An update from the Bad Decisions team

We've got some big news from Dan and Dr Mel (OK fine, mainly just Dr Mel). What's happening? When? Why? How? Then what? Great questions. Invest the seven minutes (or three and a half at double speed) and all will be revealed.

#34: Authority Bias: Why nine in ten dentists recommend this episode

Doesn't it seem strange that from the moment we're born, we're taught that following instructions is the right thing to do? In this episode, Mel and Dan discuss the authority bias, and why carrying around a clipboard could be the best thing you ever do.

Mel:                             00:17                Hi, and welcome to Bad Decisions.

Dan:                             00:19                The show that helps us understand 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:                             00:25                Always ethically.

Dan:                             00:26                Always.

Mel:                             00:27                I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan:                             00:29                And I'm Dan Monheit, co-founder of Hardhat.

Mel:                             00:31                And this is [Cuts 00:00:32] with the music.

Dan:                             00:39                All right, yo. Hey Mel, how are you?

Mel:                             00:41                I'm good, Dan, how are you going?

Dan:                             00:42                Very good. So I've been thinking as we're starting to return back to some form of normality, there are a few things from COVID 2020-life that I think I will miss, and I'm having trouble letting go of, and one of them is the Saturday movie night, where there is literally no expectation that I'm going to get dressed or go out. And really, I'm just going to sit on the couch, get takeaway food and enjoy a movie.

Mel:                             01:08                Do you do it with Chinese food? That's my default.

Dan:                             01:11                Not a huge fan. Maybe I just haven't had the right type of Chinese food. Italian is the big hit in my household. But even though we're now allowed to go out, I still am choosing to largely ignore that and enjoy the comforts of my own home and my various streaming subscriptions. And I'll tell you what. I watched an absolute cracker last weekend. I'm sure you've seen it.

Mel:                             01:29                What'd you watch?

Dan:                             01:30                Well, it's not Space Jam.

Mel:                             01:43                What did you watch after Space Jam?

Dan:                             01:43                After Space Jam? I watched Catch Me If You Can.

Mel:                             01:47                Good movie. Classic. Leo.

Dan:                             01:50                Nothing has made me want to go to a costume shop, rent a hat, and then go and fly a plane more than Catch Me If You Can, because apparently that's all it takes. Just get a hat.

Mel:                             02:00                It's not necessarily all that it takes, but it can certainly take you a long way. And it certainly took the protagonist in that movie very far. And you know what, Dan?

Dan:                             02:09                What?

Mel:                             02:09                I don't know if this was planned or not, but that basically hands us a heuristic on a silver platter right now.

Dan:                             02:16                Boom!

Mel:                             02:17                I'm sure you weren't thinking about this at all, but it reminds me very much of the authority bias.

Eric Cartman:                02:21                I'm a cop and you will respect my authority.

Dan:                             02:29                It's one of those biases that I can't believe that we've gotten to this episode and we haven't yet discussed it. So great, we've got plenty of content to get through.

Dan:                             02:39                I know. It's everywhere and it's a juicy one. So I'm also excited to dive into this. So where should we begin?

Mel:                             02:44                With the definition, obviously.

Dan:                             02:45                Well, you're the doctor and I'm not going to argue with that. So let's do it.

Mel:                             02:49                Let me use my authority to provide you with the definition. Authority bias is the human tendency to attribute greater authority and knowledge to persons of perceived authority. And that authority can be achieved through fame, power, position, status, wealth, qualifications or even dress, as you saw in Catch Me If You Can. As simple as a pilot's hat, wasn't it?

Dan:                             03:10                Yeah, that's all you need. It's not all you need, you're right, but it's about 80% of what you need to be able to fly a plane, is the correct outfit.

Mel:                             03:17                And the ability to just deceive people and not care.

Dan:                             03:20                You've got to have the swag and it just seems that movie is like, is a classic example of people just not wanting to challenge authority. If somebody with a badge and uniform tells me to do something, then I should probably do it.

Mel:                             03:31                Yeah. There are probably some bad examples of, throughout human history, of where that has led people astray.

Dan:                             03:39                Yeah. And I guess there could be a whole dark side that this podcast could go down about regular people doing terrible things in war times, just because somebody in a uniform told them to. But we're going to not really spend much time on that and instead keep it easy breezy, if that's all right with you?

Mel:                             03:53                I like to keep things easy breezy, but what you do mention in that the dark side of human history in that sense is relevant to what we're talking about, because a lot of what we're going to talk about today has its origins in early social psychology research. And a lot of the real good stuff that we have today, that you would learn in Intro to Social Psychology, comes from the 1950s and 1960s after some particularly dark moments in human history.

Mel:                             04:20                So, if anybody has taken Introduction to Social Psychology or any social psychology course, there are probably three names that you will be pretty familiar with. The first would be Solomon Asch. And I believe we talked about Asch and the conformity study when we talked about social proof.

Dan:                             04:35                I believe you're correct.

Mel:                             04:37                And check the archives for that one. And people would also probably be familiar with the name Zimbardo and the prison experiment. And that's a popular one too. It's been popularized in movies recently as well. Today, we're going to talk about the third name that I put in that group of influential social psychologists, which is the name Stanley Milgram. Have you heard of Milgram, Dan?

Dan:                             05:03                Stanmo? Absolutely.

Mel:                             05:03                Everybody's heard of Milgram.

Dan:                             05:03                But, for those listening that haven't, why don't you bring us all up to speed?

Speaker 4:                    05:06                It's a alive.

Mel:                             05:07                I certainly will. Milgram was involved in a series of studies, in fact, he was leading a series of studies that looked at people's natural tendencies to comply with authority, even when it went against their moral compass. So people might be familiar with this, and I'll just give a brief overview of his research, but he was the one who was leading these studies that were about getting ordinary people to administer electric shocks to actors, but obviously, the person administering the shock didn't know that they were actors. And, it was under the guise of, You're participating in this experiment and your job is to be the teacher. And there's going to be somebody in another room. You can't see them. You'll be able to hear them, though. But they're the learner. And your job is to teach them by administering a punishment every time they make a mistake. And that punishment is going to be in the form of an electric shock.

Mel:                             06:05                "So you just got to press this button here and the person in the other room is going to get an electric shock. And they're going to know that they got it wrong and that they need to improve and, basically, step up the game. Right? As they go, the more mistakes they make, as well, the more severe the electric shock is going to get. But don't worry about that. Your job is to just keep administering those electric shocks as they keep making mistakes."

Mel:                             06:25                And what happened was that at the beginning of the experiment, pretty much all the participants would go along and administer these mild electric shocks to the not-real people in the other room. And it would get to a point. They'd get some feedback. So they were able to hear the person in the other room expressing some pain or discomfort, obviously, in response to the shock. So, if you imagine yourself being there and administering the shock to somebody and then hearing the feedback, you're probably going to start questioning after a little while and go, "Is this really the right thing for me to be doing? And when they did express some concern about, "Should I keep going?", they were told very sternly by Milgram or that the experimenter to, "Please continue. Carry on. This is fine. This is part of the project,." At which point, the participant would typically continue to administer those shocks to such a severe level, that 65% of all the participants administered the highest possible dose of 450 volts, which they believed was causing quite significant suffering to the other person.

Dan:                             07:35                This is wild, because I imagine this is one of those classic things where if you ask people in a completely cold state, "Here's how the experiment's going to work. I'm going to tell you to keep zapping the person every time they get the question wrong. And you're going to hear them screaming for their life." Would you keep going or would you stop? And I'm sure most people would say, "Oh no, of course, I'd stop. I'm not a sick psychopath. Why would I keep electrocuting somebody I could hear screaming from the room next door?" But what the experiment showed, if you just said 65%. So, basically, two thirds of people kept going, just because a dude in a lab coat with a clipboard said, "No, please continue. This is correct. Everything's going how it's meant to be going."

Mel:                             08:08                But you just touched on something there that was really key. That the guy in a lab coat with the clipboard was actually crucial to the experiment. And when they actually changed that, partway through the experiment, there was some variations where they actually just said, "The lead guy's got to step out for a minute." And they just replaced him with an ordinary person in jeans and tee shirt, and people's compliance went way down. So that lab coat, whether it's that lab coat, whether it's the pilot's hat that Frank Abagnale wears in Catch Me If You Can, that is so important. So everybody get out to a costume shop and make yourself look important, whatever it takes to influence people.

Dan:                             08:43                It makes sense. Right? Because I think about where this has come from. And, you know I always like to take a deep historical evolutionary perspective on this. And I think about why would evolution favor a respect or an obedience of authority? Evolution only favors positive attributes, so why on earth would it do that? And so one thing that I've considered is that it often makes sense to respect or be subservient to authority, because the people in authority are usually in a better position to be able to allocate you things you need to survive. So the authority figures might be able to give you food or water or shelter that you wouldn't be able to get if you just decided to challenge them at every moment. And I think on a more broad sense that having most people in society willing to obey authority, or at least adhere to authority makes it much easier to cooperate, to trade, to build societies than if everybody's just trying to burn shit down and you basically have anarchy and pirates running the show, which makes it tough.

Dan:                             09:42                So I think that there is this natural biological incentive for respecting authority. And then we layer onto that the fact that in society, everywhere you turn, from the moment you're born, you are being educated that good and positive behavior is behavior that respects and adheres to authority, whether that comes from parents, or elders, or school, or politics, or military or religion. Everywhere you go, you have a boss, and your boss has a boss, and your boss's boss has a boss. And if everybody just keeps you in line, everything's going to be sweet.

Mel:                             10:14                Yeah. And I think that's really the key, that from a very early age, from our earliest age, we are actually reliant on authority figures. Right? To guide us, to tell us where to go, to fill in the gaps when there's information that we don't have about how to act in the world. So from a very young age, we are hardwired to follow authority figures. And then it's only, maybe, as we get older that we start to develop, maybe in our teenage, adolescent years that we start to develop this need to actually say, "You know what? I think I've got enough information now. I want to make my own decisions. I want to be accountable. I want to be responsible for my own actions." But like you said, it develops as we go and then our social hierarchy is completely catered towards that.

Dan:                             10:55                So we've got hundreds of millions of years' worth of evolution, plus all of our cultural imprinting, that means we really don't stand a chance when somebody comes on screen in a lab coat and tells us to use this particular toothpaste or chew this particular gum. And it seems that the dental industry are perhaps the ... Wonderful industry. I've got some great friends in the dental industry. But, they are big subscribers to the authority bias, because whether it's-

Speaker 5:                    11:17                This man is a dentist. So we can't show you his face on television. Morning, Rob.

Dan:                             11:22                Oral B showing the shirtless Rob, the dentist, from the back. Or the fact that [inaudible 00:11:27] around the world, has affiliations with various dental associations. They even have online education programs for dentists. They have clearly seen the benefits of partnering with the clear authorities in dental health care.

