#5 Social Proof: Why we knowingly make stupid choices with our friends

If all of our friends jumped off a cliff, chances are we would too. Same goes if that cliff is a new restaurant, movie or fashion label. In this episode, Mel and Dan look at how our innate desire for social connection can be a marketer’s best friend.


Mel: 00:17 Hey guys, welcome to Bad Decisions.

Dan: 00:20 Congrats on making at least one not bad decision. This is the show that helps us understand why we choose what we choose ...

Mel: 00:26 … Why we think, what we think …

Dan: 00:27 … and how to explore this stuff for fun and commercial gain.

Mel: 00:30 Always in an ethical and professional manner.

Dan: 00:32 Yep, Yep, Yep, Yep, Yep.

Mel: 00:33 I'm Mel Weinberg. I'm a performance psychologist.

Dan: 00:36 I'm Dan Monheit, co-founder of Hardhat, a creative agency built for the digital age. Let's do this.

Mel: 00:47 So, Dan.

Dan: 00:48 Yeah. Well actually no wait, so it's early to be interrupting you but before we start, I think we've got to say, first of all big shout out to all of our listeners who have been subscribing and downloading and super importantly rating and reviewing the show. It's been a massive first few episodes and we're kicking some ass in the podcast charts. So please keep them coming. If you are enjoying the show, tell some friends, write us a review, show us how witty you could be.

Mel: 01:17 Yeah. We do appreciate all of our fans. Can we call them fans?

Dan: 01:21 Yeah.

Mel: 01:21 Was that a bit sneaky?

Dan: 01:22 We mainly appreciate the ones with five star ratings for us.

Mel: 01:25 They are special.

Dan: 01:26 Yep.

Mel: 01:27 So, Dan?

Dan: 01:28 Yes.

Mel: 01:29 Can I take you back a little bit to your teenage years? I know they weren't all that long ago. I want to ask you if you can remember a time when all of your mates wanted to do something but for whatever reason you weren't allowed.

Dan: 01:42 Sure.

Mel: 01:43 Did you ever have that chat with your mom where she goes, “if all your friends went and jumped off a cliff would you jump off a cliff?”

Dan: 01:50 No. No, of course. Probably. Probably once a week I had that conversation with my mum.

Mel: 01:55 I feel like everybody has that and you've got to roll your eyes and just say “of course not mum. I'm not an idiot. I wouldn't jump.”

Dan: 02:03 “I don't want to jump off a cliff, I just want to go to a rave party under a bridge mum. It's not the same thing.”

Mel: 02:07 Totally different. Right?

Dan: 02:08 Yeah.

Mel: 02:08 Well, it turns out that mum's question, cynical and exaggerated as it might be, is actually a pretty good one because what she's picking up on is the fact that your friends don't always make the most rational decisions and she tried to catch you out and say, are you actually going to be able to make the rational decision in that circumstance when all your friends are doing something stupid? The thing is that chances are higher than you think, and that you probably would follow them all off the cliff.

Dan: 02:36 Yeah. If only my mum would just get out of my way and let me go and hang out with my friends at the edge of the cliff.

Mel: 02:41 It could be a cool place to hang out. Who knows but let's think about this for a second, if that actually did happen, what are your options? If you don't do it and all your friends jumped off a cliff and die then you're left alone and you don't have any friends.

Dan: 02:54 Yeah. That sucks. That's a bad option.

Mel: 02:56 That's bad. If they all do it and it's not really that dangerous and turns out jumping off this cliff is actually pretty fun and some thrilling thing to do-

Dan: 03:04 They actually is a Nordic sport, like cliff diving.

Mel: 03:06 People do that.

Dan: 03:07 I wonder what their parents say to them.

Mel: 03:07 That's an interesting question.

Dan: 03:07 Maybe for another episode. Yep.

Mel: 03:13 If that happens then you're the loser who was too afraid to jump and you're going to wear that for the rest of your life if they even stay friends with you.

Dan: 03:19 Yeah.

Mel: 03:20 So not that we're encouraging cliff jumping behaviour on the show, it's not something that we endorse unless it is for-

Dan: 03:26 Nordic and for recreational and athletic purposes.

Mel: 03:28 Of course and if you do that you can feel free to write us a review and tell us all about it as well, but just trying to make the point that we are social creatures by design and so choosing not to do what everybody else is doing is actually a form of social suicide in itself.

Dan: 03:42 Right. So basically what we're saying is our brains would rather us die with friends, than live lonely.

Mel: 03:50 Totally. Our brain is actually wired for connection, where we've said already we're inherently social creatures by design so our brains have actually evolved for us to be like that and we now know thanks to neuroscience that there’s actually particular types of neurons in our brain whose job it is to copy the behaviour that we see other people doing.

Dan: 04:10 Which this is important because this is how little kids learn how to walk and talk and not touch hot things and you know-

Mel: 04:17 All those things-

Dan: 04:17 Copying is important.

Mel: 04:20 It's not you, it's your brain.

Dan: 04:21 Yeah.

Mel: 04:21 So what we're talking about here is the heuristic that is referred to as Social Proof, which is one of the heuristics that we talk about and of all of the heuristics and all of the tricks that our brain plays on us, this is probably one of my favourites and we're allowed to have favourites. Ain't we?

Dan: 04:21 Yeah.

Mel: 04:40 It's probably one of my favourites because it really just illustrates how stupid we really are sometimes.

Dan: 04:47 Right. So let me ask. This is the thing where if we find ourselves maybe in a situation where we don't know exactly what we're meant to be doing, I've never been here before and we see a whole bunch of other people doing something, lining up for something or all going, doing something in a particular way. We just go, I don't know but they all look like they know what they're doing, so I'm just going to copy them exactly.

Mel: 05:08 Yeah. That's spot on. With all of these heuristics, they come to the fore most in times of uncertainty or whenever there's ambiguity or whenever we're looking or we're not sure about what decision to make. So, in those times what we do is we look to our friends. We don't always need to even ask them for advice, we just need to see it or we need to hear about what they've done and that's enough to motivate us to believe that it's going to be good for us as well. The chances are also that we're going to end up enjoying whatever it is that they did more because they told us that we would.

Dan: 05:37 So for me, I guess the most obvious example of where this come to life is where you decide you're going to go out for dinner and especially if you're going out for dinner in a place that you're not used to being ... overseas, interstate, whatever it is. You walk down the street and there's two restaurants side by side and you know nothing about either of those restaurants and objectively they both could be exceptional but you see one restaurant is absolutely jammed and there's a line of people at the front waiting to get in and the restaurant next door is completely empty and what do we do? Do we roll the dice and go to the empty restaurant next door? Of course not. We get in line we say “yeah, I'm happy to wait an hour for a table because this must be a much better restaurant because look how many other people who are clearly not idiots have already selected this out of the two restaurants.”

Mel: 06:25 This is an interesting one because we talk often about the heuristics guiding us towards the most efficient response and this is actually one where we would sacrifice our own time to wait in line and maybe that's just proof of how strong this heuristic really is.

Dan: 06:39 Absolutely. You were saying before that we're wired for connection as humans and I don’t know if you’ve watched a lot of bad prison shows like I tend to, you’ll know the lowest of the low, the worst thing you can do to somebody who's already in prison is to take them away from the people who are probably beating the shit out of them and punish them further by putting them in solitary confinement. So detached from any form of connection whatsoever. So I think that to your point it just shows how strong the desire to mimic and copy and be around other people really is.

Mel: 07:11 I'm going to give you another example and of course it is going to come from the research.

Dan: 07:14 Yes, from the research.

Mel: 07:16 It's research time.

Dan: 07:17 We need research music. Producer Kops can we get some music for introducing research? Yeah. I feel it needs to have a going back in time feel to it.

Mel: 07:34 Well-

Dan: 07:34 Like a harp? To the research!

Mel: 07:42 This one will data particularly dated instrument such as the harp because for this one we're going back to research from the 1950s.

Dan: 07:49 Excellent.

Mel: 07:50 So win yourselves back in time to when psychological research was questionably ethical and well, I'll give you one that would probably still make the bar, as it only involves a little bit of a manipulation of subjects. So the idea for this one is that a participant is brought into a room and there's a number of other participants sitting there and they're all involved in a task where they're presented with a line, a vertical line and that line serves as their reference or their target line. Okay? Then they're shown three other lines, we'll call them line A, line B and line C and they are varying in length and the participants job is-

Dan: 08:24 Budgets in the fifties were pretty small.

