Mini Episode 5 - Why do I get so many notifications about the status of my parcel?

Marcel in Camberwell wants to know why DHL insists on telling him every intricate detail about his new tennis racquet's cross continental journey.

 Dan: 00:18 Hey, and welcome to Bad Decisions Mini Episode Five. I'm your host, Dan Monheit co-founder of Hardhat, and we are doing our best to get through the weird and wonderful questions that have been submitted over the years while Dr. Mel is off raising a young child. What up Dr. Mel? I know you're listening. I hope I'm doing you proud here. Today, we have another super locked out appropriate question. Let's hear what we're in for.

Marcel: 00:41 Hey, Marcel from Camberwell here. I order a lot of things through Amazon and nowadays, even more while in lockdown. I love the ease and convenience, but now I'm inundated with notifications. First, it's your order has been confirmed. Then, my package has been packed. Now, it's been sent. Next, it's in transport. And finally, it's been delivered. Why all of these messages to my email and phone? It's a bit annoying.

Dan: 01:05 I love that your name is Marcel and we are tackling a question about parcels, but I will leave that for some other time. So look, I know we say these things are kind of annoying, but there's also a little bit of us that kind of loves getting the adrenaline hit or the dopamine hit from those little notifications. And it does seem weird that these things turn up so often when you consider number one, how much these big logistics companies need to invest in technology to help them track and trace and share the status of must be millions of parcels around the world. When you consider number two, that conventional CX and UX wisdom tells us that we just need to make everything smooth and we should keep customers as far away from the tangled mess of the inner workings of our organization as possible. And number three, who really cares how many Brazilian distribution centers our six pack of crew socks had to pass through before it made it to our home in Melbourne or Sydney?

Dan: 01:55 So, these are all reasons that would make us wonder why would they even bother? I mean, the other thing to consider is that those notifications don't actually make them come any quicker, but they do have a funny way of reducing our anxiety about I wonder where our package is. And I wonder if they've shipped it and I wonder when it's going to get here and I wonder if it's on track. And there probably is some tangential benefit of less people calling their call centers to just ask where their golf balls are. But behaviorally, I think we've got a far more interesting thing to dive into as we ask ourselves why would global giants like DHL and UPS let us peek behind the curtain of these giant global networks that they are running? What I believe we can pin it down to something called the effort bias and that refers to our tendency to assume that something is worth more, just because more effort has gone into it. And it seems that we are wired to believe that effort is if not a substitute, then at least a leading indicator for the quality of something.

Dan: 02:50 This effort was beautifully showcased by Kruger et al in 2004 in a funny little study that involved poetry. Now what these guys did was they bought subject a room, they randomly split them into two groups, and gave each group an identical set of poems and asked them to evaluate those poems based on the quality of the poem, the overall enjoyment they felt reading the poem, and the amount of money that they believe that a poetry magazine should pay to publish those poems, which I guess was the thing to do in 2004. Not much money getting paid for poetry these days, but anyway, it was simpler times. Now, the only difference here was at one group were told that the poems had taken four hours to write while the other group was told at the exact time poems had taken 18. As you can imagine, the group that had been told upon to take an 18 hours to write considered them of a higher quality, found the more enjoyable, and believed that they were worth far more money than the group who had been told that they'd only taken four hours to write.

Dan: 03:43 Since this study, we've seen similar experiments done with different subject matter, everything from paintings to pottery and wine, we've seen experts and amateurs put through this, and the results are always consistent. We are really, really bad at separating how much effort has gone into something with the actual value that comes out on the other side. Once you switched onto this, you start seeing it everywhere from kitchens, which are now miraculously located in the middle of restaurants when once upon a time they were hidden up the back through to expensive watches that can't be serviced in a period of less than six to eight weeks because they needed to go to some master craftsperson in Switzerland or France all the way through to getting the relentless, but somewhat enjoyable SMS updates about the precise location of a USB powered fan that cannot get here soon enough.

Dan: 04:32 And it is those little notifications that help us appreciate all of the effort that goes in to getting things to our door. With that we value the service a little bit more and we might even be a little more forgiving if things don't go exactly as they were planned. The key takeaway for brands here is not to invent more complexity because the chances are if you are running a successful business there's already insane levels of complexity happening somewhere behind the scenes. Really the key takeaway here is to surface and celebrate whatever it is that makes you great. It might be the logistics process. It might be the ingredients. It might be the origin stories of the company, but if it is not visible, it can be valuable. So make sure people know that it's not all smooth and seamless and you guys really are sweating just a little bit behind the scenes.

Dan: 05:16 So, that's it for today. Marcel, I hope that answers your questions and you can take a little bit more joy next time one of those notifications comes through. If you guys have got more questions about reasons why we do the weird and wonderful things that we do, please shoot them through to me, I'm all over the internet at Dan Monheit or you can email me at askdan@hardhat.com.au. Catch you next time.

Mini Episode 4 - Why do I keep ordering the same burrito?

Adam from Bondi wants to know why he cant say no to that bur-ri-to.

Dan:                             00:17                Yo, and welcome to Bad Decisions, mini episode four. I'm your host, Dan Monheit, co-founder of Hardhat. Now just a quick little reminder, these mini eps we're doing while Dr. Mel’s away with baby Layla. I am doing my best to get through all of these weird and wonderful questions that we've received over the years. Today we have a real doozy. This one has given me real lockdown vibes, so let's go to today's question.

Adam:                          00:41                Hey, it's Adam from Bondi here. I love your show. I've got a question for you. I have a lot of trouble when choosing a meal on Uber Eats. I don't know what to order, and I always end up going to the same burrito. Do you know why that is?

Dan:                             00:57                Right. Yeah. Adam, I really, really feel you on this one. At the moment we're in day 200 and something lock down of Melbourne. I'm doing a lot of ordering off the food apps and somewhere around day 50 of lockdown, I found this amazing chicken salad that I'm now ordering literally three or four days every single week. It has just become my go-to. I'm feeling you. Yours is a burrito, mine's the chicken salad, but I think we're dealing with the same thing here. Now what's weird, especially weird about this one is we all know that variety is, or at least it's meant to be, the spice of life. Today, from a food perspective, especially from a lunch perspective, we have more variety than we could ever hope to have imagined for. Any one of these food apps, Uber Eats, Deliveroo, DoorDash, each one must have hundreds, if not thousands of choices, and there's three or four different apps that you can be choosing from.