Dan:                             11:41                I think we see a similar thing as far back as the 1930s, when cigarette companies, believe it or not, were getting endorsements by doctors. And I'm looking at an ad from the 1930s now. It's a Lucky Strike ad. And the headline reads, "20,679 physicians say Luckies are less irritating." And it's basically an ad that, of all the cigarettes you can smoke, Lucky Strikes are the ones to go for. And there's a smiling, middle-aged doctor in a lab coat looking like one hell of an authority figure here. And, "If he's telling me to smoke Lucky Strikes, who am I to argue?"

Mel:                             12:15                Was the rationale there that they were less irritating?

Dan:                             12:17                Yeah.

Mel:                             12:18                The cigarettes or the people smoking them?

Dan:                             12:20                Well, maybe both. And I also liked that 20,679 physicians say that. I don't know how many they surveyed. There might've been another million that said, "You've got to be kidding me. These are killing you." But, it's hard to argue with a guy in a lab coat is the first key lesson from today.

Mel:                             12:35                It's interesting, there's so many examples of this out there. Like any time a celebrity's used to endorse a product, the company's, basically, trying to leverage that person's authority, that person's fame or that person's status. And, George Clooney promoting the espresso is a perfect example of that. I'm sure you could flag off many more. Or, all the celebrities who endorse perfumes. Right?

Dan:                             12:58                Yeah. George Clooney as a human looks, pretty suave and sophisticated, so you would get why they would want him promoting suave and sophisticated coffee. But, I think it's really interesting when they have characters from TV shows, like people from Big Bang Theory promoting computers, where it's not even a real person. It's a character, but the character is enough to convey the authority that, "This nerd from Big Bang Theory must know about computers, because that's what I know them as."

Mel:                             13:23                I think this is a big criteria for me to distinguish. That whether a person actually has authority or whether it's perceived authority is really critical. When a person does have authority ... If a person really is a dentist and they know a lot about brushing your teeth and what's good for dental hygiene, then it makes sense to listen to them. I don't think that's necessarily a bias. That's just making a good decision based on good evidence. But when you've got somebody like a character, a make-believe person who doesn't actually have any experience in computers and is clearly being told, "Could you please ... " Or be paid, actually. "Could you please say this and we will pay you X number of dollars." Then, that's where the authority bias comes in, because it's the perception of authority that is influencing people, rather than any actual evidence itself.

Dan:                             14:11                Yeah. So, I'm going to be careful I don't, I don't trigger you here, because there's lots of safe spaces we can go. We can talk about Heart Foundation [inaudible 00:14:16] and all sorts of other things. But, I'm tempted to just take a little wander into the world of social media and say, it's tough today to determine in many instances where somebody is a real authority and where they are a manufactured or artificial authority. And I'm sure in your space, psychology and wellbeing, there are plenty of people out there who may be actually are authorities or maybe are just authorities at looking like authorities.

Mel:                             14:43                100%. And I think the lines between who's an expert and who's not used to be a lot clearer. But, like you say, with social media, but not just social media, the access that people have to even be able to, say, publish their own book. Right? Publishing a book used to be an exclusive right of people who were invited by a publishing company, based on their expertise, to write about a particular topic. But now anybody can self-publish and make money, essentially, or sell copies of something. And people then tend to believe that they're an expert in the area, even though they may not have any qualification at all, or any experience relevant to that.

Dan:                             15:22                I guess their authority becomes their qualification.

Mel:                             15:25                Did I do a good job of not getting too triggered there?

Dan:                             15:27                That was very good.

Mel:                             15:28                Thanks.

Dan:                             15:29                All right. So, look, I think as far as biases go, this is a pretty straightforward one. What we know is that people are more likely to take advice or take instruction from a perceived or authority figure. I guess, from a brand perspective ... We don't need to overcook this, but there are a few interesting and, maybe obvious, but I still think interesting things that brands can do with this. The first is to bask in the reflected glory of other authority figures. So we see this across the board, whether that is a celebrity endorser who aligns with actually what you're trying to do, or it might be an organization, like we spoke about the Australian Dental Association, the Heart Foundation, [inaudible 00:16:04] or even looking at something overseas where ... Nike, obviously, wanting to cement or defend their position as a leading provider of athletic apparel in the world have just signed a billion-dollar, eight-year deal with the NBA to be the official maker of uniforms for the NBA, because clearly if they're making the uniforms for the NBA players, they must be the leading authority on that.

Dan:                             16:26                So number one thing to do is to, bask in the reflected glory of somebody else's authority who can speak on your behalf and lend you some credibility that you otherwise might not have.

Mel:                             16:35                Makes sense.

Dan:                             16:36                That is not why I have you on the show, at all.

Mel:                             16:37                Mm (affirmative).

Dan:                             16:38                It might be a happy coincidence, Dr. Mel.

Mel:                             16:42                I don't feel used. That's fun.

Dan:                             16:44                No. You have feel leveraged.

Dan:                             16:48                The second thing to consider is ... Maybe it's a longer-term approach. Right? Because when you're buying or renting somebody else's authority, you can do that in a short period of time. The second thing to consider is becoming an authority figure oneself. And this is usually a much longer, much deeper commitment. If we go back to the episode on the mere exposure effect, the idea that just repeated exposure over time builds trust, builds safety, builds familiarity.

Dan:                             17:13                And if you are going to become an authority, figure out for yourself, building up your capabilities, your expertise and the familiarity with which people see you associated with the thing you're trying to be an authority for, is something to work on building over time. And the third thing I think brands can do, and this is slightly tangential, but is to think about the medium as the authority. And so there's this idea that you can do things in outdoor advertising and TV advertising that you can't do through digital-only channels. And I say this as a guy who was born and raised building an agency around digital channels. But, when you are making a big commitment on a big screen to a lot of people, it says, "We're a large company. We can afford to be on television. We're going to be here next week and the week after that." And it's often hard to convey that same authority just using hyper-targeted things like email and social media.

Mel:                             18:03                It's funny, isn't it? That idea that TV can become the authority figure, but Facebook has not got that at all. Just because anybody can do it, it doesn't cost a thing.

Dan:                             18:13                Exactly. The fact that it's democratized. From a business perspective, it's amazing for Facebook, because most of their customers are small businesses. So they're a very robust, very resilient business model, but they do miss out on the flashiness and the authority that you can get from those traditional media channels. What about for the poor people of the world? Just trying to not get mistaken by a guy in a captain's hat?

Mel:                             18:37                Yeah. Well, I think the thing here for me is about whether the authority figure has gained their authority through evidence or through eminence. Right? And what I mean by that is, if you take a step back and question where that person's authority has come from, have they earned it through something worthy of actually being a spokesperson for that topic? Or are they just a well-known famous person? In which case, what they say about anything may not necessarily be grounded in actual evidence or in actual research. So, obviously, I'm going to say, "Hey, listen to the people who have done the research, who have the facts, who have the qualifications."

Mel:                             19:14                And as we said before, it's very difficult to always know the difference in today's day and age, where there is so many people out there who are experts, but they're experts based on eminence and having this acquired status, rather than actually having the evidence behind it. So in that sense, my advice to people is to say, "Why do I trust this person's opinion?" Right? What's behind it?

Mel:                             19:37                The other thing that I mentioned just for ordinary people is something that actually Milgram came up with. And I love it when the people who actually named the biases then come up with their own hacks for it. That's my favorite thing. We don't have to do the work. But, Milgram in the 1970s, talked about introducing the idea of agency theory, which might mean something different in your world. But in the world of psychology, agency theory says people will obey an authority when they believe that the authority will take responsibility for the consequences of their actions. So, once people can remind themselves that, "Actually the consequences of this decision are mine. I'm going to have to deal with the fallout or the benefit of this either way." Then you become more likely to question what you're basing your decision on, and to be more comfortable making your own decision and less likely to actually comply with the authority figure.

Dan:                             20:30                It's all on you. You got this, Mel.

Mel:                             20:32                You got this too, Dan.

Dan:                             20:33                Awesome! All right. So authority bias. I reckon that's a wrap. Can we just hit that textbook definition one more time? Just for those playing along at home.

Mel:                             20:41                Yeah. So authority bias is the tendency that we as humans have to attribute greater authority and knowledge to persons who we perceive have some level of authority.

Dan:                             20:50                And the things we can do about this as brands are to, number one, borrow or rent some authority by attaching yourselves to people, organizations or other brands that carry the authority that you want. The second thing we can look at doing is building our own authority, slowly over time. And looking at doing that through both the evidence and the eminence. Is that right, Dr. Mel?

Mel:                             21:11                Very good. How catchy is that?

Dan:                             21:12                And the third thing is to consider our media choices and where the medium itself can actually be the authority, by going big or going home. And for peeps?

Mel:                             21:21                And for peeps. So the first one is about questioning whether the authority figure actually has authority, or whether you're just perceiving that they have all authority. And if you can tell the difference between the two, then you're in a good place, because we want to trust the experts and we want to be cautious about the pseudo experts, wherever you are. And the second thing is about reminding yourself that you actually have agency and you are in control of the outcomes, not the authority figure or the perceived authority figure who you're following.

Dan:                             21:51                That's right. Like Adam Sandler said, "You can do it."

Mel:                             21:54                I can't wait to hear what you're going to watch next weekend.

Dan:                             21:57                Hopefully it lines up with whatever our next bias is going to be. I think that's all-

Mel:                             22:00                Wouldn't that be wonderful!

Dan:                             22:02                ... all for today. If you guys want to find us, we're on all the normal social media places where ... What's your handle, Dr. Mel?

Mel:                             22:09                @drmelw. The "doctor" is how you know that I'm an expert and authority figure.

Dan:                             22:12                Nice. And I'm just a lowly @danmonheit. No doctor. But, hey, I'm still good for advice, so hit me up.

Mel:                             22:18                And that's how you know the difference.

Dan:                             22:21                [inaudible 00:22:21] I will see you next time.

Mel:                             22:22                Bye.

#33 Scarcity Bias: Why you always want what you can’t have

Given the choice between two items, why do our brains try to convince us to choose the rarer one? In this episode, Mel and Dan explore the Scarcity Bias, and why people line up for days to buy sneakers.

Dan (00:00):

Just stop. Shush. Get out of it. I'm bringing a new persona to 2021. Don't get in my way.

Mel (00:08):

Wow.

Dan (00:10):

No.

Mel (00:27):

Hi and welcome to Bad Decisions.

Dan (00:29):

The podcast that helps us understand why we choose what we choose.

Mel (00:32):

Why we think what we think.

Dan (00:33):

And how do we exploit this stuff for fun and commercial gain.

Mel (00:36):

Always ethically.

Dan (00:37):

Always.

Mel (00:38):

Always. I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan (00:42):

And I'm Dan Monheit, co-founder of Hardhat.