Mel: 08:27 All we had to do was draw lines on paper.

Dan: 08:28 Sorry. Keep going.

Mel: 08:31 All they have to do, their only task is to identify which line, A, B or C, is the same size as the target line that they were originally shown and one of the key elements of this is that the task is manipulated so that the correct answer is pretty damn obvious, right? So the three lines are so different that you can pretty clearly see which one is the right line. So here's the catch, what the participant doesn't know is that all of the other participants in the room aren't real participants, they're confederates, they’re in on the study.

Dan: 09:00 You dodgy, dodgy, dodgy psych people ...

Mel: 09:00 Here we go, here comes the deception and the job is, or what the job of these confederates is, is to all identify an incorrect line as the one that matches the target line. So as they go around the room saying which line do you think stayed out loud, which line you think matches the target line? Even though line A might be the obvious correct answer, everybody else has decided that they're going to all say C, okay? So they all say C. Yep, now C the right answer. Yep. I'll go with C. C it looks correct. Okay. When it gets to the last person who is actually the real participants, they. They have no idea what's going on. They can see what the clear answer is but what they actually tend to do is to conform with everybody else even though they clearly know they’re giving the wrong answer.

Dan: 09:47 So they'll sit down and say clearly the answer is A they'll know but because everybody else has just said C, they say C?

Mel: 09:54 So that's why it's over a number of trials about 32 percent of participants agreed with the majority every single time, even though they knew they were wrong and 75 percent did so at least once. So we are very vulnerable and very stupid human beings.

Dan: 09:54 We are so precious, aren't we?

Mel: 10:09 We are.

Dan: 10:10 It's one thing to say we'd rather be dead with our mates than alive by ourselves but clearly we would also be wrong with all of our friends than right by ourselves.

Mel: 10:20 Yeah because what better way to look like an idiot than to do so surrounded by a bunch of other idiots.

Dan: 10:25 This just explain so many parts of our society.

Mel: 10:29 It does.

Dan: 10:31 Wow and I guess collective bad decision making, misguided groups of youths ... It all comes together under social proof. Yeah, yeah, yeah,

Mel: 10:40 Yeah. You understanding bad decisions.

Dan: 10:42 Wow. Alright. So, in the real world is pretty easy to see how this happens. Right? So you're in a lab study or you're at a restaurant and you can see what decisions other people are making and so it's easy to peg yourself to them but I guess for guys that work in internet spaces as I often find myself doing, the internet can be a pretty lonely place and people are trying to make decisions about what restaurants to book or what products to buy, often in the seclusion of their own homes, in their underpants. Not that that makes a difference but I'm just-

Mel: 11:11 Hang on a second. How are you looking at the internet?

Dan: 11:12 In my underpants.

Mel: 11:14 Okay.

Dan: 11:14 So my official internet browsing attire that's why I don't use internet work. So the people of the internet have found some really interesting ways to convey social proof even when there's no other people around. So, one of the earliest examples I remember saying is if you jump on the Kogan.com website for any of our international listeners which we do have some, Kogan.com is one of the biggest online retailers in Australia. Very early on in the peace one of the things that the Kogan website used to do is as you're browsing around it would bring this little pop up in the bottom left or right hand corner telling you that someone from a suburb somewhere near you has just bought a product off this website. It was pretty non-invasive but you just notice it. Notice this gentle nudge or stroke that said, "Hey mate, you're not the only idiot on this website at three in the morning there's other people on here and they're transacting".

Similarly, if we take the restaurant example onto the internet and you see a restaurant that you're looking to go to that's got two reviews with an average of five stars and another restaurant that's got 136 reviews with an average of four stars, you tend to put more faith in where more people have been and more people have endorsed. I don't know, a lot of news websites you see things like how many other people are currently reading this article. So there's lots of interesting tips and tools that we're seeing online players use to reinforce people's behaviour by letting them know other people are doing this as well.

Mel: 12:40 That's right and they actually serve two purposes. The one is to get people in and to convince people if they are uncertain about what choice to make that they'll be making the right choice. The other thing is that when they're already engaged with it, so if they're already reading a news article telling them that five thousand other people are currently reading this article as well, reinforces their enjoyment of what they're actually doing.

Dan: 13:00 It must be good because five thousand other people are also enjoying this.

Mel: 13:03 Can't be a waste of time and if you're wasting your time, hey so is everyone else good.

Dan: 13:07 God we’re idiots … not that Facebook is a time waster at all but Facebook are very prolific with this stuff as well where they do an amazing job of showing you brands or stories or other pieces of content that your other friends like and so you can't help it go, “God if 28 of my friends already like this brand or this product or this venue then geez, I should probably give it a look in as well.”

Mel: 13:29 People have gone even one step further with this where you can actually pay for social proof, right?

Dan: 13:36 Uh-huh.

Mel: 13:38 So, the idea of being able to buy followers on Instagram so you can pay x amount of dollars and they'll give you a thousand followers. What that does is increase your perception of popularity to other people. People think that, okay, other people are following you, this many people are following you, there must be something here worth following, I'm going to join the herd and I'm going to click like or I'm going to click follow as well. So it's, I think a pretty cool offshoot that you can actually now sell the heuristic.

Dan: 14:03 Yeah. Unethically of course but yeah, it's-

Mel: 14:06 Who’s the ethical police now.

Dan: 14:09 It's a bizarre thing and it's always a fundamental rule, it pays to be popular and this is the thing that businesses have known forever. If you are a nightclub, it pays to leave a whole bunch of people waiting out the front, some people driving past think that must be really popular because there's people just queuing up to get in there but the modern economy and the internet have given us a whole bunch of interesting ways to both make people feel they're doing something that lots of other people have selected and also a way of showing people that friends and contacts and people just like them are into whatever it is we want them to buy.

Mel: 14:45 We’ve got to be careful with it though because you know that feeling that you get when you do wait in the club -and look it's been a while for me - but that feeling when you do wait in a club where you wait to get in for a long time then you walk in and you're like, this place is empty, what the hell is going on? You just go, this was a sham.

Dan: 14:59 Yeah. So, the best I can do on that is that’s what Google+ was like, which is an easier reference for me than clubs, it’s been a long time, but remember when Google+ came out, which is Google's attempt at social network and there's this crazy waiting list and you had to try and get on the Beta and you're doing everything and you've got friends that’ve got limited invites and you sign yourself up for an account and you get in there and it's like “hello! (hello, hello, hello) .... There's nobody here, what the hell is this” and I'm backing out straight away and then everybody starts flaming about Google+ and saying it's terrible and then social proof ends up working against them because everybody just ended up bagging the crap out of it and it died a pretty quick death.

Mel: 15:39 So if the social proof isn't authentic or if you get caught out on it, if people realise that it's not really something worth waiting for, then you're screwed, then it's over. So the best way to overcome that is to have, to use people, when I say use people not in the unethical use people way but just use people who are most like you. So the more, if somebody, obviously we're very similar Dan, right?

Dan: 15:39 Mm-hmm (affirmative)-

Mel: 16:07 If somebody, if I get a notification on my Facebook that says Dan Monheit liked this, I'm like “Dan Monheit liked this okay, well Dan Monheit...”

Dan: 16:16 “… must be awesome he’s like a connoisseur of all things … awesome …”

Mel: 16:17 We seem to like the same things. So right, I'm in. So it's got to be genuine and the most genuine way to do it is to promote the actions of people who are most like or most similar to the person who you actually targeting.

Dan: 16:29 Yeah. So, in completely unrelated news we're talking about getting our reviews and ratings earlier and what you dear listeners should know is that a lot of people who are very, very similar to you and we know what similar to you is. We're basically inside your ear now.

Mel: 16:29 Over here.

Dan: 16:45 Yeah. A lot of the people that have been giving us five star ratings and reviews are really similar to you so it's probably something you should consider doing.

Mel: 16:53 You should do it because all of your friends who are very similar to you are also going to enjoy having us inside their brains just as much and you wouldn't want to deprive them of that, would you?

Dan: 17:03 Not at all. So, hey it's good to talk about how we can sell more nightclub admissions and restaurant food and sorts of  other things with this but there was also interesting thing we were talking about a bit earlier today about how this was used for good, how social proof was used for social good as well?