Dan:                             01:48                This should be a veritable smorgasbord, or even an actual smorgasbord for us to be making different selections from for our lunches every day. Strangely we seem to go for the same thing over and over and over again. If we look to conventional wisdom, which we can do from time to time with caution, it does suggest that we should love choice. The more options we have the better. This makes sense, right, because choice makes us feel powerful. It makes us feel in control, and the power of an individual to choose is really at the core of our modern democratic brand field capitalist society. Beyond that, I mean, as market, we are literally the Navy seals of capitalism. We dedicate our lives or at least our livelihoods to giving people more and more choices to choose from. It seems weird that you and me, Adam, seem to just keep picking the same damn thing for lunch every single day.

Dan:                             02:38                What we can attribute this to is something called the choice paradox, which refers to our tendency to love the idea of having choice, but become quickly overwhelmed when it's time to choose. The reality is that our small, fairly primitive brains are just not very well equipped to deal with all of the choices and all of the options that we might need to make in any given day. Should I get out of bed or should I not get out of bed? Should I have toast or should I have cereal? Should I wear gray sweat pants or black sweat pants? Well, I'm on Zoom all day so nobody notices anyway, but there's still choices that we need to make. Often what we do when we're faced with too much choice is just to pick the easiest thing that we can, and more often than not, that is the thing that we ordered the last 15 times that didn't kill us. Right?

Dan:                             03:20                It might not be the best burrito or the best chicken salad in the world, but we've had it before, we know it's safe, and we can really save a lot of cognitive processing power if we just go with that again. The choice paradox is beautifully demonstrated in the famous fancy jams study of the year 2000 in which psychologists, Iyengar and Lepper, tested the impact of giving people more choice on conversion rates. Now what these guys did was they set up in a fancy supermarket on back-to-back weekends, and on each time they set up, they had a little table set up with different jams for people to come and sample. When somebody sampled a jam they would then give them a coupon to go and get a discount on the jam if they decided to buy it, which beautifully let them test (1) what proportion of people did we give coupons to, and (2) how many of those are actually redeemed for purchases?

Dan:                             04:04                The first week they set up six different jams for people to come and sample. They had a wonderful 40% sampling rate. Of those 40% of people that stopped for a sample, 30% actually went on to buy. Pretty good, I would say. The next week they set up in the same supermarket on the same table, maybe slightly extended because this time they were showcasing 24 different types of jams for people to choose. What did we see? Well, we saw 60% of people now stop for a sample, which is a pretty good bump in sampling rates, but only 3% of them went on to purchase. Something happened between jam seven and jam 24 where we just exploded people's brains, and thinking about jam too much just became too difficult, and they moved on without it.

Dan:                             04:49                Now, you still need to choose something for lunch. Right? You can't just walk away. You're going to get very angry and very hungry by 3:00 PM, so it makes sense that we would just pick the simplest thing we can, the default option, the thing that we've had before, the thing that we know we like. Click the button, we get on with our day. What we can learn from this is that often less choice is actually better than more. Despite what our instincts and often textbooks tell us, giving people fewer but better choices will actually make our conversion rate better and make people happier with what they ultimately choose. Adam, if you are looking for a little hack or a little way around this, one thing I can recommend is you can give yourself a rule where say one day a week, let's say on a Friday, you are not allowed to order the safe and lovable burrito. You're going to push yourself a little bit. Maybe the Hawaiian burrito, or maybe go wild and order something completely off menu, but that'll at least force yourself to experience something new. Who knows, you might find a new family favorite.

Dan:                             05:42                That is all for today on the choice paradox. If you have other questions about the weird and wonderful things that you see others do, or that you've seen yourself do, you can hit me up at askdan@hardhat.com.au or all over the internet at Dan Monheit. We'll catch you next time. Peace out.

Mini Episode 3 - Why do cans of Coke, diet Coke and Coke Zero all suddenly look the same?

Bianca from Prahran wants to know what's behind Coca Cola's gigantic packaging u-turn.

Dan: 00:17 Hey, and welcome to Bad decisions mini episode three. I'm Dan Monheit, Co-Founder of Hardhat, and for those new to the party in this mini episode format, I am getting down to the bottom of why we do the weird and wonderful things that we do. Today's listener question is from Bianca in Prahran.

Bianca: 00:33 Hey Dan, it's Bianca from Prahran. Yesterday I went to Woolies to grab some Coke and almost accidentally grabbed a zero sugar one. What's the deal with the packaging being so similar? Isn't it confusing for customers?

Dan: 00:47 All right. I am so excited to get to the bottom of this question, but to do it justice I think we need to have a little bit of historical context first. So I'm just going to wind back the clock a little bit. 1937, Coke launches in Australia loud and proud in that distinctive Coca-Cola red we all know and love. Cruises along by itself for 45 years until boom, 1982. Everybody's wearing leotards, doing aerobics, starting to think about living healthy lifestyles, Diet Coke launches, and of course, it's going to look skinny, it's going to look futuristic, what better choice, silver.

Dan: 01:29 So we're cruising along until the new millennium and the good folk at Coca-Cola realize that Aussie males have decided that Diet Coke is maybe a little something for the ladies, and let's be honest, Diet Coke advertising absolutely took that and ran with it, and instead, Aussie males a little bit health conscious are deciding to max their thirst with Pepsi Max. So the good folks at Coke say anything you can do, we can do better, and 2005, we see the launch of Coke Zero complete with an $18 million marketing spam and the now the stinky black can.

Dan: 02:05 So here we are 2005. We have trusty Coke in red. We have Diet Coke in silver. We have Coke Zero in black, and the world makes sense. Until 2015 when Coca-Cola decide that after decades educating the world on the fact that Coke is red, Diet Coke is silver, Coke Zero is black, after billions and billions of dollars making ads ensuring that every person over the age of five knew this, everything changes. Coke strip away these three distinct identities. They instead put everything in one, almost identical can, a red Coca-Cola can save for a, let's call it 15% band across the top of the can, which has a colored strip, which denotes which can this is. So a little black strip for Coke Zero, a little silver strip for Diet Coke and a continued red strip for Coca-Cola Classic as it was then known.

