enable you to blunt the effect of it. Plus we can be tempted to increase someone’s appreciation for us by not being readily available.
Here are more resources that have helped me be a smarter decider …. sometimes:
• How Groups Can Make Better Choices
• How to Nudge Others to Act “Right
• How We Sometimes Fool Ourselves When Making Decisions then read about what Zachary Shore describes as seven cognitive traps in Blunder. They include static cling (an inability to accept change), causefusion (confusing the causes of complex events) and flatview (black and white thinking).
• Shiva’s friend, Dan Areily describes other ways to make smarter choices in Predictably Irrational.
• For extreme examples of warped reactions read Shankar Vedantam’s story on how the heat of passion deeply alters behavior no matter how smart, rational or well-trained we are.