Mel: 17:19 Yeah. So instead of using social proof as a reason to jump off the cliff with your mates, you can also use social proof and probably what you should use social proof for more than anything is to encourage pro-social behaviour. So, an example out of the UK had to do with people's compliance to paying their taxes and they were trying to figure out different ways to get people to be more compliant when it comes to paying taxes. So there are a number of different strategies that they used involving sending threatening letters, sending letters reminding people of their civic duty to pay taxes, but by far the most effective message when it came to increasing the number of people who would pay their taxes was to let people know how many other people within their neighbourhood had already paid their taxes. By doing so, you become victim to social proof and you feel that obligation that everybody else has done this, I should probably do it too.

Dan: 18:18 Just like that people paying up the taxes.

Mel: 18:20 How easy is it?

Dan: 18:21 Yeah. Amazing. Alright, I think that's everything we've got on social proof. Let's wrap this up.

Mel: 18:27 So takeaway number one, our brain is wired for social connection so much so that our instinct to connect with other people is always going to override any rational thought processes we may have.

Dan: 18:39 Like jumping off cliffs. Point two is that, if you've got a product or service to sell, what you want to do is find some really interesting or creative ways to show the person you're trying to sell to that lots and lots of other people just like them have already bought this product and they are thrilled with it. And we don't talk a lot about data on this show but this is somewhere where data can be really interesting, you can use all of the data that you have on users or prospective users to make sure that you're matching up your existing customers with your prospective ones.

Mel: 19:07 Then to expand on the last thing we learned is don't just tell them what other random people are doing, tell them what their best friends are doing, tell them what their siblings are doing, tell them what the closest people to them are doing and they're going to be more likely to do it themselves.

Dan: 19:21 And pay your taxes, everybody else in your neighbourhood is doing it. Alright. I think that's a wrap. Make sure you tune in next episode, we've got another awesome heuristic to unpack for you.

Mel: 19:31 If you guys have any questions for us or you just want to let us know what you think, please hit us up on social media. You can find me on Twitter or Instagram @DrMelW.

Dan: 19:39 I'm also on Twitter and Instagram @Danmonheit.

Mel: 19:43 See you next time.

Dan: 19:43 We out.

#4 Endowment Effect: Why we always sit in the same damn seat

Cars, homes, pens, mugs - it doesn’t matter what it is - if it’s ours, chances are we'll think it's more valuable than it really is. In this episode, Mel and Dan look at why we're always going to be disappointed when we sell something second hand, and how marketers can make their products irrationally valuable in the eyes of consumers.


Dan: 00:17 Hey, I'm Dan Monheit, Co-founder of Hardhat.

Mel: 00:20 And I'm Dr Mel Weinberg, a performance psychologist.

Dan: 00:23 And if you're listening to this, it's because you're interested in why we choose what we choose ...

Mel: 00:27 ... why we think what we think ...

Dan: 00:28 ... and how to exploit this stuff for fun and commercial gain.

Mel: 00:28 Here we go again.

Dan: 00:32 Yeah, here we go again.

Hey, Mel?

Mel: 00:47 Yeah, Dan.

Dan: 00:49 I couldn't help but notice, this is our, I don't know, third, fourth episode now, and every time we come in here, being the gentleman that I am, I always let you in first, and for some reason you always sit in that exact seat. I was just wondering why that is?

Mel: 01:01 This spot?

Dan: 01:02 Yeah.

Mel: 01:03 It's my spot.

Dan: 01:03 Yeah, I know. I know you say it's your spot, but what makes it your spot?

Mel: 01:08 It's the one that I always sit in.

Dan: 01:11 It's your spot, because it's the one you always sit in, because it's your spot ...

Mel: 01:14 Because it's my spot.

Dan: 01:15 Right.

Mel: 01:15 Are you calling me out for circular logic here?

Dan: 01:18 I mean, it just seems weird, right? Like, we had the first show, we recorded it in, I don't know, 20 minutes, 30 minutes. So you sat on that piece of fabric once for 20 minutes, and now it's yours until, I don't know, the end of time, until somebody demolishes the studio and builds a new one, and then maybe I can sit on that side.

Mel: 01:32 You want my spot.

Dan: 01:33 Well, I don't really want it, but I just think it's interesting that you have somehow assigned value to that, I guess in the same way that when we go to sell our cars, we always seem to, for some reason, think that they're worth a hell of a lot more than the people who want to buy them. The same is probably true for our houses, as well. For some reason, the person selling the house always seems to think they're going to get more for it ... unless you happen to live in Melbourne ... than people seem to think they're going to be paying for it.

Mel: 01:58 I think what I'm hearing is that you're sort of describing what's known as the Endowment Effect. It's one of those heuristics that we talk about often. It's the idea that we tend to ascribe more value to something simply because we own it. Like the reason that my spot is obviously better than your spot is because it's mine, and so basically, the more that I feel a sense of ownership over this piece of real estate, here on this couch, the more important it is to me and the less willing I am to give it up for anything.

Dan: 02:30 That's interesting that the longer you have it for, the less willing you are to give it up, which I guess, if we think about things like our cars, which we spend a lot of time in and we probably have all these wonderful memories of going on road trips on and have got these sort of parts of ourselves assigned to these objects.

Mel: 02:45 And you name ... some people name their cars.

Dan: 02:48 Some people name their cars. That'd be weird but people do it, right. I guess the longer something is part of us, and the more it becomes part of our identity, and that place on the couch is clearly a key part of your identity now, the more value we tend to ascribe to these things, even if they're just inanimate objects.

Mel: 03:05 Yeah, so hey, let me tell you about some research. Guess what-

Dan: 03:08 Dr Mel coming with the research.

Mel: 03:10 I've got a study for you, would you believe it?

Dan: 03:12 Out of your back pocket.

Mel: 03:13 It's a study from the back pocket of the jeans I was wearing back in 1990, by some of our favourites, including good old Danny Kahneman. It was a study involving Cornell undergraduate students, and what they did was they gave half of them some mugs, okay.

Dan: 03:31 Mugs? Like drinking mugs?

Mel: 03:32 Yeah, like coffee mugs. Yeah.

So they gave mugs to half of them, and the other half didn't get any mugs. Then they asked both groups to place a value on how much these mugs were worth. So we're making a bit of a contrast here between what people perhaps are willing to pay for the mugs, and for people with the mugs, it's about how much they're willing to accept for the mugs. What they found was that the people who actually were given the mugs placed a much higher cost estimate on the value of those mugs than people who weren't given the mugs.

Dan: 04:06 Okay, let me break this down. So you and I are both in this course, Cornell undergrads. You're in the lucky group of people that get a mug. I'm in the unlucky group of people that don't get mugs. Then they're like, "How much do you reckon these mugs are worth?"

Mel: 04:16 Yeah. I say, "This is a nice mug and I'm holding it, and actually, I mean, it's my mug. So it's probably worth about five bucks."

Dan: 04:26 Right, and I'm like, "Well, I don't really see any value in that mug. Who cares? I reckon it's maybe worth, I don't know, $2.50, $3.00."

Mel: 04:34 That's exactly what happened, yeah.

Dan: 04:34 And that's what happened.

Mel: 04:34 Yeah.

Dan: 04:36 So you thought it was worth more just because you had it?

Mel: 04:38 Same-looking mug, the only difference was that I was given one and you weren't.

Dan: 04:42 Right. Look, this seems weird, right. This seems weird that we would be somehow wired to assign value to something just because it's in our possession. It sounds like it would make us do kind of wacky things, but I guess if you take a long term historical perspective on this, coming from a world of finite resources ... You know I like to talk about caveman Dan ... If we had to go out and hunt for something and kill it and bring it home, there's probably a lot of work in that, so it probably makes sense that we would have evolved to overvalue the stuff that we have, over the things that we don't.

Mel: 05:14 Yeah, and in the same vein, so one of the ways that we can explain this is through the concept of loss aversion, which is also very popular in the behavioural economics field, and it's the idea that once we have something, we really, really don't want to lose it. We're more motivated by the idea of not losing something than we are by the idea of actually gaining something.

Dan: 05:35 Right, it's the old, like, bird in the hand is worth two in the bush.

Mel: 05:38 Something like that, yeah. Yeah, so the idea is that if we have it, we don't want to let it go, and if we don't have it, we don't actually care that much for it.

Dan: 05:46 Okay, that's interesting.

Mel: 05:48 It comes back to our motivation around ... and sort of how emotions play into the way that we think. So all of this stuff is about how we feel, rather than how we think, at the end of the day. One example of loss aversion is that if you lose $10 out of your pocket, you're going to be pretty upset, right.

Dan: 06:12 Mm-hmm (affirmative).