Dan: 03:00 For the marketers amongst us, you've got to ask what the hell is going on here? I mean, we have just had some of the world's most distinctive brand assets trashed. We have had brand codes abandoned. We have had icons buried alive, and in their place, just this can conformity red homogeneousness of Coca-Cola cans. This seems like complete madness. Until you consider mere exposure effect. And the mere exposure effect is a behavioral bias that refers to our tendency to prefer something simply because that thing is more familiar to us. Effectively, it's a scientific proof that turning up really is half the battle. Over the years, scientific studies have proven that mere repeated exposure is enough to prefer particular words, Chinese characters, paintings, pictures, faces, pictures of faces, you name it. Just turning up over and over and over again is enough for us to build a preference towards something.

Dan: 03:57 Perhaps the most iconic study into the mere exposure effect was done by Robert Zion in the early 1960s. And what Zion did, was he managed to get hold of a whole bunch of fertilized unhatched chicks. It was the 60s. I don't know, anything goes, right? He split these chicks into... Or unhatched chicks, I guess you would call them eggs, into two groups and played one set of tones to each group of unhatched chicks. He then waited for the chicks to hatch, played both sets of tones to both groups and miraculously and wonderfully observed that each set of chicks consistently responded to, I don't know, maybe by dancing or something, responded to the tones that they had previously been exposed to, even though the previous exposure happened when they were still eggs. Now I can tell you that if this works in unhatched chicks, it absolutely works in hatched humans.

Dan: 04:49 The mere repeated exposure, it does two things for us. Number one, it builds a sense of safety. So we think if we've seen something 10 times and it hasn't attacked us, on the 11th time, it's probably not going to attack us either. The second thing it builds is something called perceptual fluency, which is really just a fancy way of saying how easy is it to understand what this thing is. And perhaps not surprisingly things that our brain categorize as safe and easy to understand, tend to be more likable than things our brain categorizes as unsafe and difficult to understand. And mere repeated exposure builds both of those things.

Dan: 05:21 By bringing their cans into line, Coca-Cola get to benefit from the mere exposure effect in an almost exponential way, right? Because every time somebody sees a can of Coke now they also 85% see a can of Diet Coke. Every time I see a can of Diet Coke, they also 85% see a can of Coke Zero, and round and round and round it goes. Given Coca-Cola's insane distribution and very, very prominent shelf space, what this can conformity helps them do is ensure that their most valuable asset, their packaging, is also one of their hardest working.

Dan: 05:52 For all of us working in marketing, we can all benefit from the mere exposure effect by just ensuring that we turn up early, that we turn up often and that whenever somebody sees a piece of communications from us, they know it is from us because our distinctive brand assets be that our colors, our fonts, our distinctive imagery, is front and center. So Bianca, hopefully that explains why Coca-Cola have put all of their cans into line for you. Listeners out there, if you've got more weird and wonderful questions you would like answered, you can hit me up askdan@hardhat.com.au, or I'm all over social media. You can usually find me at Dan Monheit. Looking forward to catching you next time for another Bad Decisions and mini episode.

Mini Episode 2 - Why do people queue up outside full restaurants?

A very hungry Laurence from Elizabeth Bay wants to know why more people don’t just cross the street.

Dan:                             00:17                Hey, and welcome to Bad Decisions Mini Episode two, I am your host Dan Monheit co-founder of Hardhat. And for those who are new to this format, we are taking a little period while Mel is off raising a small child and we are using it to get through some of the amazing questions that we have received over the years. Today's question, this is an absolute classic and this comes from Laurence in Elizabeth Bay.

Laurence:                     00:40                Hey Dan, it's Laurence from Elizabeth Bay here. There's this weird thing that happens when I go out for dinner with my wife and we'll be walking down the street and looking for a restaurant to eat at and I always want to go to the empty restaurants so we can get our food quickly, but my wife always wants to go to the full restaurants and line up in these queues and we usually do what my wife wants in the end, but I just can't work out why she likes to do that.

Dan:                             01:00                First up Laurence. I got to say, I love this question because for a guy who spends most of his time looking at and thinking about weird irrational behaviors that we exhibit as humans, standing outside a full restaurant while an empty restaurant waits for us to cross the street has got to be somewhere near the top of the list, right? Because if we were pragmatic, rational economic beings and all we wanted to do is feed ourselves in the most efficient way possible this is definitely not the way we would go about it. So, there clearly must be something else at play here. What is at play here is actually one of the most impactful heuristics in the whole arsenal and it is something called social proof and social proof essentially relates to the idea that we are social creatures or herd creatures by design.

Dan:                             01:46                And if you look at this from a biological physical level, our brains are literally wired to copy what other people do. So, if you think about how we learned to walk or talk as babies, it is not going to the library, it is not watching YouTube. It is looking at grownups around us and trying to imitate them and this doesn't stop when we're no longer toddlers. If you think about the last time you were in a weird new uncomfortable environment so, it might've been at a gallery opening or a very fancy restaurant or a religious ceremony where you're not particularly familiar with what's going on, we tend to look around and see what everyone else is doing and we rightly or wrongly conclude that well, if that's what everybody else is doing, then that is probably the right, the correct, the appropriate, the safe thing to do and I should do it as well.

Dan:                             02:26                Perhaps the most interesting and I would say terrifying research done into social proof comes from Solomon Asch in 1951. And Solomon Asch was one of the forefathers of early behavioral science studies and he spent a lot of his time researching the ways that people made decisions together versus individually. And he designed this really clever experiment where what he would do is he would bring students into a lab and tell the students that they were there as part of an eye test. And when the students walked into the room for their alleged eye test, there were seven other people or participants already in the room. Now, the student believed that these people were also here for eye tests. What they didn't know is this other seven people were actually working for the researchers and they were what we call Confederates.

