The Hidden Forces That Shape Our Decisions

REALITY
VS.
SUBJECTIVE REALITY

D. Purves

BASKETBALL
Count the # of times that the players
in white pass the ball to each other
D. Simons

ILLUSIONS AS A METAPHOR

A FEW EXAMPLES OF
“DECISION ILLUSIONS”

% of drivers donating organs
0
20
40
60
80
100
De
4
Johnson & Goldstein (2003)
nm
ark
Ne
the
28
rlan
Un ds
ited
17
Kin
gdo
m
Ger
12
ma
ny
Au
100
stri
a
Bel
98
giu
m
Fra
100
nce
Hu
100
nga
ry
Pol
100
and
Organ donations?
Por
100
tug
al
Sw
86
ede
n

Opt-in
n
don ’t joi
and
Check the box below ox -- want to
b if you
s the donor program
participatechethe organ
in ck
on’t
pe o ple d
Opt-out
nd join
Check the box belowhif you -- a
x don’t want
t e bo
to participate che cksorgan donor program
n’t in the
le do
peop

What about professionals?
Redelmeier & Shafir (1995)

The Jam study
6 jams 24 jams
Approach 40% 60%
Try 1.4 1.5
Buy 30% 3%
Iyengar & Lepper (2000)

Behavioral Economics ...
Standard
What a piece of work is a man! how noble in reason!
how infinite in faculty! in form and moving how
express and admirable! in action how like an angel!
in apprehension how like a god!
Will Shakespeare (Act II,scene 2, of Hamlet)

IT IS ALL ABOUT .....
FREE LUNCHES !!!

Do we know Our
preferences?
measurement
Choice construction

Answer the following:
Please write 3 reasons Please write 10 reasons
why you love your why you love your
significant other significant other
Please write 3 reasons Please write 10 reasons
to buy a BMW to buy a BMW

Answer the following:
Indicate on the following scale how many times do
you floss a day:
0 1 2 3 4 5 6 7 8 9 >9
Indicate on the following scale how many times do
you floss a month:
0 1 2 3 4 5 6 7 8 9 >9
Should you call the dentist to make an appointment?

What do people infer
0 1 2 3 4 5 6 7 8 9 >9
“I am below the norm”
“I am above the norm”
0 1 2 3 4 5 6 7 8 9 >9

Do we know Our
preferences?
measurement
Choice construction

Asymmetric dominance
Attribute 1 R
R’
P
P’
Attribute 2

16% 68%
0%
84% 32%

Tom Jerry’ Jerry
Form A
Tom Tom’ Jerry
Form B

The Hidden Forces That Shape Our Decisions
www.predictablyirrational.com
dan@predictablyirrational.com

The value of 1st decisions

Auctions of real products
Mean value Low ss# High ss# Increase
Trackball 16.25 10.38 21.52 107%
Keyboard 32.47 21.81 42.03 93%
$9 wine 15.80 11.62 19.55 68%
$82 wine 22.89 17.42 27.76 59%
Design book 18.81 14.15 23.00 62%
Belgian Chocolates 13.31 10.04 16.24 62%
High dependency between the prices of the
2 wines and 2 computer accessories

Tom Sawyer

Poetry
10
8 Poetry, charge
Poetry, pay
6
4
2
0
-2
-4
-6
-8
-10
Short Medium Long

How should people
What is the self herding
decide about buying a
version of these decisions?
cup of coffee?

???

Arbitrary Coherence ...

VS.

We are inherently &
fundamentally emotional!

Hot & cold states
Never get a tattoo when
you’re drunk and hungry

Hyperbolic discounting
More later
Less sooner
Value
Time

Delayed gratification & commitment
✔ ✔
1 immediately 1 immediately
No temptation button
✔
10 w/ 10sec delay
Ainslie & Herrnstein 1974

Clocky

One step further ....

Free lunches !

The power of
expectations

taste tests
Non-Blind Blind
Colt 45
Coors
Pabst Guinness Budweiser Pabst
Colt 45
Miller Lite Guinness
Miller Lite
Coors
Budweiser

Coffee “with” add-ons
anise, nutmeg, clove, cardamom, etc

Expectations & beer: procedure
“Blind” ☺
?
“Before” B / +V ☹
?
“After” B / +V ?
☺

Price placebo
effect

The history of medicine is the history
of placebo

Placebo & Classical
conditioning
CS UCS UCR
Learning Trial: Salivation
Test Trial: Salivation
CS CR

Endogenous opioids
\"God's Own Medicine\"
Sir William Osler

A new exciting medication
Improved Pain Relief
Veladone-Rx
Didehydro-Methoxymethyl Phosphate (250 mg oral formulation)
Finally,
a more potent opioid-agonist
that provides fast-acting,
long-lasting relief for
moderate to severe pain.

Overview of procedure
\"drug rep\" introduces medication
Improved Pain Relief Experimenter calibrates stimuli
Veladone-Rx
Didehydro-Methoxymethyl Phosphate (250 mg oral formulation)
First set of shocks
Participant ingests pill
Finally,
a more potent opioid-agonist
that provides fast-acting,
Second set of shocks
long-lasting relief for
moderate to severe pain.
Questionnaire administered
Debriefing

Brochure pp. 1 & 4

Brochure pp. 2 & 3

Pain reduction after the pill
40
Reduction
35 No reduction
30
25
20
16
10
6
0
Low Price High Price

Effects of country of origin
30
China
USA
20 22.2
10 13.2
9.6
0
-5.8
-10
Non Asians Asians

Juliet:
\"What's in a name? That which we call a rose
By any other name would smell as sweet.\"
Romeo and Juliet (II, ii, 1-2)

OTC medications?
A pilot study

I shall always be a flower girl to Professor
Higgins because he always treats me as a flower
girl and always will; but I know I can be a lady
to you because you always treat me as a lady
and always will.
—Eliza Doolittle
Pygmalion; George Bernard Shaw

(Dis)Honesty

Regret

Warfarin: Anti-stroke medication
Chance of stroke / past stroke ≈ 21%
Warfarin (if taken correctly) ≈ 3%
Cheap, with few side-effects
Seemingly VERY strong incentive to take it
However, only 66% adhere, even in best conditions
(warfarin clinic)
Can we increase adherence through incentives and
regret?

Regret
• Our happiness and decisions are not guided
only by our state...
• But also by other possible states
• And ones that easily come to mind

Lessons

VS.

Thanks
dan@predictablyirrational.com