Mel: 06:13 Everybody knows that feeling where you've just lost 10 bucks, right.

Dan: 06:15 “I'm such an idiot!”

Mel: 06:17 And logically, you'd think, well, if you get 10 bucks back, all right, we're good, I'm even. Even though your bank account might be even, emotionally you're not. Emotionally you've gone out of whack because that loss of $10 was actually a lot stronger than finding it again. So what you actually need, to come out emotionally even, is actually to find 20 bucks.

Dan: 06:40 Right, to compensate for the lost 10.

Mel: 06:43 That's right.

Dan: 06:44 Wow. That's a recipe for disaster for mankind, surely.

Mel: 06:44 Can be. Yeah.

Dan: 06:49 Okay, so if we're going to just really put a ribbon around this, what we're saying is, if we own a thing, actually or even just perceptually, even just that we happen to sit on that chair for five minutes, if we feel some sense of ownership towards something, we are going to ascribe more value to it than if we never owned it at all.

Mel: 07:08 Yeah. Can you give me an example of how this might work in your world?

Dan: 07:13 I'm so glad you asked. Obviously, academically or just intuitively, instinctively, businesses have realised this for a long, long time, that the quicker you can get somebody to feel like this thing is theirs, the better chance you've got of them actually buying it. So if you look at things like real estate, right, we have open for inspections for a reason. We want people to come in and see the house. You know you go to an open for inspection and they take away all the photos of the family that live there. Firstly because it's kind of weird, but also it's much easier for you to imagine yourself in that home.

Same thing when you go to buy a car, the first thing the sales guys wants to do, right, is give you an experience. He wants to get you in the car, going for a test drive, so you can start imagining yourself driving to work or driving home or cruising around with your friends in this exact car. Even if you've only driven it for two or three minutes, 15 minutes, whatever it is, it's started to weld itself to you, and you start feeling some degree of ownership. You've imagined your future life together.

Mel: 08:11 It's pretty amazing how strong our imagination is for things like this. Back in the day, I used to work at Sportsco.

Dan: 08:18 Let's go Sportsco?

Mel: 08:20 That's the one. I used to sell running shoes, used to sell sneakers. That might have been where part of the obsession started. But what I used to do would be to get the customer to try them on, right, and if you can get a customer to try it on, you've basically made the sale, because what happens when they try it on is that they start to walk around the store in it, and as they're walking around the store in it, they're imagining their future life with these shoes.

Dan: 08:42 “My life is so good with these shoes.”

Mel: 08:46 And they're imagining all the other outfits they can wear with these shoes. They're imagining what events they're going to wear these shoes to. So then, for them to actually not make that purchase, that not only deprives them of the shoes, but of all those future dreams that they had with this fantastic new pair of Air Force Ones.

Dan: 09:00 Got you. So that's one. The second way businesses try to use this is with the process of co-creation, so knowing that if they can get consumers to feel like they're actually contributing to the end product, they're going to ascribe ownership to it, and therefore they're going to value it more. There's a couple of really great examples of this.

Number one is IKEA. IKEA know that the fact people spend whatever it is, 89 bucks on a Billy bookshelf, they bring it home and then they invest two or three hours of themselves, their own time and effort, and cursing and tears if you're me, in putting together your Billy bookshelf, you are just going to be so much more proud of it, and you're going to value it so much more highly than if you'd just gone and bought a ready-made thing off the shelf. It results in people doing all sorts of crazy stuff, like selling Billy bookshelves on Ebay for hundreds of dollars, which makes no sense at all. I was even speaking to somebody last week who's being relocated overseas and they are taking their Billy bookshelf with them. The thing cost under 100 bucks and they probably sell them wherever the person's moving. Makes no sense at all.

The other great example of co-creation is the guys at Betty Crocker. You guys know the cake people, and Betty Crocker know that if they can get people to feel like we are really creating the cake with them, and not just putting together a bunch of things they have assembled for us, we're going to be so much more proud of it. They've realised that the minimum threshold for us feeling like we're contributing is cracking an egg. So even if everything else is in the box, if we crack the egg, we mix it in there, we are baking, and now it feels like it's ours, and man, this cake tastes so good, and I'm so proud of it because I made that thing. I cracked that egg by hand.

Mel: 10:38 So another example, it's reminding me of customising products and personalising shoes. We'll go back to the good old Nike kicks as an example, because one day, one day we'll get Phil Knight in the store, in the studio, and then we'll get in his door. But the idea is that if you can personalise a pair of shoes, right, everybody's got shoes, and they come in all different colours, but if you can actually co-design them, if you can actually contribute to what colour those shoes are, what colour the swoosh is going to be, what colour every little piece of it is going to be, what colour the shoelaces are going to be, it's going to feel like yours. And if at the end, you can chuck your initials on it and a number, then those shoes are ultimately yours.

Dan: 11:24 I guess we're seeing that proliferate out everywhere, from websites where you can spec up your own car and put your own wheels on, and you can change the different tint of the windows, through to even just being able to put your initials on a phone case or a bag or a wallet.

Mel: 11:40 Yeah, that's it. It's happening everywhere now, so I think we can move onto the next ... the last one, which was the idea of a money-back guarantee.

Dan: 11:49 Uh-huh (affirmative).

Mel: 11:49 Yeah, so we know all sorts of companies offer a money-back guarantee these days, for all sorts of things, and what they're really doing there, rather than giving you a sense of ownership or allowing you to co-create, they're actually feeding into this idea of loss aversion. So knowing that we don't like to lose out on anything, for example our money to buy something, what they do is offer a money-back guarantee which says, "You don't actually need to worry about losing anything of yours to obtain this product. In fact, we're going to, if you're unhappy, you can have all of your money back. There's absolutely no reason to worry or to feel anything in respect to loss, at all."

Dan: 12:26 You've basically just described every infomercial ever made.

Mel: 12:29 That's it.

Dan: 12:30 All right, so the three ways I guess companies are using this is, one is around giving people an experience to get a sense of ownership, you know, free trial of the product, test drive, try it on, walk around, describe your life in this thing. The second is around co-creation. If we can get them to build it, they're going to value it more, they're going to love it. And the third is around de-risking the potential loss with things like money-back guarantees.

Mel: 12:53 Yeah. Don't take my spot.

Dan: 12:55 I would not take your spot, and now I understand how much you value it, I don't even think I could afford to take that spot if I ever wanted to.

Mel: 13:02 No, I'm not selling it to you for anything.

Dan: 13:03 But to you guys, dear listeners, I mean, look, this show would be nothing without you all. You have contributed so much and you should all be so proud of yourselves for the show that you've helped create here.

Mel: 13:12 Yeah, I mean, it really is their show. I mean, we do it for everybody, don't we?

Dan: 13:18 Yeah.

Mel: 13:19 It's fun for us, but it's really-

Dan: 13:21 Mainly for the people.

Mel: 13:22 It's all for them.

Dan: 13:23 Yeah. So if you've got more questions about the endowment effect or loss aversion, you can hit us on Twitter. If you want the airy-fairy academic stuff, you can get Mel. What's your handle, Mel?

Mel: 13:32 Airy-fairy ... @DrMelW.

Dan: 13:34 Sorry, well-researched.

Mel: 13:36 Scientifically credible.

Dan: 13:37 Scientifically proven. She's wearing a lab coat right now, @DrMelW. Is that D-R Mel W?

Mel: 13:44 That's the one.

Dan: 13:45 Got you. Or if you want to know the hard hitting business side of this stuff and how to actually use sell more products and services, you can get me on Twitter as well, I'm @danmonheit, M-O-N-H-E-I-T.

Mel: 13:56 And just in case you were wondering, that was Dan trying to sneak everybody into co-creating the show.

Dan: 14:02 No, it's not sneaky at all.

Mel: 14:04 You told me, again. I'm going to put my ethical police hat on.

Dan: 14:07 Call the fun police.

Mel: 14:09 Show's over. We're out.

Dan: 14:10 All right, we're done.

#3 Choice Paradox: Why it’s so hard to choose a hamburger

We all want more choices, right? Well, no. Not according to the data anyway. In this episode Mel and Dan look at how choice can adversely affect our ability to make decisions, as well as what good marketers can do to tip things in their favour.


Dan: 00:17 Hey, I'm Dan Monheit, co-founder of Hardhat.

Mel: 00:20 And I'm Dr. Mel Weinberg, a performance psychologist.