Mel (00:44):

And here is [inaudible 00:00:45] with the music.

Dan (00:50):

Wow. Big year, 2021. We made it. Welcome.

Mel (00:54):

Yeah. Yeah. Well, thank you. Nobody's actually welcomed me to the new year, so that's very kind of you.

Dan (00:59):

That's my official responsibility. I've been working through my list. I only just got to W. Sorry it's taken me to February, but we are here now. Whoa. Big year. Lot of really interesting things from behavioral perspective, hey?

Mel (01:12):

Such as?

Dan (01:13):

Such as everything.

Mel (01:14):

It's been a big year. You're talking COVID?

Dan (01:17):

Yeah. How about you give me a list of things that didn't change, and then I'll give you a list of things that did, all right? My hairstyle.

Mel (01:22):

Let's go straight into the big things that...

Dan (01:25):

My hairstyle didn't change. I'm holding strong. One big category of change we can look at from last year is how many things that for, as far back as we can remember, were in abundance, and then suddenly became very scarce. And at the same time, how many things that were at one point in time, very, very scarce. And then whether we like it or not, became very, very abundant.

Mel (01:48):

Yeah. So you're talking about like changes to things that we just took for granted, that we'd always sort of have. And then all of a sudden there were restrictions imposed, or toilet paper. The old toilet paper, yeah?

Dan (01:59):

Things like, I mean, I wouldn't go as far as saying civil liberties, but yes. I mean, in January of last year, if you wanted to go for a walk anytime day or night, you could. If you wanted to go to the supermarket and buy pasta sauce, or toilet paper, or soap, or hand sanitizer, you could. And then by March, you couldn't do most of those things as and when you pleased. And the opposite is also true, where things like time with your kids, which was once very, very limited, suddenly became you're also now a full-time homeschooling teacher person, and you cannot be more than five kilometers from your children at any time for the next six months.

Mel (02:36):

Is there anything you need to get off your chest, Dan?

Dan (02:37):

No, I love my children, but I'm just reflecting on how quickly things can flip between the two.

Mel (02:46):

Right. And so this difference, this distinction between things being abundant or things being scarce makes a big difference to our behavior when it comes to how much we want or how much we're willing to pay for the items in question. And you know what that does, Dan? It brings us to a wonderful point where we can actually talk about a heuristic, that is related to all of this stuff that you've been talking about.

Dan (03:06):

Bring it on. 2021's first heuristic. What do we got?

Mel (03:09):

It's called the scarcity bias, or the scarcity heuristic.

Dan (03:12):

(singing)

Mel (03:18):

It is exactly is as you've described, the tendency for us to place more value on things that we perceive to be more rare than things that we perceive to be in abundance.

Dan (03:28):

And how long will this scarcity heuristic be available for?

Mel (03:31):

Well, it's in short supply, but we are only going to talk about it for about the next 15 minutes.

Dan (03:36):

Whoa. Shit. All right. Well, we better get straight onto it. So this is one of those ones where in a lot of respects, it feels very obvious. That if we can't get hold of something, we probably want it more. And I think that the evolutionary handwriting for this is pretty obvious. So for most of our existence, a lot of things that we wanted were very hard to get, very dangerous to get, or actually very scarce. So it was hard to get food, it was hard to get shelter. So it makes a lot of sense that we would be wired to want stuff that was in short supply. But what's weird is, I mean, today, most things that we need for our basic survival are not in short supply. And I think most of what we would consider scarce today, I think our cave people selves would probably laugh at the notion that we'd be lusting after things simply because of the perception that they are not readily available.

Mel (04:29):

Right. And this is how... if I may, I'm sure our listeners are hanging out for the research. So this is how a lot of the research has been designed, basically to manipulate the perception of scarcity rather than the actuality of it, and to see how people respond. So if I may have some research music please, [inaudible 00:04:48].

Speaker 4 (04:48):

It's alive.

Speaker 5 (04:48):

That's the attitude. You can sell anything? Sell me this fucking pen right here. You can sell anything? Sell that. Go ahead. Sell me that pen.

Speaker 6 (05:00):

Can I finish eating first? I need [inaudible 00:05:02].

Mel (05:02):

Essentially, there's a series of studies where the essence of them all is the same. They'll have two things on offer, two options, I guess of a similar good, like two flavors of cookies, for example, or two ballpoint pens, or two key rings in less exciting variations of these sorts of studies, certainly less tasty ones. And what they do is they first check that the two items are valued similarly at the start by participants. And then what they do is they introduce manipulations where they will change either the scarcity, or the availability, or abundance of one of these goods, and they present the object back to participants with this added context: "You have a choice of two cookies, but this one, there's only two of them left and this other one, there's 20 of them left."

Mel (05:52):

And all of a sudden you see that people's preference for these goods, how desirable they rate it and how valuable they rate it, increases significantly once they know that it is in short supply. So the cookie study was done by Worchel, Lee and Adewald in 1975. And then there were a bunch of studies in between, but another common one that's cited is by Luigi Matone and Luchea Salvadori in 2009, who used the ballpoint pens or key rings. And they found that the preference for the good increased by up to 23% in the scarce condition compared to the abundant conditions.

Dan (06:34):

Spare a thought here. I mean, I do feel bad for the researchers that have to try and make key rings and ballpoint pens seem scarce. I mean, I've never really understood the rationale for better funding for research projects, but if you're scrapping around trying to get people to lust off the caterings, you're probably working too hard.

Mel (06:52):

Sometimes you've got to do what you got to do, Dan for the purposes of scientific research.

Dan (06:57):

I know, but what pricked my ears up here...did you say 23% more, people willing to pay up to 23% more? Just because of the perception?

Mel (07:05):

So, I know that they're willing to pay up to 23% more, but their preference for the scarce option was 23% higher.

Dan (07:13):

Yeah. Potato, potato.

Mel (07:15):

So there was a 23% increase in something.

Dan (07:17):

Yeah, I mean what is preference, if not a substitute for willingness to pay.

Mel (07:22):

And when did we ever...when did you ever let the details get in the way?

Dan (07:26):

Exactly. So 23% more, just because of the perception of rarity, even in actual fact, there were probably lots of cookies still available or ballpoint pens, or key rings.

Mel (07:36):

Yeah. And there's one thing that they also did that's probably worth noting that the Italian researchers that I mentioned from 2009, they noted that competition increases the chances that scarcity bias is going to impact on your decision-making. If you know that somebody else is going to get the option that you don't choose, so if you don't choose this key ring and remember the only two left, somebody else is going to get it, then you're much more likely to choose the scarce one. Like it's like, oh, well I want it. Like, I don't want them to have it because there's something special about this. So better I have the special thing than them.

Dan (08:09):

You just said one thing that was actually two things, right. You said I want it. And also I don't want them to have it, even if I don't want it that much. I want it enough to not want anybody else to get it that I'm just going to go and buy it.

Mel (08:21):

Aren't we funny humans?

Dan (08:23):

This idea of a perception of scarcity, I think, is more relevant than ever now because throughout our entire history, and remember even up into the seventies, probably when it came down to business, the thing that was really hard was making stuff. Because you had to somehow coordinate supply chains from other sides of the world and get stuff into a place like Australia. And the idea was stuff was kind of hard to make but easy to sell. If you could land product here, oftentimes you could flog it.

Dan (08:51):

And I think what we've seen in the last 20 or 30 years is that it is now kind of easy to make most stuff. I mean, it's not easy to make an iPhone, but most things are easy to make. Most of us can go onto AliExpress and start importing bicycle parts, or USB powered fans or bell bottom jeans. If that's what we decide, we want to start making, but it's really hard to sell, right? Because everyone's trying to sell stuff through social channels and through e-commerce and through retail stores. And so we've gone from a world where it was hard to make easy to sell, into a world where it is easy to make, hard to sell. And really one of the best weapons I think we have at our disposal is being able to create a perception of scarcity. When in reality, there probably isn't one.

Mel (09:35):

Right, there's a big thing here about where the scarcity is coming from and you're talking about situations where you can potentially manipulate, strategically manipulate the scarcity of an object or the perception of it.

Dan (09:48):

I don't know about manipulate, but yes.

Mel (09:51):

Use whatever word you want. You can suggest or yeah, let's do something to alter the perception of scarcity for people. And I guess the reasons underlying people's tendencies to do this are really strong and really, really deeply sort of...they're inherent. And that's why I think it's one of those things where even though it like you say, it might be so easy to produce things, why it might actually work in favor of brands to sometimes produce limited amounts. And I think that they know that there are a couple of key factors, two in particular that we'll talk about that contribute to the scarcity bias occurring and the tendency for people to fall victim to it.

Mel (10:32):

We'll just note a couple of underlying sort of theories that contribute to it. First there's commodity theory, which simply states that the perceived unavailability of a resource, that makes it more valuable. So knowing that something is hard to get makes you want it more. There's also uniqueness theory, which is the idea that we have a basic need to set ourselves apart from other people, to differentiate ourselves. And one way that we can make ourselves different or set ourselves apart is by acquiring a rare good that not everybody has access to.

Mel (11:04):

There's also...we've talked about in previous episodes, a couple of heuristics that sort of play a part here. So one is social proof and you'll remember that social proof is our tendency to sort of follow the crowd and do what everybody else is doing. And we'll tend to assume that if something is scarce, it's because lots of other people have already bought it. And so if everybody else has it, then I want it as well. I want to be just like everybody else, which is sort of a little bit against the uniqueness theory, but in a situation where there's actually...there was once a lot of something and now there's maybe less of it. We're more likely to go, well, everybody else has picked that up. I better get one as well. Right? I don't want to miss out.

Dan (11:42):

Restaurants are always the talking point for this stuff. It's like there are a lot of people that want to go to this restaurant. There are limited number of tables in there, so they kind of scarce, but, and while there's lots of other places I could eat, I'm very happy to stand out in front of this restaurant and wait for a table with all of these other people, because it seems like a rare opportunity to get to eat there.

Mel (12:03):

Right, and the other thing that comes into play here as sort of a family favorite that we come back to is loss aversion. The idea that we don't want to feel like we've lost an opportunity to own something, right, because that hurts us. And so the idea with that is like, if we're presented with two options, one that there's plenty of it's in abundance, and one that's scarce, we're tempted to purchase the scarce item. Because if we buy the abundant one, but make the wrong choice, we're not going to be able to come back and get the scarce one. We're going to lose our opportunity to purchase the scarce one. But on the other hand, if we take the scarce one and then later we change our mind about it, we haven't really lost anything. We can always come back and get the one that's in abundance. There's plenty of them.

Dan (12:45):

You can flip the scarce one on eBay. You'll probably come out on top.

Mel (12:48):

Yeah, so there's this huge advantages or perceived advantages to going with the scarce one. Plus the fact that if you have it, nobody else does or somebody else won't. And at the end of the day, that's how we are as humans, we're all horrible creatures. We just want what's best for us and don't care about anybody else.

