Humans: an irrational species
Did you think that we are rational being? Ori and Rom Brafman will prove you wrong in “Sway: the irresistible pull of irrational behavior“. In this book, the two authors present concrete real life examples and research regarding our tendency to act irrationally. Even the most serious scientist or most skilled pilot can disregard years of training or formal protocols in specific situations. Here I present some of the most interesting findings and examples presented in this book.
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- Two different studies, one on the sales of eggs in California and the other one on the sales of orange juice in Indiana, have shown irrational behavior in consumer decisions. When the price of these items diminished, sales increased a little bit. But if prices increased a little, sales felt dramatically, whereas the variation in price is the same. The perception of loss outweights the gain. The same effect is shown in phone plans. Between a plan for a monthly fee and a plan based on the number of calls, consumers choose the first one. However, most of them would have pay less with the second plan, and even in knowing that, they will choose the monthly fee “just in case”. This potential loss makes consumer sway their decision even if they make too few calls to make their phone plan optimal.
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- Commitment to an action associated to loss aversion has a very powerful effect on our behavior that is almost impossible to control. In this case, it is more than difficult to stop our action. Take for example the Bazerman’s auction experience. This professor at Harvard proposed an auction for a $20 bill to his students with 2 rules
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- Bids are to be made in $1 increments
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- The winner wins the bill but the runner-up must still honor his bids and receive nothing in return
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- We have a tendency to attribute some qualities to someone or something based on their perceived value rather than objective data or view. This is called the “value attribution”. For example, when Joshua Bell, one of the best violonist player alive, played Bach’s Sonatas and Partitas for Unaccompaned Violin in a subway station, almost no one stop to listen. Because of what he was wearing (baseball cap and jean), almost everyone was considerering it as street music and nothing else. Another example is a hot dog sller on the Coney Island. At that time sellers were charging 10 cents for a hot dog. This new seller charged only 5 cents but no one stopped, thinking that it was full of poor or bad ingredients. However, it was his grandmother’s receipe just as good as others. But when he thought of inviting a doctor in a white uniform and his stetoscope to eat a hot dog on his stand, people started to come because of the perceived value of the doctor.
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- Diagnosis bias is our tendency to label people, ideas or things based on our first judgments of them and our inability to reconsider these opinions once we have made them. We are so attached to label people that we cannot stay neutral. For example, a class at MIT received a new professor for a day. Two differents descriptions of the professor were given to two different groups of students. One mentioned him as very warm, the other as very cold. At the end of the class, every student answered the same questionnaire about the teacher. Even if they have followed the exact same lecture with the same teacher, the first group identified him as “social, popular, humorous and human”. Surprisingly, the other roup described him as “formal, unsociable, unpopular, humorless and ruthless”. People dismiss objective data when it goes against what they believe or what they want to see. This is why job interviews are a very weak means to assess an employee for future work. Indeed, the first of his or her class will be judged better than the sixth, even if the sixth is as good, if not better, for your job position. This sway is called the “mirror effect”. According to professor Allen Huffcut “we often base the image of the ideal candidate on ourselves”. A more effective hiring process would be to make applicants pass an ability test and after that use an unstructured interview to see the motivation about the job and excitement about the company.
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- We are as much attached to the process as the outcome of this process when we deal with someone (car dealership, attorneys and prisoners, one to one game with $10, venture capitalists with entrepreneurs…).
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- The notion of fairness vary greatly from a culture to another. For example, in USA, it is fair to be rich. In Russia, being rich means you may have done illegal business or that you use other people. In Amazonian villages, it is the finder/keeper rule, in the example used, it was money.
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- Financial Incentives : When two groups of students were asked to pass the MAT, the entrance exam required by most prestigious business schools, the findings were startling. The first group was said to do their best, while the other group was offered 2.5 cents for every right answer. Surprisingly, the scores of the first group (average of 39/50) were higher than the second (average of 35.9/50). The financial incentive seemed to not be as powerful as expected. The same result was observed when the two researchers from the university of Zurich asked people from a small town if they would accept to have a repository for nuclear waste in their village. Half of the community answered positively. However, when offered an economic compensation every month, the number of accepting people felt to 24.6%. This is the reason why offering financial bonuses and rewards to employees for every project or task accomplished is not the best way to motivate people.
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- The region of the brain called the “posterior superior temporal sculus” (or “altrusim center”) is the part of the brain responsible for our social interactions – how we perceive others, how we relate and how we form bonds. The nucleus accumbens, known as the craving spot, is one of the oldest part of the brain associated with with the pleasure of sex, drugs and gambling. However, when activated, it needs a higher amount of “fuel” to be activated again, thus at its extreme point, can cause addiction. For example, a ciarette a day is transformed into a daily pack; a few dollars in a casino need to be transformed into a higher amount to activate the pleasure spot. The nucleus accumbens and the posterior temporal sculus cannot be activated together. Either your self-centricity or your empathy controls your thoughts and actions at a single moment.
All these findings prove that we, as people, don’t follow a rational way of thinking. Being aware of these gaps between our excpectations and actions is a first step in self-awareness and behavior control.