Dan: 00:23 And if you're listening to this podcast it's because you're interested in, why we choose what we choose ...  

Mel: 00:27 Why we think, what we think ...

Dan: 00:28 And how to exploit these things for fun and commercial gain.

Mel: 00:31 Dan, you promised me this would be ethical.

Dan: 00:33 This is totally ethical, but let's be real, that's what we're here to do.

Mel: 00:46 So I've got to tell you what happened last night.

Dan: 00:48 You sound so depressed about it.

Mel: 00:50 Well, I mean it wasn't one of my finest moments. I was hungry, so I couldn't figure out what to eat, so I thought I'll get in my car and I'll drive around. Is that not what you do when you're angry?

Dan: 01:03 No, go on.

Mel: 01:03 Alright. So I thought, there's so many options within a two kilometre radius of my place. So I just drove around to see what jumps out at me. 45 minutes later, I parked out in front of my house, went inside and boiled a can of tomato soup.

Dan: 01:18 Wow.

Mel: 01:19 Yeah.

Dan: 01:19 That's a good insight Mel.

Mel: 01:20 Yeah. That's the life of Dr. Mel.

Dan: 01:23 That's right, you had soup for dinner last night?

Mel: 01:25 Yeah.

Dan: 01:26 I'm going to tell you something, I'm going to one up here, I actually wish I'd had soup for dinner last night.

Mel: 01:31 What did you have?

Dan: 01:32 I had cereal for dinner last night. This idea of driving around is ridiculous. I don't know if you're familiar with smartphones, but you should get one. And on phones you can get things called apps. I have three such apps on my phone, I have Deliveroo, I have Foodora and I have Uber Eats. And actually a bit like you, I had to first decide which one of these three apps I want to open.

I went with Uber Eats, but then even opening Uber Eats there was literally like hundreds of choices, talk about first world problems. There are so many different types of delicious looking hamburgers for me to choose from that I actually just could not come to terms with making a decision. And by this point it was already after 8:00 and I thought forget it, I just closed the apps and went and had some cereal. Which was actually quite delicious, I think.

Mel: 02:18 Cornflakes or Weetbix?

Dan: 02:20 I actually had Muesli. Actually, my thing with cereal, I think most of us are dehydrated most of the time, we don't drink enough water. So I think having cereal does a good job of filling up and also giving you the fluids that you probably need.

Mel: 02:31 Not that should anybody should be taking dietary recommendations from the two of us right now.

Dan: 02:39 I think this is true. But anyway, I was just thinking, it seems ridiculous to complain about how hard it was to choose which dinner option I wanted out of the literally hundreds that were available to me, compared to what even just a couple of hundred years ago we would have had to go through to eat dinner.

Mel: 02:53 Like what?

Dan: 02:53 Well maybe a few thousand years ago, like Flintstones times, you had to go and hunt a Dinosaur, or whatever people hunted, and go and kill that thing and that's what you get to eat for dinner. But at least you didn't have to decide which thing you were going to have, just like you just see a thing and you hunt it down and you kill it, and guess what? Everybody is eating.

Mel: 03:13 We were such simple humans back then, weren’t we?

Dan: 03:16 I know, I can't help but think hunting a saber tooth tiger would have been easier than selecting a burger off Uber Eats.

Mel: 03:21 Well, see, you're bringing up an interesting thing there, which is this idea about choice and freedom to choose, right? Because as humans, we like the idea of having choice, right?

Dan: 03:33 Absolutely. It's a right, isn't it?

Mel: 03:35 We deserve the right to freedom and to freedom of choice. It makes us feel like we're in control of things and it makes us feel like we know our world. But there's this thing called the Choice Paradox, which a lot of people are probably familiar with and we're going to tease that out a little bit in this study ... in this episode...

Dan: 03:53 What’s not a study? Everything's a study.

Mel: 03:55 I'm such a researcher, aren’t I?

Dan: 03:58 You are.

Mel: 03:58 But we're going to tease that a little bit to help us understand why we make such poor food choices when it comes to dinner and to hopefully help us make better ones next time.

Dan: 04:07 Awesome. Okay. I think the other good thing about Choice Paradox is that it’s a thing you can say in front of other people and it's immediately going to make you sound smarter. So let's unpack exactly what it is so that you can back up the big terminology with some actual ideas. So Dr. Mel, let's start where all good things start. Surely there's some seminal piece of research that we can all look to, to learn about the choice paradox.

Mel: 04:30 In fact there is. Have you heard of the jam study?

Dan: 04:34 I have not, but I feel like I'm about to. Let's talk about the jam study.

Mel: 04:38 You know what, it's actually called the famous jam study. It's not only the jam study, it is the famous jam study.

Dan: 04:44 The most famous of all other jam studies.

Mel: 04:46 I'm not sure how much research there is the journal of jam, but this one is definitely up there. So the famous jam study was an experiment by Lyengar and Lepper back in 2000. So it's really fairly contemporary in terms of how these sorts of things go in psychology. What they did was, they set up a tasting booth at, say a local supermarket and there were two conditions that people were exposed to. At one of these tasting booths, say it was on the first weekend, there were six varieties of jam that the people could choose from and they noticed, or took note of how many of the passers by or how many of the shoppers stopped to taste these jams.

Dan: 05:21 Everybody loves tasting some free jam.

Mel: 05:22 Yeah, a sprinkle of strawberry jam, spoonful of raspberry jam and you're good to go. So then the next weekend they actually had the same tasting booth, but instead of having six jams on display, there were 24 varieties of jam.

Dan: 05:36 What how many?

Mel: 05:36 24.

Dan: 05:38 24, there's no way you could, we're not going to do this because it's going to be annoying for our listeners, but nobody can name more than seven types of jam.

Mel: 05:47 I'm pretty sure-

Dan: 05:47 We're not doing this, 24, that's ridiculous.

Mel: 05:50 What would be the most random jam?

Dan: 05:54 There would be some sort of a Goji Berry infused with some sort of ancient- I don't know. Let's keep going. Lots of jams.

Mel: 06:00 Okay. There were some exotic jam options as part of this 24 variety. So what they actually did was, they took note of how many of the passers by stopped to taste some of the jam and they found that people were more interested in the display when there was the larger variety, so for the 24 jams on display, people were going around thinking "Oh, what is this jam?"

Dan: 06:23 “I have to go and see this!”

Mel: 06:24 Yeah - “I want to have a look at what sorts of jams are there, I'm going to check this out.”

Dan: 06:27 People call in their wives and husbands, “you have to come down there are 24, you will not believe it, 24 jams, come check it out. “

Mel: 06:33 So even though more people did stop, when it actually came to purchasing behaviour, what they found was that people were much more likely to actually make a purchase of jam when they had been exposed to only 6 of the options.

Dan: 06:45 Oh, let me get this right. So 24 jams, more people stopping, six jams, less people stopping, but more people buying.

Mel: 06:52 That's it.

Dan: 06:54 Right. So that's not what we would expect, right? We would think that more choice is better and we're going to feel better about it and you get to choose one out of 24, not one out of six. So what has happened? Something has happened between jam seven and jam 24, that people have just decided to stop buying.

Mel: 07:10 Yeah. There are few things that come into play. One of the things could be, did you know what jam you were looking for in the first place? Because if you have 24 options at your disposal and you already had an idea in mind about what jam you wanted, then you're more likely to see that jam when there's 24 options on display than when there's only six. But most people stumbling across a jam display in the supermarket are willing to try new flavours, and they are not sure what they're going to come across. So what happens is they try a few, and all of a sudden they start comparing the properties of the different jams, the sweetness-

Dan: 07:43 How's the viscosity on the apricot and passion fruit?

Mel: 07:45 Yeah. All these things come into play and all of a sudden jam becomes something that's really important and our brain is trying to figure out all this new information that we have to coordinate which jam we're going to choose. And then it's like something flicks in our brain and our brain goes, hang on a second, I really don't give a stuff about jam, where's the chocolate at?

Dan: 08:04 Yeah. I don't need jam my life. Let's move on.

Mel: 08:07 So that's exactly what happened. So our brain just goes, you know what, like flip the switch because I'm not interested in this any more, stuff this.

Dan: 08:12 Like too hard, can't win, don't try.

Mel: 08:13 Absolute too hard basket. Yep.

Dan: 08:15 Right. And that's going to happen more when we're dealing with making a choice out of 24 than we're making a choice out of six.