Dan (13:06):

Well, that is largely true, but there is something that seems to be innate within a lot of us that loves the idea of, if you have something that other people can't get, you must have access to power or money or contact or information that other people don't have, otherwise you can't get that thing. So in our natural desire to create pecking orders in our societies, this really feeds into that.

Mel (13:30):

Yeah, and I think we can also go back to...we can throw in a little shout out to the framing effect as well, because there was something in the framing effect where if you remember, we talked about how it's not really about the object itself. It's just all about how it's presented, and that comes a lot into play here. That there's the perceived value of the good has very little to do with the good itself, but everything to do with the context and whether it's scarce or abundant.

Dan (13:56):

Exactly. I mean, there was a big trend in sneakers as a few years ago, started by a company called Balenciaga. They released a shoe called the Triple S, and it was called a Triple S because it had three midsoles stacked on top of each other. And you talk about the framing effect in one respect, this is a horrifically ugly shoe. On the other hand, it is a horrifically ugly shoe that is $1,200. And there are very, very few pairs available.

Mel (14:26):

How many pairs of them do you own?

Dan (14:27):

Well, I don't want any thank God, but they went absolutely bonkers and nobody could tell you why. I mean, they literally are a diabolical looking shoe, but they were rare, they were expensive and they just struck a chord with people.

Mel (14:42):

So we can sort of capture the ways that you can, I'll say manipulate, I know you don't like that word, but there are a couple of ways that we can actually manipulate the scarcity of a good, right? So one of them has to do with the quantity, so we can limit the quantity. I think you were talking about this before, you can limit the quantity that are actually produced, right?

Dan (15:00):

Yep. Sneakers is one really obvious place where we see this, where especially particular shoes, like there's a particular Jordan...the Air Jordan 11...we could do a whole separate podcast on the Jordan 11...anyway, great shoe, very iconic. Originally from 1995, it was Jordan's comeback shoe after his first retirement. And people love this shoe, and it gets re-released every year, often, multiple times a year in different colorways with different levels of perceived or actual scarcity.

Dan (15:30):

And there was a particular colorway that came out in 2014. It was the legend blue. It wasn't even that rare. I think there were about half a million pairs that got dropped on release date and they were only 200 bucks. So nothing so crazy, but the perception that there weren't many pairs of these meant that from three days out there were people camping out to get these shoes. The day before the stores actually opened, at one store they had 50 police officers dispatched to the site to steady the crowds, there was crowds of people trying to buy $200 sneakers. The day that the shop actually opened, there were riots. Things got set on fire. The doors got broken down. And really just because of the perception that there was a limited quantity of this number of shoes. And we've seen this play out hundreds and hundreds of times since.

Mel (16:18):

Yeah, and that's about limiting the quantity of the product and the flip side of that is that if something is very limited to the point where it's actually rare, then it becomes more valuable. You just have to think of like collector baseball cards or basketball cards and there are certain ones that they're not in high production. And so people will pay a lot more for them simply because they're very hard to get, right?

Dan (16:39):

Absolutely.

Mel (16:40):

Another factor that contributes to scarcity has to do with time, right? So whenever there's a perception that time is limited, and we see this [inaudible 00:16:49] but I'm thinking of limited time only, or this deal is only available for the next 24 hours or the offer expires in a few days, look at me going all marketing on us.

Dan (16:58):

Yeah. I mean, this is a sales technique as old as selling. You see this from signs stuck up in $2 shops basically saying clearance sale today only, to this has almost become a hallmark of things like [inaudible 00:17:16] industry, where there really is no natural limit on how many deals they can make, how long they can offer plans for. So what they do is they add an official constraint that this particular deal, or this particular bundle is only available until the end of February. When, of course they could keep doing it in March and April and May, but they put that artificial constraint in there so people feel that pressure of having to act now so that they don't miss it.

Mel (17:39):

Yeah, and so the final thing, I guess, that we can think about in terms of what we can do to make something more scarce is that we can restrict or sensor access to something, so that it's only available to certain people if they're willing to, I guess, pay for it.

Dan (17:54):

Yeah, exactly, I guess the digital economy is a really interesting place where we see this, where there is a huge abundance of things like news. And once a newspaper puts an article on the website, it can be accessed by billions of people, really for no incremental costs. But to try and get people to assign value to news online, the publishers have had to find some interesting ways to create scarcity. And so this idea of limiting access where a billion people can look at this article, but you Dr. Mel, or you producer [inaudible 00:18:24] could only look at five articles on this website this month and then you just start paying for it, gets us to start thinking that this is a rarer opportunity than it really is and increases the value he might perceive of the content of that publisher. And therefore increases the likelihood that we might actually pay to become a subscriber.

Mel (18:41):

Great. So I think we've covered a lot of scarcity bias. I feel like we've actually gone through a whole bunch of stuff. Is it time to do a little recap? A little summary?

Dan (18:49):

Yeah, I feel like our episode on scarcity bias has been abundant with information and I feel like that that was nice because normally I have to do all the brand stuff by myself, but I feel like you really led me in there. I might just ask you for the humans out there, just trying to get by in the world, trying to not fall victim of the scarcity bias, have you got any suggestions?

Mel (19:09):

Yeah, I think there's a suggestion, not by me, but there's a suggestion that actually, when we perceive there to be limited choice of something that that itself engenders a state of arousal in us. And we've talked before about how, when we experience a sort of a change to our physiological or emotional state, we're motivated to reduce it, right? We actually, even though it could be like an exciting thing, like there's a bit of a thrill of...oh my God, there's something...I don't know if I'm going to get it or not, but we can resolve it by purchasing the product, right?

Mel (19:37):

And I guess my question, or the question I want people to put to themselves is, do you actually want this item or are you just sort of falling victim to this thrill, right? Of...I don't want to not have it. Cause I think there's a big difference between wanting something and then wanting to make sure that you don't not have it. And I think it's important that if you want something...hey, go for it. If you want something and you can afford it and it's going to help you, then it's a good decision, right? But if you're wanting, just not to be sour from something, then that's, I guess a point where you might be more likely to make a decision that we would call a bad decision.

Dan (20:15):

No, I think anybody that's been in a nightclub past 2:30 in the morning is familiar with that equation of choices going down, arousal levels going up and asking yourself whether you really want something or if you just don't want to miss out, is a really worthwhile thing to challenge yourself with. And that's probably a good time to end this episode. What do you think?

Mel (20:34):

It's good for me. I don't know what you're talking about. I was never in that position. Always had an abundance of choices. At least I like to fool myself into thinking I did.

Dan (20:41):

Or maybe we won't end, do you want to talk a bit more about that Doctor Mel?

Mel (20:43):

No, no, no. I think we're good.

Dan (20:46):

All right, let's put a ribbon on it. Scarcity bias, what's that textbook definition?

Mel (20:51):

The scarcity bias is our tendency to value something more simply because there's less of it or we perceive that there's less of it available.

Dan (20:58):

Exactly. And it doesn't just work for cookies and key rings, it pretty much works for everything, right? So I think the opportunity for brands here is to do this, number one through quantity. So limited runs or capped availability of particular ranges to do it through time. So making offers available, but having definitive cutoff points after which point they're no longer available and thinking about access. So giving people the ability to consume or interact with some part of what you offer, but cutting it off there unless they become paying subscribers. And for peeps?

Mel (21:29):

And for peeps, I guess just recognize whether you actually want the product or whether you jus...whether it's just FOMO and you're just falling victim to wanting to make sure that you don't miss out.

Dan (21:38):

Yeah, might be some other way to get your endorphins. Just go for a run.

Mel (21:41):

Go for a run. Yeah, sure, [inaudible 00:21:43] go for coffee with a friend. You can probably have the...probably be just as exciting as actually buying the product and you don't have to probably wait in line for the good outside of Nike store for three days.

Dan (21:53):

Go for a run, have a coffee and if you still want it, then you can buy it if it's still available.

Mel (21:58):

[inaudible 00:21:58]

Dan (21:58):

All right, cool. That was fun. You can find us on the internet, I'm @danmonheit.

Mel (22:04):

I'm @drmelw.

Dan (22:05):

We'll be back with another episode, maybe, they're pretty limited.

Mel (22:10):

This could be the last one.

Dan (22:11):

Could be, who knows, tell a friend, get it quick, catch you next time.

#32 Commitment Bias: Why you should shout it out loud

Ever stuck to your guns even though you knew deep down you were wrong? In this episode, Mel and Dan unpack the Commitment Bias and how to make sure your New Years resolution actually sticks this time.

Mel (00:17):

Hi, and welcome to Bad Decisions.

Dan (00:19):                                                                                          

The podcast that helps us understand 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.

Dan (00:29):

You also normally say, "Ethically," at the end of that intro, but I guess you've thrown caution to the wind.

Mel (00:33):

I've given up.

Dan (00:35):

Hey, I'm Dan Monheit, co-founder of Hardhat, ethically.

Dan (00:46):

So, Mel?

Mel (00:47):

Yes? I'm so suspicious.

Dan (00:50):

So patronizing. So hey, I've been thinking, you're not meant to date the shows, but we're going to date this show and say, "Look, we're heading into the end of 2020, it's been quite the year."

Mel (01:01):

It's been a different year.

Dan (01:03):

Interesting, different. As I cast my mind to 2020, one of the things that I think about that might sit right in that sweet spot between psychology and commerce, is this weird phenomenon of people making all sorts of resolutions, and what they're going to do next year.

Mel (01:21):

Ah, the old New Year's resolution.

Dan (01:21):

Yeah, and you know the one thing that I know to be true about New Year's resolutions?

Mel (01:24):

What's that?

Dan (01:25):

That they apply for maybe the first three days of the New Year, and then they are basically just vapor.

Mel (01:31):

Yeah, I think that's a pretty common phenomenon, isn't it? That people will make a New Year's resolution on January one, and it's pretty well known that by the end of the month, at least if not sooner, they have absolutely gone out the window.

Dan (01:42):

Yeah, which sucks because we probably make these things with the best of intentions, and we just don't seem to have this staying power. I thought it might be a nice idea as our last show for the year, to maybe think about why we have so much trouble sticking to our New Year's resolutions, and if there's anything we can do to maybe help.

Mel (02:03):

You know, it's an interesting one because in fact, if we look at the research, there's a whole bunch of information that would suggest that we actually have a tendency to stick with and commit to a claim that we make, or a resolution. So yeah, it's really odd that we don't when it comes to New Year's resolutions.

Dan (02:19):

So wait, is there a [inaudible 00:02:21] around this?

Mel (02:22):

Would you believe, there is. It's called, "The commitment bias." It's sometimes called, "The escalation of commitment," but I think the commitment bias is probably what we'll go with.