Dan:                             03:11                So, the student comes in, sits down and then the researcher explains to them here's how the artist is going to work. There are going to be 18 rounds of this test and for each test, we're going to show you three lines of different length so, let's say an A line, a B line and a C line, we are then going to show you a target line and you are going to have to say, which of the three sample lines A, B or C does the target line most closely match. And let me tell you guys, the answer was always quite obvious. Now what the student didn't know was that the other seven participants had been instructed that on 12 of the 18 occasions to all give the same wrong answer. So, you can imagine you've walked in, you've had this test explained to you, they hold up the three sample lines, they hold up the target line.

Dan:                             03:55                The target line clearly matches sample line A and they go around the room and you hear, which is the closest match? B, B, B, B, B, B, B and now it's your turn to answer what would you say? If you were anything like one third of the participants, you would conform every single time. That's right, 33% of participants conformed every time and 75% of participants conformed at least once. So, this is university educated, intelligent people giving an answer that was clearly incorrect to a question that was very easy, simply because they'd had seven other random people give the same wrong answer before they did. And from here Solomon Asch and his team of researchers and us were able to conclude that not only is being part of the group important, but often being together is more important than being right.

Dan:                             04:49                So, social proof is why the leading online retailers like the guys at Kogan.com have little pop-ups that show you that other people are currently also shopping on this website. It's why news publications will tell you how many other people are currently reading this article or its why hotels and flight booking websites will tell you how many other people are currently looking at these deals right now. All of these are not so subtle cues that you are with the group, lots of other people are doing what you're doing and you should just continue along the path. So, really the key takeaway for brands here and how to make the most out of social proof is to show prospective customers the people who are already just like them have done the thing that we're asking them to do.

Dan:                             05:28                So, Laurence there you have it. Social proof is why your wife insists on waiting outside full restaurants. Chances are it's probably going to be a pretty good meal and hopefully you will enjoy the atmosphere of being in a packed restaurant rather than empty one more as well. I bet dear listeners as if you guys have got some weird interesting quirky human behavior that you have observed and you would love my take on why it is happening. Please hit me up with your emails or your social media messages, you can hit me up @DanMonheit across most of the internet or askdan@hardhat.com.au. We'll be back in two weeks and by we I mean I. It's so lonely.

Mini Episode 1 - Why do we keep the boxes from expensive shoes and handbags?

Carli from Melbourne gets us rolling with a listener question that's way too close to home.

Dan:                             00:17                Hey, and welcome to Bad Decisions, mini episode one. I am Dan Monheit co-founder of Hardhat. And if you've just come off listening to the previous episode that we did with Mel, you'll know she's off doing things far more important than recording podcasts, having a baby. Go with that, Mel. So I'm going to try and tide us over, and instead of recording new episodes about new heuristics, I'm going to start working my way through the backlog of amazing questions that we have received over the years about why people do some of the weird and wonderful things that they do. So the first question that we are going to look at as part of this mini ep series comes from Carli in Melbourne.

Carli:                            00:55                Hey, Dan, calling from Melbourne here. I thought it was just something I do, but I've noticed my friends have done this as well. The other day, I bought a pair of shoes, and when they arrived, I loved them and put the box in a closet along with 10 other boxes that have been there, collecting dust. I don't know why I do this. I'm probably never going to use it again. And I've realized I do this with a bunch of other products as well. I'm wondering why.

Dan:                             01:17                Such a good question. And this one is real close to home for me as both a sneaker enthusiast and the husband of a shoe and handbag enthusiast. I'm sure that at least 50% of my mortgage payments each month are just going to cover the cost of storing empty boxes from luxury goods. So this is a great one for us to dive into.

Dan:                             01:37                As I think about it, this probably extends beyond just luxury goods. So when I was younger, I remember like in share houses, people used to hang on to all of the old alcohol bottles from expensive whiskeys or champagnes that they drunk. I remember about the same time in my life. People used to collect the old bottles from the aftershaves and perfumes, even though there was nothing left in them. They didn't want to throw out the bottles. And I guess more recently there seems to be a global habit of hanging on to all of our old iPhone boxes even though we know we are never going to need them again, for some reason, we just cannot bear to throw them out. So it is weird that we would hang on to these things, especially when we know that objectively the value is basically zero.

Dan:                             02:20                So the thing that explains that I think explains a lot of this weird and wonderful behavior is a concept called the halo effect. And the halo effect is all around the idea that as humans, we have a tendency to take an initial impression of a person, product, service, brand. And we take that initial impression, and we apply it to the entire being. It's like why as children, we get told not to judge books by their cover because inherently that's what we do. Reading the whole book is long, boring, time-consuming. It's much quicker to just see the cover, make a call, and get on with your life most of the time. But obviously, this can lead us astray.

Dan:                             02:58                So if we think about some of the research behind this, and the first real piece of research done into the halo effect was done by a guy named Edward Thorndike in the 1920s. And what Thorndike and his team of researchers did was I went to the military, and in the military, they asked commanding officers to rate their subordinates on a series of attributes, including their character, their physical strength, their leadership, and their intelligence. And I think what's interesting about doing this in the military is that there's a natural, maybe not a natural, a forced separation between the commanding officers and their soldiers. So they know who each other are, but they don't know each other particularly well, which I feel is a good approximation for most people with most brands. You know what it is, but you don't know it particularly well.

Dan:                             03:44                Anyway, what they found after the commanding officers filled in their reviews and handed the results in was something that is both obvious, but also very, very interesting. What they found was disproportionately high correlations between positive attributes and disproportionately high correlations between negative attributes. So if a soldier was rated really well on one thing, they were probably rated really well on most things. If they were rated poorly on a thing, they were more than likely to be poorly rated on most things. Now, some of these things make sense. So you would imagine that leadership and intelligence should track together. A smarter person is probably a better leader. But someone's physical characteristics and their character or physical characteristics and their intelligence should really have nothing to do with one another, but they still seem to be tracking side by side of whether people were rated well or not well on those attributes. And from this, Thorndike and his team concluded that we tend to take that initial impression and apply it universally.