Mel: 08:22 Yeah. And then, it goes a step further, because if even if you do make a choice and even if you actually do buy a jam from that option of 24, when you go home, you're tasting that jam but you're still thinking about all the ones that you didn't buy and all the ones that you left behind and so your actual enjoyment of the product at the end of the day is less than it would be if you would have been more secure in your choice or more definite in your choice from having a smaller option.

Dan: 08:51 So I'm eating my lunch of boysenberry jam and instead of just enjoying it, I'm actually running 23 concurrent “what if” scenarios in my brain about how much better my life could have been if I just picked standard, predictable strawberry? It's always been there for me. Or what if I'd picked raspberry it's like strawberry but just slightly more interesting.

Mel: 09:13 And all of a sudden, all of the positive things that we normally attribute to jam, all the sweetness that we know about jam gets overtaken by this horrible indecision and regret about all of the jams that we left behind.

Dan: 09:25 God we’re pathetic creatures aren’t we.

Mel: 09:26 Oh, yeah.

Dan: 09:27 And I mean, let's be honest, this probably goes some way to explaining the current divorce rate in the country, which is around about 50%. I mean, what about the thousands of other people that we've met in our lives? What if we just picked one of those instead?

Mel: 09:41 So much choice, so much regret.

Dan: 09:44 But you know what I guess is not just an affliction affecting the lowly jam buys of the world. I think it's quite well known that some of the world's greatest entrepreneurs including the late great Steve Jobs and Mark Zuckerberg, are famous for wearing the same thing day in, day out.

Mel: 10:00 People who know you might think that you're perhaps in that category as well, with your dunks, with your jeans, with your pretty standard attire here. What are you trying to do here, Dan?

Dan: 10:11 Well, I think what guys like Steve and Mark and I are trying to do here is, we acknowledge the fact that there's going to be a lot of decisions to make today and probably, I don't know, four or five of them are actually going to be really, really important decisions and it would be remiss of me, and us - I speak on behalf of my choice minimising brethren here - It'd be remiss of us to waste one of the good decisions of the day on what are we going to wear today?

Mel: 10:37 So this has absolutely nothing to do with fashion?

Dan: 10:39 No, no, no. Nothing to do with fashion.

Mel: 10:41 No. This is all about you just making smarter decisions throughout the day.

Dan: 10:44 Yeah. It's saying, look, there's going to be important decisions to make during the day. I have to reduce the decisions early on in the morning so that I can be ready and fresh for when an actual important decision turns up. So what I'm going to eat for breakfast, not such an important decision, I might as well just eat what I ate yesterday.

Mel: 11:00 Yeah, you're probably going to eat it for dinner as well.

Dan: 11:01 Well, that cuts to the core Mel. But ... what are we going to wear? Like it seems crazy that people would actually expend real mental energy considering that every morning. But, you know, to each their own ...

Mel: 11:15 Sorry, retail industry.

Dan: 11:18 You guys do a great job. Don't get me wrong. I guess, a lot of the ... Well you're probably the one to talk about literature more than I do, but I would imagine if I read literature, a lot of it would talk about how decision making abilities are like a tank of gas, or maybe like a muscle.

Mel: 11:34 Yeah. One way that you could think about these would be to think of it like a fuel tank, like a decision fuel tank. And we make sure we want to keep that full because you never know when you're going to need that.

Dan: 11:44 I'm a high octane performer. Yes.

Mel: 11:46 You want to preserve as much fuel as you can in that decision tank as possible. So yeah, I guess it makes sense that if there are things that you can reduce, that discomfort of having to choose between having to use up that fuel in that tank and save it for later, then you'll be much better placed to make better decisions later on.

Dan: 12:02 Exactly. That's what I tell people. An interesting side note on that is, a good tip for our listeners, if you guys ever end up in prison or if you're currently listening to us from prison and you find yourself eligible for a parole hearing, the research shows that you should try and get your parole hearing done in the morning. It was a very famous study, so famous that even guys like me have heard about it, done with judges in Israel. That looked at the likelihood of granting parole as the day wore on, and what the researchers found was that the earlier in the day the more likely people were to be granted parole because as the judge is still human and as they fatigued as the day wore on, it's much easier to just deny parole knowing that they would get another shot at making a decision at some future point. And it's better to make the easiest decision of all, which is, to not make a decision at all.

Mel: 12:51 So whether you're buying jam, whether you're starting up the next Facebook or really ... whether you're in some seriously big trouble and trying to apply for parole, then there's so many things that you can learn from understanding how we make decisions and the Choice Paradox itself.

Dan: 13:09 Absolutely. So if we look at this on a really tactical level, if we're designing an interface or something for a client, even just things like how many navigation items we give people, there used to be an idea that people want to see everything on the homepage, put all the navigation items up there and let the poor user workout which one of those 15 items to select. Whereas now we realised, we needed to give people fewer but better options.

Can we condense it down to three or four really good choices? And same with even things like a contact us page, do we really need to give people, call us, email us, fill out this form, get us on Facebook, get us on Twitter and get us on Google+. We just make it so hard for people. Fewer but better options is absolutely going to do the trick.

Mel: 13:52 I think one of the things that the Choice Paradox highlights is the difference between giving people actual choice and giving them the perception of choice, right? Really what people need is the illusion. They need that perception that they are able to choose should they want to, but don't give them the actual choice. It's too much.

Dan: 14:06 So who's questionably ethical now? How are we going to give people the illusion of choice. I didn't know you were in the world of trickery, Dr. Mel.

Mel: 14:13 Excuse me. I think in my time here is done...

Dan: 14:16 So no, let's finish up on this bit. So we're talking about giving people the illusion of choice? So I guess we could think about that on a website where you have a big shopping cart. I don't know, where do you buy your sneakers from?

Mel: 14:28 East Bay.

Dan: 14:29 From East Bay. All right, cool, so on East Bay we know there's thousands and thousands of different sneakers on there, but we know the site is good enough to filter you down pretty quickly to a digestible list of a few dozen results.

Mel: 14:42 While at the same time showing me how much choice that actually is available. So you get those little numbers in brackets behind each filter, which actually tell me, “now if you really want to go and look at all of the possible Nike shoes, I'll show them to you. But really I know that here are just the ones that you want.”

Dan: 14:56 Awesome. So I guess what they're doing by that is they're saying, "Look, all of the choice is here," but at the same time they're trying to not completely bamboozle you by showing you 2000 options at once, knowing that if they did that, chances are you'll just leave.

Mel: 15:08 That's right.

Dan: 15:09 Cool. So Choice Paradox, fewer but better options.

Mel: 15:12 Yeah, so what are you having for dinner tonight?

Dan: 15:15 Why do you have to do that? What are you having for dinner tonight?

Mel: 15:20 I'm probably just going to mum's house.

Dan: 15:22 For soup?

Mel: 15:24 Two options at mom's house, take it or leave it.

Dan: 15:26 Love it. All right, well, hopefully today you've learned a bit more about why we choose what we choose ...

Mel: 15:30 Why we think what we think ...

Dan: 15:31 And how to exploit these things for fun and commercial gain.

#2 Availability Bias: Why we massively overestimate our chances of success

Of all the mental tasks we suck at performing, estimating the likelihood of something really good or really bad happening is right up there. In this episode, Mel and Dan unpack the ingredients that lead to our terrible mental calculations, and discuss how we can reconfigure them to create more compelling ads


Dan: 00:17 Hey, I'm Dan Monheit, co-founder of Hardhat.

Mel: 00:19 And I'm Dr. Mel Weinberg, a performance psychologist.

Dan: 00:22 And if you're listening to this podcast, it's because you're interested in why we choose what we choose-

Mel: 00:26 Why we think what we think-

Dan: 00:27 And how to exploit these things for fun and commercial gain.

Mel: 00:31 Dan, you promised me this would be ethical.

Dan: 00:33 This is totally ethical but let's be real, that's what we're here to do.

So, Mel, I was thinking we seem to be terrible at estimating the likelihood with which things happen. People seem to really overestimate the likelihood of things like winning the lottery, or their startup getting bought by Facebook for a billion dollars.

Mel: 01:00 Yeah, it goes the other way as well. We also tend to underestimate the likelihood that bad things are going to happen to us in the future. We always think that if we look ahead into our future that bad things are more likely to happen to other people than they are to us.

Dan: 01:12 Yeah, which is kind of weird right? It seems like instead of going through all the hard work of getting the data and crunching the stats and making an educated guess about how likely something is to happen, we seem to do this weird kind of mental gymnastics trick where we're like "Hey brain, find me an example of startups getting bought by Facebook for a billion dollars". And it would appear that the easier it is for our brain to produce an example of that, the more likely we think it is for that thing to happen.