Dan (02:36):

Nice. Hey, you know what? That really sounds like something I would like to learn more about.

Mel (02:40):

Well, why don't we talk about it for the next 15 minutes or so?

Dan (02:44):

Well, I said I was going to, so we should totally do it. Let's do it. How does this work?

Mel (02:47):

Now that we've committed. So, the commitment bias is the idea that individuals have a tendency to get locked into a course of action, and that we'll actually persist with that action even in the face of negative consequences. So once we've made a commitment to something, and particularly via a verbal or written declaration of our commitment, we're extremely likely to continue to act or behave in ways that are consistent with that.

Dan (03:12):

Yeah, I guess we could figure out this as almost the double down bias, right? It's like, "Look, if I said I'm going to do it, then I'm going to do it. If I said I'm going to do it in front of a whole bunch of people, then I'm seriously probably almost definitely likely to probably going to do it."

Mel (03:25):

Yeah. You know, how we've talked about some heuristics where it's called one thing and then a researcher comes along and calls it something else, I think there's a big space for us to come in here and rename this, "The double down effect." Because that's what it is.

Dan (03:38):

I like it. So much catchier.

Mel (03:39):

Yeah. Would you mind writing a research article on that?

Dan (03:42):

Yes, I would very much mind writing a research paper on this, but maybe you write the research paper and I'll make an ad to tell people how good the research paper was.

Mel (03:50):

I'm not going to make any verbal or written declarations as to what I may or may not do at this point, especially in the context of this episode, but it might be an idea for us to consider. For future Mel and future Dan to think about.

Dan (04:00):

All right, well it's interesting that you're shirking your out loud commitments, given how prominent, out loud public commitments seem to be in our society. If I just think about people getting married or people being in court, or people joining strange cults. It seems like for anything momentous in life, we have almost ritualized this idea that you make a commitment, you write it down, you say it out loud, you hopefully get a bunch of witnesses there, so there must be some good psychological reasoning behind this, surely.

Mel (04:32):

Sure. There are some good reasons why we would engage in continued actions that reinforce our originally held beliefs. So once we've made a commitment to something, we're also then motivated to act in ways that support that. I mean, fundamentally, we all want to appear like rational people, and as good decision makers. So if I commit to doing something, and especially if other people know about that commitment, then yeah, I want to follow through with that. I want people to see that I can be trusted to do what I say, I will do, I want people to see that I'm predictable, that they can rely on me to do things. That's all going to serve me an advantage in a social system.

Mel (05:12):

You know what? The interesting thing is, and the thing about the commitment bias that I find really interesting, is the idea that even if my original commitment was not turning out well, according to the research, I'd be much more likely to escalate my commitment, to over commit, to double down even more so, even when things aren't working out so well. I'm so committed to looking like a trustworthy, reliable, predictable person, that I'll keep doing it even if it's not looking good.

Dan (05:44):

Okay, it's like being consistent is more important than being correct.

Mel (05:48):

100%.

Dan (05:49):

It's kind of weird.

Mel (05:49):

Yeah.

Dan (05:50):

So, you mentioned research. I can only imagine somebody, somewhere has done some sort of research to prove this beyond a shadow of a doubt.

Mel (05:58):

Well, of course they have or we wouldn't be here, right? I'll cite the original author of Escalation to Commitment, who I believe was Barry Staw back in 1976. However, I'm not going to talk about his actual research paper because it would probably take up the rest of the time that we actually have to talk about this topic as a whole. So what I'll do instead is let people know that we attribute this to Barry Staw, and his work in the late '70s and '80s, but I'll give you a more real life example of it.

Dan (06:34):

Yeah, I'm not going to lie, just the bit when I've got your back when we were prepping for this episode, Mel was trying to explain this piece of research to me, and the fourth time she tried explaining it to me I was like, "I just don't think we can do this on the show. It's past midnight now and I still don't understand what this guy did. I'm sure it was great, but have you got anything a little more contemporary?" So, what have we got?

Mel (06:53):

So, I'm going to give you an example, a much simpler example from the behavioral insights team in the UK. What they were doing was working with a Jobcentre organization who would look to support job seekers to find work.

Dan (07:08):

Hey, Mel?

Mel (07:09):

Yep.

Dan (07:09):

Sorry, it's worth noting, this is not your boring, stuffy, mothball, academic research. I think this is the first episode where we're talking about real, in the wild, in the field, live research, right? This is cool. This is good, this is mean, this is gritty.

Mel (07:25):

Yeah, personally I think that what you'd call ... what did you call it? Mothy and something else?

Dan (07:30):

Mothball.

Mel (07:30):

Academic research, I personally find that pretty cool, but you know, you and I are different and that's fine [crosstalk 00:07:35]-

Dan (07:35):

But this is real. Anyway, let's talk about the real world. What happened in Essex, hey? Oh God, that was terrible. [inaudible 00:07:41], please fix that in post-production.

Speaker 3 (07:49):

Booyakasha, check this out, yo.

Mel (07:51):

No, I think that needs to stay in there.

Dan (07:56):

In it.

Mel (07:57):

So, in the existing system that they had, what would happen is that advisors would ask the job seekers retrospectively to list three job search activities that they'd done in the previous fortnight. So in order to be eligible for the benefits, they'd need to report back on what they'd done over the last two weeks to try and find a job. What the behavioural insights team suggested is a little nudge involving the commitment bias, was that actually what they were going to do was that on the first day of that two week period when job seekers were eligible for the program, they actually had to lay out what they were going to do over the next two weeks to find a job. So it had to be quite specific and verbally declare what their actions would be in order to try and find a job over the next fortnight.

Mel (08:49):

What they found was that the job seekers who had to make that commitment at the start of the two week period were 15 to 20% more likely than those in the original condition, to be off the benefits 13 weeks after signing on. So they were able to get people actually back into work and out of the job seeker program, much more quickly just by making them commit verbally at the start of the period, as opposed to retrospectively.

Dan (09:17):

That is so much more exciting than getting an academic paper published, I've just got to say. I just want to make sure I get this, because you know, I'm a little bit slow. I just want to make sure I've got. So, the first condition is; you're unemployed, you go to the job seekers center and they're like, "Okay, it's been two weeks, if you want to get paid you need to say that you've applied for at least three jobs. Did you apply for at least three jobs?"

Mel (09:35):

Yeah, of course, yeah.

Dan (09:35):

Well, you know, people probably said yes. "Yeah." And then the second way it's like, "Okay, in two weeks time you need to have shown us that you've applied for at least three jobs, let's make a plan about how we're going to do it, and are you really going to do it?" And people said yes. Turns out, the first group didn't do as well at actually getting jobs, as the second group who made the commitment.

Mel (09:54):

Correct.

Dan (09:54):

Proactively, not retrospectively.

Mel (09:56):

That's it.

Dan (09:57):

Yeah. This proactive-ness as retrospective commitment is something that has just been bubbling around in my head for a long time. When I started thinking about it was in ... you know at the end of every year we have to fill out our tax forms?

Mel (10:09):

Yeah.

Dan (10:09):

Which I will just first of all go on the record and say, "My tax forms are squeaky clean, ATO don't look here, there is seriously nothing to see, keep rolling." But what I did think, as the curious individual that I am, is that what's kind of peculiar is that you go through this whole tax form situation where you fill in your income and all of your expenses and your deductions, and how much you used your car and all that other stuff. Then right at the end it's like, "Oh, and by the way, was all of this stuff true?" And you're like, "Yeah, of course it was true, and also there's no way I'm going back to re-read all of this and double check it. But I know it's true, because I've just wrote it."

Dan (10:43):

It just seems odd to me that they don't put the question at the start. At the start, if they said to you, "All right, you're about to start your 2021 tax lodgement, can you just confirm that everything you're about to tell us is going to be true?" I can't help but think, based on what we're about to learn about the commitment bias, that that would have a far better impact than asking people at the end when it's already all said and done.

Mel (11:06):

Well that's what it's all about really, right? Making people have that public declaration up front that says, "I'm going to do this," because people are highly motivated to then do what they said they were going to do. So yeah, intuitively makes a lot more sense.

Mel (11:21):

I think it's interesting to think about this idea that we persist with a course of action just because we're locked into it, even when things are telling us that it's not really the right thing to do. It makes me think of a popular psychological concept that you and I have talked about off the podcast, of grit. Right? This idea of grit and the idea that we should persevere and be persistent, despite whatever happens, just keep going and eventually the idea is that you will reach your goal.

Mel (11:54):

You and I have talked about how sometimes it actually might be more beneficial to actually cut your losses in the context of things like a sunk cost or in this case, the commitment bias, where doing so may actually be leading you towards making bad decisions, rather than a better option that might be to actually choose an alternate course of action that could be more favourable.

Dan (12:16):

Hey, so, what seems weird to me is that we do have this inherent bias, we have this wiring that means if we've made a commitment to something, we're more likely to do it. But we still seem to not be very good at keeping a lot of the commitments that we make. So maybe what we have is some problems in the environment, or some challenges in the environment that we could set up a different way to make people more likely to come good on the commitments that they desperately want to come good anyway.

Mel (12:43):

Yeah, well I guess one of the things that makes people a lot more likely to stick through with a commitment, is when they feel personally responsible for it, right? So if I'm entirely responsible for the thing that I'm committing to, then I'm more likely to stick with it and keep acting in pursuit of it than if it's somebody else's decision. This is where it's all about me as an individual, trying to save face, right? What we said before, that I'd rather be consistent, necessarily, than be right.

Mel (13:10):

That I want to persist with an action because I have said, I have committed, I'm a rational person and I don't actually want anybody to think of me, that I'm maybe not true to my word. That's an undesirable social trait, so if I'm responsible for it, I'm going to stick with it. Usually no matter what, and because I'm stubborn as hell.

Speaker 4 (13:28):

Big pharma ran millions of dollars of negative advertisements against me during the campaign, which I won, by the way, but you know, we'll find that out.

Dan (13:37):

I mean, it's interesting because you figure out in a business sense where you just realise at some point in your career that shared accountability is terrible. When you have a group of people responsible for delivering an outcome, it is far less likely that it's going to get delivered than if one person's head is on the chopping block, and it's going to live or die with them.

Mel (13:54):

Yeah, that leads us to another psychological concept that has to do with the diffusion of responsibility, right? Where nobody actually takes responsibility. When somebody does, things will get done.

Dan (14:05):

So, I guess what you're saying is; if you are a person who wants to be better at sticking to their commitments, making it out loud, writing it down is a good place to start. But being solely responsible for the outcome is going to make you stick to it whether you want to or not.

Mel (14:22):

Yeah, and you can think of this in terms of goal setting, a lot of the research that goes towards goal setting, and especially in the area I work in, in sports psychology, setting goals is a key factor that contributes to positive outcomes. One of the things that they make sure that you do when it comes to goal setting is that you write it down. According to commitment bias, you can make a verbal or written declaration but most of the time, at least when it comes to goal setting, a written declaration that is then put up somewhere where everybody can see it.