Dan:                             04:47                Now, the halo effect goes to explain a lot of other weird and wonderful pieces of research that have been conducted, where we tend to assume that tall people are more competent at their jobs, which perhaps in the NBA is correct, but, really anywhere else, it makes no difference. The halo effect is why Ferrari can sell ballpoint pens for $370. It is why good-looking people tend to do better in our legal system than less good-looking people because we judge books by their covers, and we get on with our lives. Now, there are lots of other wonderful brand examples of this.

Dan:                             05:19                Sometimes the halo is set from the top. It's set from the founder of the business. So the gentleman who founded IKEA, his name is Ingvar Kamprad. He, unfortunately, died a couple of years ago, but before he died, he was written up in one of the rich lists as being, I think, the eighth richest man in the world with a net worth of around $60 billion. And you know, what is amazing about this guy is that if you knew one thing about him, it's that he found that he founded IKEA. If you knew a second thing about him, it would probably be that he insisted on driving a 20-year-old beat-up Volvo, that he always flew economy, that he almost exclusively shopped in thrift stores and at markets. He was just a massive tight ass. Now, this might sound like crazy behavior for somebody that's worth $60 billion. But when you have a business built around sharp pricing, that halo of frugality shines all the way down.

Dan:                             06:08                Luxury brands use the halo effect incredibly well. And I guess, what they do, really core to their being, is they take the halo from their hero or their flagship product. So that piece of jewelry that you're actually buying from Tiffany & Co, and they managed to extend the shine of that halo to the tissue paper that wraps it up, to the box that it sits in, to the bag that it goes home into, the ribbon that ties the bag handles together. It sometimes even extends the retail experience to the perceived fanciness of the people serving us. And even the way we feel about their advertising. If the core product is beautiful and luxurious enough, they seem to be able to stretch that halo to everything else that it touches. And the rational attempting to be rational part of our brain says, "well, look, if you've just paid $520 for this silver pendant, which was clearly worth it, otherwise you wouldn't have paid it. Surely the tissue paper and the box and the bag must be worth something. So we'd better not throw them out".

Dan:                             07:06                So for brands, really, the idea is to remember that first impressions count. And whether that first impression is a website, a piece of content on social media, or in-store interaction, remember that people will judge you by it. So if we're going to be judged by our cover, let's make sure the cover is hot. Thank you so much for your question, Carly. Hopefully, that goes some way to answering why people hang on to the boxes from expensive bags and jewelry. If you've got a question for me that you would love to hear answered, you can hit me up on social media. I'm @DanMonheit. You can find me on LinkedIn, or you can email me at AskDan@hardhat.com.au. And if I've piqued your interest in halo effect, make sure you go back and check out episode 21 of the regular Bad Decisions podcast. We'll be back with another one of these in a couple of weeks. So stay safe, and I'll see you then.

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.

#30 Pratfall Effect: Why you can afford to make a mistake

People and brands often go to great efforts to manage the impressions others form of them, but what if we stopped trying to be perfect, and instead owned our flaws? In this episode, Mel and Dan explore the Pratfall effect, and why tripping up the stairs on your way to a presentation could be a winning strategy.

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

Dan:                             00:18                The podcast 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'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan:                             00:27                And I'm Dan Monheit, co-founder of Hardhat.

Mel:                             00:41                Dan, you know what? There's something very exciting today.

Dan:                             00:45                It is Tuesday or Wednesday or Thursday. It's Corona, I have no idea what day it is.

Mel:                             00:49                It is our 30th episode.

Dan:                             00:51                Woo-hoo, dirty 30. Woo-hoo. Yeah, really testing the levels.

Mel:                             00:56                Yeah, we are 30-years-old again.

Dan:                             00:59                First woo-ing on bad decisions. How do you like that, Kopel? Not so much.

Daniel Kopel:                01:04                Yeah, I'm not in the podcast.

Dan:                             01:07                You should be. It's about time. A third voice. The third voice that makes the first two voices sound much better, which given we're 30 episodes in, we were having a lot of fun doing this. We now have listeners in over 90 countries. So what up, everybody out there, thank you all so much for tuning in. We think it is time that we level with you guys just a little bit.

Mel:                             01:27                Go on.

Dan:                             01:27                Go on. Okay. I'll be leveling. Mel will be spectating my leveling. Well, I mean, you guys just like open your podcast player and you see the new episode come up and you start listening and you get to the end of episode and you think, "Man, that is slick. These guys are just smooth." And I guess we want you guys to know that in between our recording and you're listening, there's actually a lot of editing that happens. Like a lot, a lot, a lot of editing that happens.

Mel:                             01:53                Well, hang on, not the lot. Most of it's pretty good.

Dan:                             01:55                Well, a lot of your stuff needs editing. Mine's pretty good. Yours... It's kind of like out with a weed whacker, just trying to get to the nuggets.

Mel:                             02:03                Thanks.

Dan:                             02:03                But it's important. It's important because we need to come across as professionals here and yeah, we've got to be silky smooth.

Mel:                             02:11                It's true about like you said, we do make mistakes sometimes and it gives Kops our producer a lot of great content for bloopers. Right, Kops?

Dan:                             02:21                There are no bloopers.

Mel:                             02:26                This is the conundrum that brands have made... I can't, I'm just going to... Okay.

Dan:                             02:27                Do you remember the definition?

Mel:                             02:31                Course not.

Dan:                             02:35                Where are you, Mel?

Mel:                             02:37                @drmelw, Instagram, Twitter, LinkedIn.

Dan:                             02:40                Instagram, that's the number one academic...

Mel:                             02:41                Okay. I'll tell that one again. Fuck me. God, I'm sorry, I'm just like...

Dan:                             02:48                The second thing... What the fuck have I written here. The show that helps.

Mel:                             02:51                The podcast.

Dan:                             02:54                Sorry. I'm slightly confused. Are you telling me what you're about to do or are you just actually recording for the show?

Mel:                             02:59                Okay. Let me start again. Start again.

Dan:                             03:03                What, all the way back from the start? Fuck. Mic check was better.

Mel:                             03:07                It's not always so competitive. There are... Here we go. So... Fuck me.

Dan:                             03:15                What did I miss?

Mel:                             03:17                But also, sorry, I actually don't have a point to make. I was just going...

Dan:                             03:23                Maybe I should be asking you... Oh, sorry. Kops had to see the microphone.