Mel: 01:39 Yeah, so basically what you're explaining is a psychological phenomenon called the Availability Bias. It was introduced to us by a couple of legends called Kahneman and Tversky, amongst a host of other types of heuristics and biases that they identified. The common example that they give is when they ask people to guess or to estimate whether, if they think about all the words in the english language, are there more words that start with the letter K, or that have K as the third letter. Do you want to have a go?

Dan: 02:11 Okay, let’s do this.

Mel: 02:12 Alright, how many words can you think of that start with the letter K?

Dan: 02:14 You go first.

Mel: 02:14 Okay. Kiss.

Dan: 02:18 That's cute. That's with a C. Kickboxing.

Mel: 02:22 Kill.

Dan: 02:24 Knuckle.

Mel: 02:25 Kind.

Dan: 02:26 Karate.

Mel: 02:26 Knife.

Dan: 02:29 Kar- I said Karate. Karaoke!

Mel: 02:30 You're out, you're out, you're out!

Dan: 02:30 There's lives, there's lives! Kangaroo!

Mel: 02:30 Kangaroo, okay.

Dan: 02:30 Knickerbocker.

Mel: 02:30 King.

Dan: 02:30 Knuckle.

Mel: 02:36 Knife. You said knuckle.

Dan: 02:38 Damn it, Okay. Go on.

Mel: 02:39 Anyway, there's heaps, right? How many words can you think of that have K as the third letter?

Dan: 02:44 Ask.

Mel: 02:45 Take.

Dan: 02:49 Make.

Mel: 02:49 Bake.

Dan: 02:49 Cake.

Mel: 02:52 Acknowledge.

Dan: 02:57 I got nothing.

Mel: 02:58 Okay, so basically the same thing that you explained before about how your brain searches for bits of information.

Dan: 03:03 There are no words with K as the third letter, clearly.

Mel: 03:05 Well, see it's not exactly true. In fact there are many, many more words in the english language that actually do have K as the third letter, it's just that it's so much easier for us to remember words that start with the letter K because that's how we process information. We process words alphabetically. We have rules for the way that we store information and they dictate how easy it is, or how difficult it is for us to retrieve that information.

So basically what Kahneman and Tversky show us with that experiment was that, if you want to think of words that start with the letter K, or you want to answer this question, you don't actually know how many words start with the letter K, you don't actually know how many words have K as the third letter. So you say to your brain “Brain go and find me examples of words that start with the letter K". It's easy you can think of heaps - that's how we store information. But if you say to your brain “Hang on a second can you find some words for me that have K as the third letter?" And all of a sudden your brain comes up blank.

Dan: 03:55 While you're describing this, I don't know about you listening, but I'm imagining my brain as Tom Cruise in Minority Report calling up all of these examples on a giant moving screen, waving his arms around. That's basically what happens, yes?

Mel: 04:07 Great movie, great reference, totally appreciate it. Pretty much, we're just searching for information. And that's what Kahneman and Tversky called the Availability Bias, and that was the classic example that they used to teach us about how it works.

Dan: 04:19 Right, so, as marketers what does this mean for us?

Mel: 04:24 You're the marketing guru.

Dan: 04:24 Oh, right.

Mel: 04:26 I'm just the psychologist.

Dan: 04:28 Clearly as marketers we want to be words that start with K. We don't want to be words with K as the third letter. When we are promoting a product, a service, a brand, we want our prospective customers to think about us and think about the benefits they're likely to get from using our product, service, brand, far more often and to be far more frequently occurring than they otherwise might, right?

Mel: 04:52 So you want to play with people's minds?

Dan: 04:56 Yes, that's what we do right? As advertisers, we're choice architects, we're trying to get people to choose certain things. So, if what you're telling me, and what we're talking about today is the fact that the easier something is to recall, the more likely we think it is to happen. Then obviously we need to ask ourselves, how do we make things easier to recall and therefore seem more likely to happen.

Mel: 05:17 There is a way that we can do that, and there are some things that we know about the way that we store information that can make it more easy to retrieve. I'll give you three examples. The first thing that makes it easier for us to recall something is how recent it is. If you imagine that your brain has multiple compartments, and it's constantly taking in new information, the most recent information has part of place in your brain and in your awareness, until something else comes along to replace it. The more recent something is, the easier it is for us to remember, so, if you think about a couple of years ago with the Malaysian airlines flight that went missing. And for a few days after that, all people were thinking about with regard to aeroplanes when the word aeroplane popped up, people were thinking about aeroplanes going missing.

Dan: 06:02 Right, because it just happened right?

Mel: 06:04 And it was fearful, right then for a few days afterwards people were thinking “I don't want to fly, I definitely don't want to fly Malaysian Airlines, I don't really want to fly anywhere near Asia”. Slowly though after that as more instances, or as more days passed where there weren't any planes going missing, that became more common, and that became more frequent. The example of the Malaysian Airlines flight was that, for as long as it was in recent memory, and recently available, it was very easy for us to pay attention to it and to recall it.

Dan: 06:36 So the more recently something's happened, the easier it is for us to remember, and that makes sense because people forget stuff, we forget stuff all the time. If we saw it this morning we're way more likely to remember it than if we saw it six weeks ago.

Mel: 06:49 And because we're more likely to remember it, we think it's more likely to happen again.

Dan: 06:49 I've got a couple of young kids, one of the things I learned very early on is as soon as my son has a bad incident with something- he falls off a slide at a park, the first thing we’ve got to do is put him straight back on there. And I guess now what we're explaining is that that pushes the most recent memory of falling off a slide down the list, or down the giant Facebook news feed that is our brain, and adds new memories on top of it pushing it further and further and further away until one day he's a messed up 28 year old and can't remember why, and one day realises because he fell off a slide and his dad never acknowledged it. Or something like that.

Mel: 07:25 Parenting tips to come in the near future.

Dan: 07:28 Yeah, yeah. Talk to me about marketing, don't talk to me about parenting.

Mel: 07:30 Alright, so we've covered recency, making something more recent can make it easier to remember. The next thing has to do with the emotional intensity. If you think about the way that your brain processes and stores information, the area of your brain that is responsible for storing memories is right next to the part that's responsible for storing emotions. So these things go together and these things are very highly connected.

If I asked you to think about the happiest moments of your life, go.

Dan: 07:56 My wedding day, the birth of my children.

Mel: 07:59 I'm calling bullshit Dan, they are the things that you're supposed to say. Be honest.

Dan: 08:00 Yeah, but they're happy.

I got this pair of Jordan 11s-

Mel: 08:05 Now we're talking.

Dan: 08:07 When they were released in the U.S. people actually burnt down footlocker stores, and I just walked straight into a shop here, they had one pair left in my size. Must have been 2007.

Mel: 08:16 Could probably recall the exact date, can you hear the passion in his voice. Alright this is an emotionally intense-

Dan: 08:16 The smell, oh you open up the box and just- anyway.

Mel: 08:25 This is a vivid, emotionally intense experience. What about if I ask you to think about the times in your life where you were most relaxed?

Dan: 08:31 Yeah, yeah, an example?

Mel: 08:32 Okay, you can tell me.

Dan: 08:34 Example. Intellectually I know the answer, I was probably on a beach somewhere on a holiday?

Mel: 08:43 Cause that's where you're supposed to be relaxed.

Dan: 08:46 Like the most relaxed?

Mel: 08:52 It's hard, right, because an emotion like feeling relaxed, feeling calm, feeling tired, or feeling sleeping don't have the same intensity as emotions like being happy, being sad, being terrified, being excited. Anything that has a higher emotional intensity, any memory that is associated with a more intense emotion is going to be much easier for us to find. It's gonna stand out in our brain when we go searching for things. The ones that have the emotional attachments are gonna have the big spotlights on them, the ones we’re gonna be directed to.

Dan: 09:23 It's like in all caps with all the hashtags. Very easy to locate for future reference.

Mel: 09:27 Easy to find, that's it.

Dan: 09:28 So, I guess if we go back to that Malaysian Airlines example, right. We talked about the perfect storm for that. It happened very recently and clearly a missing plane, just like a car crash or a shark attack is high on the emotional spectrum.

Mel: 09:43 Definitely and those are the things that make it. Yeah you can say emotional spectrum, that's a thing.