Mel (14:54):

So in sports teams they might put everybody's goals up on the wall in the changing room, somewhere where it's frequently seen, means that people are more likely to abide by it and to act consistently in pursuit of their goals.

Dan (15:08):

That's super interesting in a corporate sense, if people have development plans and they're writing goals as part of them, that often those goals are secret or maybe just between a person and their manager, and maybe there's something to be said for a sports club style wall of goals, unless your goal is to get rid of that bitch in finance or something similar, you probably don't want them to know that that's what you're scheming for. There's no bitches in finance, I'm sure they're all wonderful. But I'm just saying that you could have a goal that is not in line with what other people would like to see. But by and large, it might be good to have some sort of shared visibility over each other's goals, because then you feel the pressure of not just lying to yourself, but lying to everyone.

Mel (15:47):

You could put it that way. How is this going to help brands?

Dan (15:50):

Well there are so many ways that this can help brands, because really, as any brand, business, product, service, at the end of the day, the main thing we're asking for is some sort of a commitment from a person to exchange some time, money, effort for what we've got to offer. So there's a few different ways in on this, and some of them almost seem contradictory, but just roll with me on this.

Dan (16:11):

So the first thing you can do from a commitment bias perspective, is you can charge exorbitantly high prices. Now, this sounds weird. Let's say you sell pens, and you sell a pen for 50 cents, right? And that pen kind of sucks. It is way easier for somebody to say, "This 50 cent pen is actually a piece of crap, I never should have bought it." Than it is for them to say, "This $150 pen that I bought is a piece of crap, I never should have bought it." So it's like, by over paying for something, you're almost making yourself have to like it, compared to if you hadn't paid much for it at all.

Dan (16:47):

As a cyclist, I certainly see this, myself and all of my friends spend way too much money on overpriced cycling kit, and the fact that is expensive means we have to tell everybody else that it's really good, otherwise we're just big idiots. Which we're not, we're being very discerning consumers. So, charging lots of money is great.

Mel (17:04):

Oh, but as a marketer, basically what you're saying to the consumer is that, "Yeah, just price high because better for the brand." Is that what you're saying?

Dan (17:13):

No, what I'm saying is, if people have paid more for the product or service, they will be more inclined to believe that it was good, than if they have not paid very much for it. So if you have the opportunity to charge a lot for your overpriced cycling kit, which I do love a lot, just do it and I'll tell myself it was worth it. That's all I'm saying.

Mel (17:28):

Okay. So you're the consumer on this side.

Dan (17:31):

Just go with me. Anyway, moving on, we're moving on, we're moving on, we're moving on. Now, on the other side of the fence, there's also a really good argument to price cheaply. Not maybe [inaudible 00:17:43], but the idea of giving people really cheap, really easy ways to start getting involved with your brand. So, in the app world we might see this as freemium offerings, we have an ad supported version which you then grow to love and then you want to get the paid one.

Dan (17:59):

But we also see this with luxury goods, where they might do what we call, a diffusion line. So you've got the $7000 handbag which you probably can't buy right now, but there's $150 perfume, or a $110 phone case, or a key ring, which lets you get in, be part of the brand, tell yourself that you're a Louis Vuitton kind of person, or a Gucci kind of person or whatever it is, knowing that when you get a little bit more money to spend, because you're moving up the chain or you've got a bonus or whatever it is, you're already aligned with that brand and maybe when you want to buy your next piece of luggage, that's where you're going to end up.

Mel (18:35):

Right. So you're talking about essentially setting the scene for people to make that initial commitment, knowing that once they've actually made a commitment, the commitment bias means that they're much more likely to stick with it and continue to behave in ways, like purchase more goods associated with that initial commitment.

Dan (18:51):

Yeah, exactly. That's why you see weird things happen on eBay, why you see a [inaudible 00:18:57] that's clearly worth $1000, start on a 99 cent no reserve auction, because the person selling that thing knows if they can get people involved, bidding, making small commitments, that even when that item gets to a price that is probably above what that person was willing to pay, they feel like they've committed to it and if they didn't really want the item, why would they have just wasted all of this time bidding on it up until now? So they might as well keep going.

Mel (19:19):

Right.

Dan (19:20):

Another example of this getting small commitments early, is maybe relevant for charities where, it might seem like a pain in the arse to be getting really small donations from lots and lots of people, and there's an administrative overhead to that, but if you can get people ... especially early on in their career, to get in the habit of donating to your charity organisation, there is a good chance that as they progress in their careers and they start making more money, and they start giving bigger donations, that they're going to want to be consistent with what they've supported up until now and there might be a better pay off in the long run if you can let them buy in early.

Mel (19:50):

Good. Have you got any more examples?

Dan (19:52):

Yeah, so that's two, price high, price low, you basically can't go wrong, just don't price in the middle, right? The other two, I really quickly want to give you. One is from a personal experience, working with a university client a couple of years ago, and the way we really tried leading into this which was quite successful was ... I say this, it sounds dodgy but it's really not dodgy. It's the idea of trying to help people realize that the thing we're asking them to do is the thing they always wanted.

Dan (20:17):

So, if we're trying to promote a nursing course, and so one thing you can do is you can run advertising to tell people to choose nursing. Another thing you can do is you can run ads to remind people that nursing has already chosen them. To basically help them recall their memories of the school playground, where they were always the kid that ran to the hurt kid. They were always the person that was going for help, and being a nurse or being a teacher, or being a whatever vocation you're trying to promote, had always been within them, and coming and starting this course at this institution was just meeting a commitment that they'd already made for themselves at a time when they hadn't even realise that that's what they were doing.

Mel (20:56):

Right. So you're trying to draw out a subconscious commitment, or a subconscious way of behaving that is then consistent with further learning in that way.

Dan (21:05):

Exactly, you've always told yourself, this is the year you were going to get fit. You always told yourself, this was the year you were going to learn Spanish. So, this is the perfect time to do our Spanish-based fitness course, for example.

Mel (21:17):

You know, sometimes people say to me, "I don't like psychologists, they're deceptive or they're sneaky." But you marketers, you're worse.

Dan (21:30):

No, well we just put it out there, and if you didn't always think you were going to be a nurse, then you'll just ignore us like you ignore the other 10,000 ads you see a day. But if something in you as a 12 year old was like, "I really like helping sick people." We're going to wake it up and make sure you come and enroll with us. So, one is price high, one is price low, one is help people realize that the thing that you want them to do is the thing they always wanted to do anyway, and we're just really here to help you achieve all that you can be as marketers, that's all I [inaudible 00:21:55].

Mel (21:55):

Just helping people reach their potential.

Dan (21:57):

Exactly, through a hand picked mix of products and services sold by my clients.

Dan (22:04):

With the last one on this, is something called, "The Yes Set." This is a pretty well worn technique from sales people, a lot of agencies use this as well. It's the idea of getting people to say yes a whole bunch of times, to get incremental yeses as you lead up to the real thing you actually want them to say yes to. So, in a very B to C sense, if you walk into a store to buy a new TV, the person working there, before they take you to the TVs they might have a little chat, they might say things to you like, "It's always nice to be able to sit down and relax and enjoy a good movie from time to time." Right?

Mel (22:40):

Yes.

Dan (22:41):

I though so. And when you enjoy a movie, the thing that really makes a difference is you want a big screen and you want really vibrant colour, right? Because that's what makes it an outstanding experience, right?

Mel (22:53):

Oh yeah.

Dan (22:55):

Exactly. And you know what? While the vision is really important, the thing that really steps it up to a cinema level experience, we've got to have the pumping sound, right?

Mel (23:05):

Yes.

Dan (23:06):

Yeah, exactly. So you know what? I've got some TVs to show you. Guess what features those TVs are going to have? They're going to be big and they're going to be colorful, and they're going to have integrated sound because you've already just said yes to all this stuff, and it's very hard for you to now say, "Actually no, I don't want that. I want the small TV with the shitty color and no sound."

Mel (23:22):

Yes, give me the biggest, most brightest, loudest TV in the store.

Dan (23:26):

Exactly.

Mel (23:26):

Got me.

Dan (23:28):

One funny little technique that I've just found in my decade and a half of pitching, is when you meet a client and they're giving you a brief that you're then going to come back and present on, and often you don't know how to present the agency, as say, 45 people, are we big or are we small? It depends on who we're pitching against.

Dan (23:46):

So one of the things I've found is, often you can ask a prospective client what they're looking for in a partner beyond delivery of the thing that they've briefed you. So they're like, "Oh, we want to see three ideas for a new TV commercial." And you go, "Cool, cool, there's lots of agencies that can give you a new TV commercial. Beyond that, what else are you looking for?"

Dan (24:05):

And what is incredible is the clients will tell you. They'll tell you, do they want agencies with higher velocity and agility, and fast paced, and they just want to see ideas and energy? Or are they a client that says they really want to see their thinking, they want it stepped out, they want it methodical, they want to see all the research. There's no right or wrong answer, but what I find amazing is; if they ask a client, they'll tell you. Then when you come back and present, you can present in exactly the manner that they've said they want to see it and they almost have no choice but to be consistent with what they've told you they were looking for.

Mel (24:34):

Yeah, you guys are definitely more sneaky than psychologists.

Dan (24:37):

Please, don't use that if you're pitching against me, Dr. Mel.

Mel (24:41):

All right, so have we covered all of the commitment bias?

Dan (24:44):

Yeah, I feel like we said we would, and then we did, and we've gone full circle.

Mel (24:49):

Wow, so let's wrap it up. So the commitment bias is the idea that individuals have a tendency to get locked into a course of action, so once we say we're going to do something, we are very likely to then act in ways that are consistent with that. In terms of New Year's resolutions, one thing that you can do to make sure if you really want to commit to it, is actually not just say what you're going to do, but also write down why you want that, why do you want to do it? Almost write a defense for it, that's going to enhance your commitment to the course.

Dan (25:19):

Right, and the way I can help you make your New Year's resolutions is, number one; go and buy something really expensive. If you decide you're going to sign up to the gym this year, sign up to a really expensive gym and you'll just force yourself to go, maybe. Alternatively, do something really cheap just to start getting used to it, and get that buy in. The third thing you can do is think about how this was always your destiny, and every year you've told yourself that you were going to get fit, and this is the year you're absolutely going to do it. If none of that works, ask yourself a list of questions that all end with yes, where the last question is, "Are we going to go to gym today?"

Mel (25:51):

And make sure that whatever it is that you commit to, that you print it out, put it up on the fridge, tell everybody about it as much as possible so that everybody else keeps you accountable as well.

Dan (26:01):

Yeah, totally do that. Take the pledge, post it to social media, so that when you see people out, they're going to ask you, "Hey, how's gym going?"