Mel:                             03:26                Monheit calling me a bitch, or what'd you call me the other day?

Dan:                             03:27                Bitch, please.

Dan:                             03:35                They are no bloopers.

Mel:                             03:36                So we thought this would be a good episode to really look at whether there's any heuristics out there that actually celebrate mistakes because I think it's important that we do that.

Dan:                             03:46                Yeah. Because you know what's better than being awesome? Being flawsome.

Mel:                             03:51                Haw-haw.

Dan:                             03:53                Cut that out as well.

Mel:                             03:54                I was going to say, is it too late for that to go into the bloopers?

Dan:                             03:57                What do you got for us, Dr. Mel? What are we talking about today?

Mel:                             04:00                We are talking about the pratfall effect.

Dan:                             04:05                So the pratfall effect. I'm very excited to hear about the misadventures of Mr. And or Mrs. Pratfall. Enlighten me.

Mel:                             04:12                I'm not sure who Mr. or Mrs. Pratfall are. I'm sure they're a lovely couple living a nice life somewhere, but the pratfall effect wasn't actually named after them. Let me tell you what the pratfall effect was and then I'll tell you what a pratfall is. The pratfall effect is the idea that people who are considered to be highly competent, intelligent, or otherwise superior in some way, actually become more likable after committing a blunder. And just in case you were wondering, and as promised, I will tell you what a pratfall is and what it was named after. The dictionary definition of a pratfall is literally a fall in which one lands on the buttocks.

Dan:                             04:51                Who knew there was a specific term for falls which result in landing on one's own buttocks?

Mel:                             04:55                Literally falling on your arse is the pratfall effect. And I think this is interesting because this is really specific. If you fall face-first, not a pratfall.-

Dan:                             05:05                No, it's just a fall.

Mel:                             05:06                ... It's a different type of fall.

Dan:                             05:07                Stack, tumble.

Mel:                             05:09                But there is a specific term for falling on your arse and I really like that.

Dan:                             05:13                Yeah. I feel like it should be more widespread.

Mel:                             05:15                So everybody, challenge for our audience, use the word pratfall in a sentence this week.

Dan:                             05:20                Yeah. I like it. All right. So, hey, I mean, I think pratfalls, or showcasing flaws are a really interesting thing in the topic of brands because much like us two podcast hosts, a lot of brands go to a lot of trouble to make themselves pretty much perfect, pretty much flawless. And what this tells us is that might actually be slightly misdirected. If we think about what brands who show some flaws do is they come across as I guess more honest, or more credible, or more trusted because we know brands aren't perfect like we know people aren't perfect. And so by telling us what their imperfection is, it kind of stops us from guessing.

Mel:                             05:53                Yeah.

Dan:                             05:54                They're like, "I'll tell you what's wrong with me. It's right here."

Mel:                             05:56                Hey, look, Dan, before we get too deep into it, I think it's really important that we look at the research.

Dan:                             06:02                You know what, I'm always doing that. I'm so sorry. Yes, let's look at the research.

Mel:                             06:11                So the pratfall effect was given its name back in 1966 by Elliot Aronson who presented his research in literally an article that was literally two pages long. And when I looked at this, I thought, "Wow. Research was so much easier in 1966 to publish." And if any of my students were to submit a piece of work like that, it would fail automatically today. However...

Dan:                             06:36                Refer to the effort bias. I don't remember what episode that was, but she was real. So the lazy, lazy Aronson, what did he do?

Mel:                             06:43                Aronson in 1966 conducted a study that involved 48 male university students who were involved in introductory psychology course. And basically what happened was all of these 48 students listened to a tape recording. Remember it was 1966. They listened to a tape recording of a fellow student who they were told was trying out to represent the university in a quiz contest, right? And so they were listening to this fellow student answer quiz questions. In two of these groups, the student performed really well. So they were getting 92% of the questions correct. So they gave the impression that they were superior and obviously really competent as a trivia person, the right person to represent the university.

Mel:                             07:25                In the other two groups, the contestant only got 30% of the questions correct. And so they were considered the mediocre student if you will. And then within these two groups, there was another manipulation. So we've got the competent versus incompetent groups. And then within that, the other manipulation was that at the end of the recording, just before the tape ended, one of the groups in either the superior-competent or the inferior-incompetent group heard the student apparently accidentally spill a coffee on themselves and make a sort of claim aloud that said, "Oh my God, I've spilled my coffee all over my suit."

Dan:                             08:00                "Oh, no."

Mel:                             08:01                Yeah. "Oh, no. I spilled my coffee." Right? And two of the groups didn't hear that, they just heard the student answering all the questions. And so then afterwards, all of the subjects that participated were interviewed and they were asked to rate how likable the contestant, their fellow student was. And what the results showed was that those who listened to the contestant who performed really well, who got 92% of the answers correct. They actually liked that person. They rated them much more likable if they had heard him spill the coffee.

Dan:                             08:32                Aw, because he's like a smart klutz. It's cute.

Mel:                             08:34                Moral of the story is if you're good at something, spill your coffee all over yourself and get a new suit.

Dan:                             08:39                I can't wait to be good at something and try this out.

Mel:                             08:43                So this is the idea, the idea that when you're really competent when you're perceived to be really competent in something that actually making a mistake in an area that's really unrelated can actually make you more likable. And the idea behind it is that when somebody seems to be really superior or really competent or really perfect in some way, they're not particularly relatable, but when they show that they are vulnerable in a way that any of us are, we tend to sympathize more with them. And that makes us like them more.

Dan:                             09:10                Yeah, I really like is how the kind of the klutziness doesn't make them more competent. It just makes the same competent person more likable. Where I think this is really good if you've sort of maxed-out on competence, everybody already thinks your brand or your person is really good at something, this is a nice way to start working on it on another attribute around likability by showing some sort of unrelated flaws.

Mel:                             09:35                That's exactly what it is. Yeah. And look, now that I've had my research moment. Yeah. I can guide you back to talking about brands.

Dan:                             09:42                Yeah. Well, I know that's what people are tuning in for, right? It's good to have the research, but let's build on that. And when I think about this pratfall effect, where I absolutely see it coming to life is in the whole growth of the discount airline space, right?