Dan: 09:47 Yeah. Good, scientific.

Mel: 09:47 I'll pay that.

Dan: 09:47 It punches us in the brain.

Mel: 09:47 No.

Dan: 09:53 No, it doesn't do that.

Mel: 09:55 Stick with by your head.

Dan: 09:55 Emotional spectrum.

Mel: 09:58 Yes, the emotional spectrum of things if we're going from low alertness, low arousal to high alertness, high aroused. The things that are on the higher end of that spectrum are gonna be more memorable.

Dan: 10:09 Right.

Mel: 10:09 So, the third thing that we can do to make a memory more available is to give it some personal significance. Let's think of the example of something that nobody should ever do but a lot of people are typically guilty of on a frequent basis. Let's say texting and driving. We all know we're not supposed to text and drive and it's very dangerous and that if you get caught there are terrible consequences. At the very least you might get some demerit points and a heavy fine, at the very least. We know these things but it still doesn't really stop us from doing the behaviour. The thing that might stop us or make us think twice about engaging in that behaviour is if we hear that our best friend, our sibling or our parent has just been busted, been caught, been fined and had it happen to them. What happens is we see, “okay that's just happened to somebody who is very much like us. If it can happen to them it is more likely to happen to us.”

So, because we can easily recall an instance of it happening to somebody just like us, it's front and centre of our memory.

Dan: 11:12 I guess what's weird about this it can completely override nonsensical things. Somebody who has a relative who smokes a pack a day and lives to 106 for some reason believes or over indexes in the belief that you can smoke and live a long life, even though the facts clearly would suggest that the opposite is true.

Mel: 11:34 Well, if you're looking for instances of smoking related deaths, you think okay, well I know somebody who smoked and they lived till 110, so I don't know if I believe in that.

Dan: 11:34 Yeah.

Mel: 11:43 So we'd certainly overestimate the importance and the frequency of these things based on how personally significant it is to us.

Dan: 11:49 Cool. So, just to recap here, not all memories are created equal.

Mel: 11:54 Certainly not.

Dan: 11:54 The easier it is to pry out a memory, the more likely we are to think something is going to happen. Creating memories that are more powerful and more easily recalled, we need to make them recent, we need to make them emotional and we need to make them as personally relevant as we can for our audience.

Mel: 12:11 Yep.

Dan: 12:11 So, if we think about how we might wrap this up as a marketing campaign or as a thing that might happen for a real life business product or service out there. Let's imagine a university and the university has a sport's science program and it's obviously trying to attract undergrad students into that program. Some of the previous alumni from that program have gone on to exceptional careers in the best sporting leagues in the world. Out of the thousands and thousands of graduates that have come and gone, a handful have found their way into the NBA, the NFL, the English Premier League, whatever it is. Taking what we've learned today, if a university were to produce a whole bunch of content, highly emotional stories that were displayed very frequently through the likes of say social media, to the right audience, which featured people that looked like, smelt like, seemed like their audience - and these guys went out and achieved things that were emotionally significant and exciting and interesting … perspective students would not be able think that the likelihood of that happening to them is higher than it actually is. Is that what we're saying here?

Mel: 13:21 Yeah, I mean you try to compete with a whole bunch of other information that a person's brain is taking in. So, you're looking at what you can do, knowing what we know about how the brain works to make your information the most readily available and seemingly important information to them.

Dan: 13:37 I guess what you're trying to say here, and I'll just be blunt about it before the ethical police start talking about us manipulating people, let's be honest, the advertising industry, those of us that work in ads and marketing. We are here to change people's mind, that is our whole remit. Anybody that tells you anything different is lying or self delusional. We're here to make people choose our products, our clients products over other peoples, so we might as well be good at it. Understanding how people remember things and knowing that the easier it is to recall a memory, the more likely people are to believe it is something that we should absolutely consider. I guess what we've learned about today is one such technique to help us do that, called:

Mel: 14:17 The availability bias.

Dan: 14:17 Awesome. All right. Do we have anything else to talk about on the Availability Bias?

Mel: 14:20 Do we?

Dan: 14:20 I don't know, I have a fun fact.

Mel: 14:23 Give me a fun fact.

Dan: 14:25 More people, I think over 20 people a year die taking selfies.

Mel: 14:31 Ouch.

Dan: 14:32 Less than two people a year in Australia die from shark attacks.

Mel: 14:35 I'm never taking a selfie again.

Dan: 14:36 Yeah, we should fear selfies way more than than we should fear sharks.

Mel: 14:39 It's probably the reason I'm still alive is cause I don't take selfies.

Dan: 14:42 All right, I think we should start a campaign, stop the selfies, it's for your own good. All right, I think that's it for this episode. Come back next time for more about why people choose what they choose.

Mel: 14:53 Why people think the way they think.

Dan: 14:55 And how to exploit them for profit and fun.

Mel: 14:55 Ethically.

Speaker 3: 14:55 (Music playing)


#1 Intro to Bad Decisions

Welcome to Bad Decisions, the podcast that helps marketers understand why we choose what we choose, why we think what we think, and how to exploit this stuff for fun and commercial gain.

Each episode, Dr Melissa Weinberg (performance psychologist) and Dan Monheit (ad guy) will explore a different heuristic (behavioural quirk) that causes us to make poor decisions. In doing so, they’ll draw from the worlds of research, behavioural sciences, and cold, hard advertising.


Mel: 00:17 Hi. Welcome to Bad Decisions.

Dan: 00:19 The podcast series that explores why we choose what we choose.

Mel: 00:22 Why we think what we think.

Dan: 00:23 And how to exploit this stuff for fun and commercial gain.

Mel: 00:26 I'm Dr. Mel Weinberg. I'm a performance psychologist with a background in subjective well-being and resilience.

Dan: 00:32 I'm Dan Monheit, co-founder of Hardhat, a creative agency built for the digital age.

Mel: 00:47 Every day of our lives, we're faced with making a bunch of decisions. And sometimes we make good ones, but most of the time we actually make really bad ones.

Dan: 00:56 Yeah, you're right. It's actually quite miraculous that we've survived as a species until this point.

Mel: 01:00 We live in a world where we've got choices to make all of the time. How do we know when we're making good decisions? And how do we know we're making bad decisions?

Dan: 01:08 It seems as though our brains aren't always working exactly how we think they should.

Mel: 01:12 It's funny, because we rely on our brains to perform all these important processes for us, but they don't always seem to work in the way that's actually best for us.

Dan: 01:20 Yeah, I mean, like, it's usually net positive.

Mel: 01:24 Generally. But I think, something that we're both interested in is how our brain makes shortcuts to get us to making decisions.

Dan: 01:32 Because the reality is, if we actually stopped and thought about all the options for every decision we needed to make every single day, we'd never get past breakfast, right?

Mel: 01:40 We might end up making the most rational decision, but maybe that's not the best one. Maybe it will help us to make the most rational decision, but maybe that will come at the cost of  a whole lot of our time. So maybe it's actually more effective for us to make decisions based on other things, like I don't know, our emotions.

Dan: 01:58 Yeah, however, when you look at it, knowing how people make decisions and understanding how we can perhaps influence how people make decisions is a pretty important thing, especially if you're an advertising marketing guy like me.

Mel: 02:10 And it's basically what I do as a psychologist, I try to understand why people think, how they feel and really help people get a better understanding of ultimately who they are.

Dan: 02:20 The way the show is going to work is each episode we're going to take a heuristic. And a heuristic is like a quirk or a weird thing that our brain does to help us make a decision without us even really noticing. And we're going to sort of interrogate it from various perspectives.

Mel: 02:32 I'm going to come at it from an academic and psychological perspective. So I'm going to talk about how the brain works. I'm going to look at some of the research and explain some of the research that we have from the field of behavioural economics.

Dan: 02:44 And as interesting as the research and the academic side of things are, I'm going to be bringing the real world where the “rubber hits the road” perspective, and looking at how great brands and great businesses can use some of these heuristics or quirks to sell more products and services and make a whole bunch of cash.

Mel: 03:00 In the upcoming episodes, we're going to explore things like the availability bias, the choice paradox.

Dan: 03:05 We're going to see what happens when you put too many jams on display for people to look at.

Mel: 03:09 We're going to explore how many words you can think of starting with a letter of the alphabet.

Dan: 03:14 Sounds good, right?

Mel: 03:15 By the time we're done, you'll have a whole new understanding of how your brain works.

Dan: 03:19 And you'll never look at another purchase decision the same way again.