Mel (26:07):

And you want to be able to say, "Oh yeah, it's going well."

Dan (26:11):

It's great. Hey, [inaudible 00:26:12], just before we wrap this up, I have a couple of very quick questions for you. Number one; are you enjoying recording these podcasts with me?

Mel (26:19):

Yeah.

Dan (26:21):

I knew you were. And are you enjoying the fact that we're really getting a good level of cadence now? As they're coming out, people are loving them, feels good.

Mel (26:30):

Yeah, that part's good.

Dan (26:31):

Yeah, so wouldn't it be good if next year, we were actually able to get more of these out than we did this year because it's good for everybody?

Mel (26:40):

Yeah.

Dan (26:41):

Come on, we didn't do that many this year. It'd be much better if we did more next year, so I think ... how would you feel about recording our next episode early in the new year? Let's do it before the end of January.

Mel (26:52):

I see what you've done, you sneaky [inaudible 00:26:53].

Dan (26:52):

Yes, we're doing it, we're doing it, we're doing it. I'm going to buy you a new microphone. You're going to love it.

Mel (26:59):

Now we're talking.

Dan (26:59):

It's going to be really expensive, yes. All right, so I think that's it. Commitment bias, say it and then do it.

Mel (27:04):

I think that's a wrap on commitment bias, and I think it's a wrap on 2020 for us.

Dan (27:07):

I know, say it and then do it, this could have been a 15 second episode. Anyway, that is a wrap on 2020. Mel, you've been a wonderful, wonderful co-host, thank you for enduring me for another 12 months.

Mel (27:18):

I just want to note that you just verbally declared that and publicly, that doesn't happen when we're not recording, but yeah. Thanks Dan, that's really lovely. You've been good, too.

Dan (27:27):

I was going to say, don't forget the reciprocity bias. Make sure you say something nice about me, too. Hey, if you guys want to find us, we're on the internet, you know what to do. Otherwise, we'll be back for a bigger and better 2021.

Mel (27:54):

See you then.

Dan (27:54):

Bye.

#31 Dunning-Kruger Effect: Why you might know just enough to be dangerous

Ever notice how novices tend to be highly opinionated, while those with more experience are a little less sure? In this episode, Mel and Dan unpack the Dunning-Kruger Effect, and why your social media feed is often so infuriating.

Mel:                             00:16                Hi, and welcome to Bad Decisions.

Dan:                             00:18                The show that helps us understand why we choose what we choose.

Mel:                             00:21                Why we think what we think.

Dan:                             00:22                And how to exploit this stuff for fun and commercial gain.

Mel:                             00:25                I feel like we've forgotten to say ethically. Ethically.

Dan:                             00:27                I never forget ethically. It's hardwired in.

Mel:                             00:30                Speaking of ethics, I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan:                             00:34                What does that leave for me? And speaking of performance, I'm Dan Monheit, co-founder of Hardhat. And speaking of great tracks, here's Cops.

Dan:                             00:49                All right. So we have got a, I think we've got a mega show today, a disproportionately large show today, not in length, but maybe in terms of insight. I'm overcooking this. Look, I'm just going to tell you what's up, Mel. Do you know what's up, Mel?

Mel:                             01:02                What's up? I'm scared.

Dan:                             01:05                This is show 31 and I think there's certain heuristics that you learn that reveal more of the world to you than others. And I think today's heuristic is one where once you see this, you're like, "Oh my god, so many things that didn't make sense, now makes sense." I feel like the licensing effect was one of these for me.

Mel:                             01:23                Yeah. I feel like this is sort of the reason that we haven't gotten to this until this point. I think we've waited to episode 31 because we've sort of thought that this is just so big that we don't even know, it's going to blow your mind.

Dan:                             01:37                Oh, well, I'm glad I'm not the only one overselling this. All right. So today we are talking about a heuristic that makes the idiots loud and proud, and the experts kind of quiet and not so sure. Dr. Mel, what are we talking about today?

Mel:                             01:50                Most people may be familiar with this. It's probably one of the most famous heuristics out there. And it's called the Dunning-Kruger effect.

Speaker 3:                    01:59                Mr. Simpson, I'm afraid you have a crayon lodged in your brain.

Dan:                             02:03                The what?

Mel:                             02:05                That's right. The Dunning-Kruger effect named after, you guessed it, Mr. Dunning and Mr. Kruger.

Dan:                             02:11                All right, let's do this, Dr. Mel. What do we got?

Mel:                             02:13                Okay. So the Dunning-Kruger effect named after David Dunning and Justin Kruger, who wrote the seminal paper on this-

Dan:                             02:19                Double D and JK. Sorry, couldn't help myself.

Mel:                             02:22                Back in 1999, the Dunning-Kruger effect basically has two parts to it. The first part is that it explains that people with low levels of ability tend to overestimate their performance on certain tasks. You know the idea that people who aren't very intelligent, aren't actually intelligent enough to know that they're not intelligent?

Dan:                             02:47                Yeah. Yeah. It's like, "You're so stupid. You don't even know how stupid stupid is."

Mel:                             02:51                Exactly. And so, I think that people can relate to this and people are familiar with this idea. The other side of the Dunning-Kruger effect and perhaps the more unfortunate side is that people who actually have high levels of ability tend to underestimate their performance compared to others.

Dan:                             03:06                Oh, so, in the same way, like, "So stupid, you don't even know how stupid stupid is." It's like the smart people actually know so much that they realize how much they don't know, which makes them think they don't actually know very much at all, when relative to other people, they kind of do.

Mel:                             03:18                Exactly. You got it.

Dan:                             03:20                This is a continuum, right?

Mel:                             03:21                Well, essentially that people fall along this continuum. I guess there's two dimensions to it. There's a dimension of your actual ability and there's a dimension of your perceived ability. And this is what Dunning and Kruger and then their buddies kept looking at in the series of studies and one in particular in 2003, where they asked the-

Dan:                             03:39                Whoa, whoa, whoa, whoa, whoa. Are you about to go into research?

Mel:                             03:42                Yeah.

Dan:                             03:43                Mel, you know what happens.

Mel:                             03:45                Okay, play the music.

Dan:                             03:52                You're welcome, Cops. Okay. Now, as you were saying.

Mel:                             03:55                So in their 2003 study, what they did was they had 141 students in an exam. But on the way out of the exam, they asked people to say, "Hey, how'd you think you went compared to everybody else?" And what they actually plotted was people's actual performance on the exam and how they thought they went. And what they found, unfortunately, was that the students who didn't do particularly well on the test, certainly overestimated their ability compared to others. Whereas for people who actually were the high performers, they underestimated how they went compared to everybody else. So they showed this really neatly.

Dan:                             04:31                Yeah. I totally remember this from school where it's like the dumb kids all think it's going to be fine. And the kids that are really smart, always came out of the test being like, "Oh, I'm not sure how well I did." And it's like, "Shut up. You know you did well."

Mel:                             04:41                Yeah. And that's exactly what it is. And it's not only the case for sort of certain specific tests of ability or intelligence like this. We see this in other domains as well. So, one of their studies was on humor. People who aren't funny, don't know enough about what comedy involves, to know that they're not funny. So people who aren't funny think they're hilarious, and people who are really clever and witty will second-guess their jokes before they get up on stage. So the real comedians, I don't know if we're ever really getting to see them.

Dan:                             05:14                So I think what's cool about what you're saying is that there's some interesting and very consistent graphs about how this works on the internet. And so if you imagine a normal sort of two-by-two axes, and on one side, you've got confidence, on the other side, you've got competence. At the start, you don't know anything about anything. And so, you're pretty much at zero for both. And then what seems to happen is we learn a little bit. So our competence goes up a touch, but our confidence goes through the roof because we've just caught our first wave surfing, or we've just driven the car around the block for the first time. And we feel like, "Oh my god, this is so easy. I can literally do this all day, every day. Everyone else is stupid."

Mel:                             05:50                There is a term for this. Yeah, for people who have a little bit of competence, but a whole lot of confidence, this is called sitting on top of Mount Stupid.

Dan:                             05:57                Right, it makes sense.

Mel:                             05:58                Not my term.

Dan:                             06:00                Because you've just shot straight up to it and we know what's happening next. Next is you take a very, very deep slide, basically off a cliff, into the trough of despair, because what happens is you get a little bit more knowledge. And you have to now overtake a car in the wet or do a hook turn or you're driving next to a tram or whatever it is. And you realize, "Oh my god, I just got a tiny bit more competence, but that has completely shot my confidence. And actually, oh my god, this is really hard. I don't know anything. I suck at this. I'm never going to be able to drive, surf, play golf, harmonica," whatever it is you happen to do. This trough of despair seems like it can go on for a while until, Mel, something happens.

Mel:                             06:37                What happens next?

Dan:                             06:38                Well, then we get to enjoy the slow gradual climb up the hill of enlightenment, where you do start getting more confident and also more competent at the same time, until you're basically at a point where you know a whole lot, but think there's actually so much more to know.

Mel:                             06:56                Yeah. And I think this distinction between your level of confidence and your level of competence, that's critical to the Dunning-Kruger effect. That's essentially what it's all about.

Dan:                             07:05                It's the whole thing. I think when we talk about it like this, what we realize is, as a person, you are not on the Dunning-Kruger line somewhere. You are somewhere on this journey in every facet of your life. Some aspect of confidence to competence, no matter what it is that you're doing. I think we all get to experience this in different ways.

Dan:                             07:25                So we've all been through this in a very task level. So you learn a new skill, you learn a new task. So, as I said before, maybe it's driving or riding a bike or playing the flute. And you go through that thing of like, "Wow, this is really hard. Oh my god. This is so easy. Oh no, this is actually impossible. I'm okay at it now." But also at a more macro level. And I don't know if this happens for you guys in academia or psychology or all of the other wonderful things that you do. But I think this happens over the course of our career as well.

Mel:                             07:54                What do you mean?

Dan:                             07:55                It's probably like an unfair label that gets thrown on millennials or Gen Z or whatever up to now, but kids coming into the workforce and thinking that they know everything.

Mel:                             08:02                Of the entitlement?

Dan:                             08:02                Well, entitlement, and, "I know everything,"

Mel:                             08:02                The arrogance.

Dan:                             08:06                "I can do my boss' job." The arrogance. How dare they? But from their perspective, you can see that they're just at their... What's that thing called? The peak of... you're at the top of Mount, whatever you say.

Mel:                             08:14                They're just sitting right at top of Mount Stupid, having a picnic up there.

Dan:                             08:17                Yeah. Because you've just come out of uni. You've done pretty well. You've landed a job. Your confidence is sky high. And you're so stupid. You don't even know how stupid stupid is. You don't even realize all the things you don't know yet. And so, in our careers, I think it's easy for us to feel like we know everything so early on. And it is often not until we've been around the circuit a few times and maybe we're two or five or 10 or 15 or 20 years into our career that we actually appreciate how much there is to know. And not only how little do we know now, but, "Oh my god, how little did I know when I was in my first six months, thinking I could run this place."