Mel:                             09:54                Okay.

Dan:                             09:54                So the thing with brands is, you don't want people guessing where your flaw is, especially if you are something like an airline, right? Where if you're going to come out and start offering flights at much cheaper prices, you think about a Ryanair who's advertising flights for £5 to different countries. You don't want people guessing that the way you're able to do that is by compromising on safety or they're just using one trainee pilot, or they don't really service the planes very often.

Dan:                             10:20                So by pratfalling, right, by saying, "Look, we're really good at getting you there, but the service is going to be shit or there's no food, or you can't take any luggage with you. Or the seats are not going to be very comfortable." It helps people understand what the real value proposition is and prevents them from questioning stuff that you don't want them to question. You don't want them questioning your safety record, you want them questioning the comfort of your seats because at the end of the day, for most people that doesn't really matter on a short flight.

Mel:                             10:47                It's interesting to think about what they're actually focusing on, which is it forces you to think, "Am I going on this flight to get from A to B, or am I going on this flight to get the best meal I've ever had?" And most people will realize I just need to get from A to B, willing to compromise on the food or go to a nice restaurant when I get there.

Dan:                             11:03                Exactly. And so it takes a brave brand to lean into that. And I think about where this is really relevant. And I think it's most interesting in categories where there is a lot of bravado, right? Because what you want to do with advertising, you want memorability and part of memorability is standing out, saying something different to what the rest of the category is saying. So some categories are really notorious for swag. And for basically everybody saying how awesome they are. So that might be around performance cars, or it might be around luxury hotels, or it might be around beer. Where everybody's just trying to one-up each other. And it's very interesting in those categories where people come at and say, "Well, actually there's something kind of wrong with me."

Dan:                             11:43                So a couple of really famous examples of this. If we look at the car rental space, one of the most successful campaigns of all time was Avis coming out and saying, "We're number two, so we try harder." Right? If we look at Guinness, where Guinness actually takes twice as long to pour as most other beers, and taking that old software adage that, "It's not a bug, it's a feature." Guinness beautifully transformed taking twice as long to pour into the line that it's worth the wait. So they're not compromising the quality of the beer, they're just saying that it's going to take a little bit longer to get it, which in the scheme of things shouldn't really matter.

Dan:                             12:18                Guinness actually makes me think of a lot of the work we did a number of years ago for Little Creatures when they were still an independent brewer. So before they absolutely blew up and became sort of the monolith that they were. Working with that brand through the early stages of their growth, the thing that was on every brief for them, not written but it was kind of subtext for every brief, was everything needed to be a little bit shit, right? So whether you're making an ad or a new website or a EDM campaign, right, it kind of had to look a little bit shit because they didn't want people wondering whether they were any good at beer, right? They wanted people to know these guys are exceptional at making craft beer, so it makes sense that they're not that great at making a website, or they're not that great at designing a menu, or they're not that great at making an ad.

Mel:                             13:01                Right. And I think you've really touched on a point that sort of, we need to emphasize in that, which is that this isn't a heuristic for everybody, right? This is not a universal one-size-fits-all type thing. You need to be really careful when you use this heuristic or if you try to use this heuristic because it really is only for the bravado-type brands. It really is only for the superior, the competent, and the perfect. And as you sort of mentioned, it's not about being better or being the best. It's about being more likable instead. It reminds me... The other side of the research article I thought... Can I go back to the research just for a minute? Would you allow me?

Dan:                             13:35                Oh, fine. Let's go back to the research.

Mel:                             13:37                Because there was another part of it, which is that in the-

Dan:                             13:40                One second, do you want music to go back to the research? Or you just want to dive back into it.

Mel:                             13:44                No, no, I'm fine to just go back into it. That's fine.

Dan:                             13:45                I've already paused us now. I think we should get the music. Come on, Kops, let's get some music.

Mel:                             13:54                The other side of that study that I didn't mention was that when participants were exposed to the mediocre-type contestant, who wasn't very good at answering quiz questions, so who was generally incompetent.-

Dan:                             14:06                The 30% guy? Yeah?

Mel:                             14:07                Yeah. When that guy spilled his coffee, he actually became less likable and less competent. It was like this guy is a moron and he can't even hold a cup of coffee.

Dan:                             14:17                Yeah. Yeah. So you really can't understate that you need to be competent first. If you are not... If you're Little Creatures and you're not already making great beer, making shit ads is not going to help, right? But if you are highly competent, then maybe it's going to make people like you more. Is that fair?

Mel:                             14:33                Yeah. I think that's fair. And remember, as we've said, this is all about likability, right? And not trying to be perfect, but trying to be more human and trying to be something that people can relate to.

Dan:                             14:42                So I think if I was going to sort of sum this up as a recommendation for brands, the thing to do is to be brilliant at the thing that is important. You don't want to pratfall effect the core thing people are trying to buy from you. If you're an airline, don't make jokes about your safety procedures, right? You need to be brilliant about what's important and honest about what is not important.

Mel:                             15:03                Yeah. I mean, the way that I think of it is that if you're a competent sportsperson and you miss a catch, it's probably not going to go well for you because that's the thing that you're supposed to be good at. You got to catch the ball, right? But if you're a competent sportsperson who isn't very good at drawing pictures of animals, then that makes you more likable, right? If you're a lousy sportsperson and you drop a catch, then you're probably just crap at what you do. You're just a lousy sportsperson.

Dan:                             15:28                You should be here in the first place, let's be honest.

Mel:                             15:30                I was going to say, and if you're a lousy sportsperson and you can't draw pictures of animals, then you're probably just a lousy person in general.

Dan:                             15:35                Yeah. You need to find something else to do with your time.

Mel:                             15:38                So Dan, obviously I, as a psychologist, I'm a huge fan of vulnerability. I encourage people to be vulnerable, right? I imagine that this could be a really helpful thing for competent brands to use. Why don't we see more of it?

Dan:                             15:51                This is a wonderful question and I would love to see more brands doing this because it does make for interesting ads. Every ad is basically a brand talking about what they're great at. So there should be disproportionate payoffs for brands that don't do that. I think the biggest issue we have, and I certainly know when I've sort of tried to talk to some prospective clients about this. The biggest issue that we have is something called the principal-agent problem, where you have the principal, which is the brand, right? And you have the agent, which is the marketer, the person acting on behalf of the brand. And often the best outcome for each of those things is not the same.