Mel:                             08:51                So, that makes me think, who's pitched a tent and has been camping on top of Mount Stupid for years?

Dan:                             08:57                Who's that?

Mel:                             08:58                All those people who try out for American Idol, who you see in the first few weeks of auditions.

Mel:                             09:06                (singing).

Mel:                             09:16                The people who are awful singers. And yet nobody's ever actually told them that they're awful. And they think that they're really good, but they're not good enough to know how bad they are.

Dan:                             09:27                Yeah. It's like that. So stupid, you don't even know how stupid stupid is. It's like, not only are you bad at singing, but you're so bad at singing that you don't even realise all of the things that you suck at. There's so many different ways that you suck.

Mel:                             09:39                This is called the double curse, right? The idea that not only are you bad at something, but you don't even know how bad you are. Shame.

Dan:                             09:47                Shame. But you know what? I think if it wasn't for the Dunning-Kruger effect, probably nothing would happen. Because I think that false sense of security is enough to... or false sense of confidence is enough to get you to start. And if you really knew how hard it was going to be to learn the cello or Mandarin or whatever it is you want to do, god, we probably would never bother. So absolutely, we see this in reality TV shows. We absolutely see this with our politicians, who know not much about lots and are very happy to speak very confidently and proudly about the little bits that they know. What about in your world, Mel?

Mel:                             10:23                I guess it makes me think, the idea of Dunning-Kruger is closely related to what's called the above-average effect, which is the tendency of the average person to believe that he or she is above-average. For example, I see this in my well-being research and psychology all the time that it is essentially pretty well-understood that about 75% of the population think that they're happier than everybody else. And I'm not sure how much people can figure it out. This is not complex statistics, but it doesn't quite make sense that the majority of people can feel that they're more competent or happier or better than everybody else.

Dan:                             10:58                But what good can possibly come of telling people, "Don't but don't," but nothing good can come of telling people that they're not as happy as they think they are. Going to ruin everything.

Mel:                             11:07                Yeah. It's such a killjoy, I know.

Dan:                             11:08                I know. I'm sorry to inform you, but you're actually less happy than you think you are. Sorry.

Mel:                             11:14                Yeah, you should go see somebody.

Dan:                             11:17                Here's my card.

Mel:                             11:18                Exactly.

Dan:                             11:18                I see what you're doing, yeah.

Mel:                             11:20                See? I do own marketing.

Dan:                             11:22                Good, good, good segue. You know we practice ethical marketing on this show. Mel, I'm going to have to talk to you about this afterwards.

Mel:                             11:28                Wow.

Dan:                             11:31                It's a good transition point to talk about. If this is a thing that we just see in the world. People are dealing with the Dunning-Kruger effect as they go in and out of categories. What on earth are we meant to do about this as the brand that service these people? And I think, Mel, if it's okay with you, what I would love to do is talk very quickly about two different situations that we might find ourselves in as brands or as salespeople or as marketers. One is people right at the top of Mount Stupid. People who are rushing into a new category they don't know anything about. And then I've sort of got some thoughts on people right in that trough of disappointment. Is that all right?

Mel:                             12:09                There's nothing I'd rather learn more about right now.

Dan:                             12:12                So nice. All right. Finally, after all these episodes, finally a compliment. Mark that one up.

Dan:                             12:17                When we talk about people at the top of Mount Stupid, this is a classic salesperson's dilemma. So let's say you are a salesperson working in a... I'll do something easy for me, like a high-end bike store. And you get somebody coming in who has been for one ride on their friend's bike. And now they have $12,000 to basically give you to buy a bike that is the same as the one that belongs to their friend that they've just ridden. And this is classic salesperson's dilemma, right? Because it's like, you know this person has no idea what they're doing. They are camping out at the top of that mountain, thinking they know everything. And they are about to purchase something that you know is going to end badly. It's probably not the right bike for them if it's their first bike.

Dan:                             13:02                So you have two choices. One is just get out of the way, take their money, give them the bike, and wish them a nice day. Good short-term result. But the reality is if your time horizon is anything more than one day, there's probably a better long-term solution. And like as any good salesperson would tell you, rather than taking their money and running, if you accept that they are inevitably going to come crashing down off that hill, not on the bike, but off that competence curve. And eventually realize that that was probably not the right thing to have bought, you would be well-served to take it upon yourself to gently escort them down that cliff face, help maybe interrogate their purchase decision a little more, find out what they're interested in, share a little bit of information, not overwhelm them, but share enough information to start showing them some of the things they may not have considered, and perhaps guide them to a purchase that is more appropriate, which might mean less revenue in the immediate term, but will, without a doubt, result in better goodwill, a better long-term customer and probably better word-of-mouth as well.

Mel:                             14:00                I think this is a really delicate situation to manage, right? You're right when you call it a dilemma, because you need to be really careful in how you pitch this to the customer. Because I imagined that if their level of knowledge about something is quite simple and you start to tell them about all the wonderful features of this $12,000 bike that they didn't even know they needed, then you're all of a sudden going to overwhelm them very quickly and they'll end up making no purchase at all.

Dan:                             14:26                It is really delicate because the last thing you want to do is talk somebody out of spending $15,000 with you. It just went up from 12,000 to 15, but that's what happens with bikes. You just literally blink and now it's $3,000 more. So, it is really delicate and you certainly don't want to leave the person feeling like they can't give you their money. Because they'll just find someone else they can give it to.

Dan:                             14:43                So, I mean, when this happens, in our sense, when a prospective client comes to me and wants to buy something that is just completely the wrong thing for them, I will always tell them, "You can absolutely give me money to do that. Of course, I will take your money and make that campaign, build that website, make that, produce that content, whatever you want. But before I do, let me just go through a couple of questions to make sure it's actually the right thing to do." And you can usually get them to come to their own conclusion that, "Okay, there might be a better way of directing my energy or budget."

Mel:                             15:13                I love it when you talk about ethical principles of marketing.

Dan:                             15:16                We're in it for a long time, not just a good time. So, that's once. I think it's the job of a good salesperson and maybe of a good ad to slowly escort somebody down the cliff face and give them what they need, not necessarily just what they want.

Dan:                             15:31                I think when we consider people that are in that trough, people who actually do know quite a bit, but feel like they don't, that creates a whole different set of problems for us because their lack of confidence and their misplaced lack of confidence is actually a barrier to our sales. You are totally good enough to buy this baking kit or this bike or this better guitar, but your own mind is telling you that you're not. And so, I think really what the opportunity to do here is, is for brands and ads to use things like bridging language, to help people realize that the skills you have, the capabilities you have, are enough to take the next step. So to be able to do this course, all you need is an understanding of A, B and C. Or to be able to create this piece of art, all you need is the basic skills that are from the fields of X, Y, and Z. So basically dispelling the myths in people's own minds and letting them do a better job of convincing themselves that, "Yes, of course I can do that. It's not as hard as I think it would be." Basically doing the job that a good friend would or a supportive partner would do for somebody. "You've got this."

Mel:                             16:35                Yeah. And I mean, I'm thinking about my own work in this space because it's these people that I'm, I guess in a way, more concerned about. These are people who are actually really competent, they actually really do have a lot of knowledge, but it's their confidence that holds them back from maybe sharing that with the world. And I think that's, in a way, a lot sadder than the people who are sitting on top of Mount Stupid.

Dan:                             16:55                Yeah. Because the people sitting on top of Mount Stupid are usually screaming pretty loudly.

Mel:                             16:59                Yeah. And they might be doing so through their social media platforms. Because-

Dan:                             17:04                Oh, shots fired, Dr. Mel.

Mel:                             17:06                Well, the thing with social media and an unfortunate sort of drawback of it is that it doesn't necessarily discriminate between those who do know what they're talking about and those who don't. And as we've established is that people themselves can't discriminate that well either. And so, what we find is that social media gives a platform to everybody. The problem is that the people who don't know are more likely to use that platform to express their opinion or their beliefs or their suggestions, when the people who actually do know and perhaps the people that we should be listening to, are going to be second-guessing themselves and hesitating before they click post and share it with the world.

Dan:                             17:41                I know. Anybody that knows that the earth is actually round is too busy actually doing something productive with their time to bother posting a rant on social media. So that's why all you get is people saying, "The earth is flat." If you have time to post that the earth is flat, you're probably not smart enough to know the difference. I know we've just lost a hundred percent of our flat earth listeners, but I'm okay. I'm completely fine with that.

Dan:                             17:57                So anyway, that's for brands. So, I think if you're dealing with somebody sitting on that peak, then escort them down. If you're dealing with somebody in the trough, then make it easy for them to convince themselves, make it less intimidating, help them bridge what they know definitely to what you want them to do.

Dan:                             18:12                What about for peeps, Dr. Mel, what can the poor humble person do to overcome the Dunning-Kruger effect?

Mel:                             18:19                So, I guess for regular people, what it comes down to for me is that we're not always the best at evaluating our own competence at different tasks. And we're probably going to make mistakes when we attempt to self-evaluate. So there is value and merit in asking other people for feedback and listening to it. If you think you're really good at something and people suggest that you're not, it would be easy to dismiss it, but maybe it's worth a second thought. On the other hand, if you're doubting yourself and other people actually encourage you and say, "You really are good at it," then maybe they're right. Maybe you are better than you think.

Dan:                             18:54                I think in '93, Ice Cube said it best. And I quote, "Check yourself before you wreck yourself."

Mel:                             19:02                I think somebody may have said it better than Ice Cube.

Dan:                             19:04                Better than Ice Cube? Come on.

Mel:                             19:08                Let me give you a quote from Confucius.

Dan:                             19:11                Oh, come on.

Mel:                             19:12                Real date unknown. Confucius apparently said, "Real knowledge is to know the extent of one's ignorance."

Dan:                             19:20                Wow. That is deep. Philosophy and ethics in one show. I take my hat off to you, Dr. Mel.

Mel:                             19:26                I was going to say, we did say we'd blow people's minds.

Dan:                             19:28                Well, okay. Well, consider my mind blown. What an episode.

Mel:                             19:32                I think there was a lot in there. Lots of good takeaways.

Dan:                             19:33                Yeah. I've also just realized that maybe it was actually nowhere near as good as we thought it was. Anyway, who knows? You can tell us.

Mel:                             19:40                Please give us the feedback.

Dan:                             19:42                Yeah, yeah. Check ourselves before we wreck ourselves. You can find me at Dan Monheit all over the internet. Where are you, Dr. Mel?

Mel:                             19:50                At Dr. Melw in all the places you'd find at Dan Monheit.

Dan:                             19:54                Yeah. You'll find Mel just like 30 seconds behind. See you next time.