Dan:                             16:29                So for a brand, the best longterm thing might be to indulge in this pratfall effect to talk about some of its vulnerabilities to build likability over time. But it is a rare marketing director or marketing manager that's going to bet their next campaign and therefore, possibly the next phase of their career on an ad that tells people that their beer is really slow. It's a kind of perceived higher-risk strategy than it really is. And I think that explains why we don't see many marketers take it on, even though I would really encourage you to.

Mel:                             17:01                Yeah. So it's one of those high-risk, high-reward possibly, the type of situations if you play it right.

Dan:                             17:06                Yeah. And the thing with the high-risk is it's high-risk for the individual, but it's not high-risk for the brand. If you get it right, it's great for the brand. If you get it wrong, it doesn't really matter, you'll just switch and do some other campaign later. But for an individual, it's like you're only as good as your last campaign and you do not want to be the guy or girl that did the world's worst tasting yogurt campaign when you're actually trying to sell yogurt. It's just not going to go well for you.

Dan:                             17:28                So with that in mind, I guess what I would say to brands is you got to try and find a way to do this, right? You got to try and find a safe way to do this. Maybe don't commit your whole next wave activity to it. Maybe there's one channel, or one market, or one audience, or one product line where you could just indulge in this idea of trying to be brilliant at what is important and honest about what is not. So find a safe space, give it a crack and we'd love to hear how you go. I'm sure it'll be fine. I'm sure your career will be great. And if not, you can always talk about the failure in your next interview as the thing that you messed up and that'll make you more likable.

Mel:                             18:02                And I think it was really easy for me thinking about this to link this to sort of the human side of things. And as soon as I sort of started reading about the pratfall effect, it immediately reminded me of the structure of a TED Talk, right, where you've got somebody who is usually... I guess, the whole point of them doing it is that they're the expert, they're the most competent person in that area to be giving that talk. And the first instruction of a TEDTalk is to make yourself vulnerable. Nobody does this better, Dan than Brené Brown, right, who-

Dan:                             18:31                Well, maybe Brené Brown's second best. I have seen your TEDTalk and it was magnificent, but following you, Brené Brown-

Mel:                             18:36                TEDx, TEDx.

Dan:                             18:38                TEDx, TEDx, TEDx. Following you though, Brené Brown does do a pretty good job of this.

Mel:                             18:41                I was going to sort of segue Dan, that Brené Brown... I mean, you and I did share a stage with her last year, was it? At South by Southwest? Maybe not the exact same stage, her stage was a little bigger than ours.

Dan:                             18:55                We shared some carpet. I think I walked over some of the same carpet that she walked over.

Mel:                             18:58                But sure nobody does this better than her. Her actual TEDTalk is about being vulnerable. So it's really meta the way that she goes about it. And so she really plays that out. And I think it's part of making her who she is. Yes, she's a wonderful expert in that space and lots of people know her to be that, but she's also very vulnerable. She leaves herself very exposed on there and it's much easier to relate to her. And she's very likable for that reason.

Mel:                             19:24                And I think, just thinking about people in general, we all strive for perfection, right? We all think that we want to be perfect, and we admire people who are perfect, and we want to be admired. But sometimes what we don't realize is that people don't actually like perfect. They might admire it, but they don't like it. People like people. And so it's not that we're saying that we want to see important people stuff up. That's not what this is about, but we want to be the type of person that others can relate to and nobody can relate to perfect because nobody is perfect.

Dan:                             19:56                Very true. And the same goes for brands. So I'll tell you what, how about we... Do you want to put a slightly imperfect ribbon on all of this?

Mel:                             20:03                Yeah.

Dan:                             20:04                We'll wind it back. All right. So today we have talked about the pratfall effect, not named after a Mr. or a Mrs. but instead after the specific word for falling on one's buttocks.

Mel:                             20:13                Correct.

Dan:                             20:14                You want to hit us with a definition, Dr. Mel?

Mel:                             20:16                I can.

Dan:                             20:18                Please. Indulge us.

Mel:                             20:22                The pratfall effect is the idea that people who are considered highly-competent or superior actually become more likable after they make some sort of mistake.

Dan:                             20:29                Right, and the key thing for brands here is you've got to carve out a little space to do this. And when you do it, focus on being brilliant at what is important and honest about the rest of it, right? So make sure you're failing at something that is kind of tangential, doesn't really matter, it could be a little bit funny. And for peeps?

Mel:                             20:45                The takeaway for people is that look, all we want as human beings ultimately is to love and to be loved by others. And so falling on your butt every now and then maybe a better play in the long-run than striving for perfection.

Dan:                             20:56                Love it. Inspirational message. All right. That is a wrap for today. Episode 30. Thank you all so much. I might just take one quick moment to thank our very special producer extraordinaire, Kops in the booth on the wheels of steel making us sound-

Mel:                             21:09                Does an excellent job getting rid of all of our bloopers all the time.

Daniel Kopel:                21:12                Except this episode.

Dan:                             21:14                Just one time we're just going to publish the whole two-hour mess and you guys can sort it out for yourselves. Thank you guys all so much for your downloads, your listens, your ratings, reviews. If you guys have got questions, feedbacks, comments. Good feedback to me, bad feedback to Mel, she's working on her pratfall effect right now. We'd love to hear it. And Dr. Mel, thanks to you. This has been good. Let's do 30 more.

Mel:                             21:35                Oh God. 30 more. You got 30 more heuristics for me?

Dan:                             21:38                Yeah, we just have to make some. It's fine.

Mel:                             21:40                The Weinberg-Monheit effect. Coming up in a future episode. Do you like how I put Weinberg first?

Dan:                             21:47                Anyway, let's do it. If you've got ideas for what that effect could be, send them through and we'll see you next time.

Mel:                             21:53                Bye.

#29 Reciprocity Bias: Why you should always buy the first coffee

It might not always feel like it, but we’re wired with an inherent desire to cooperate and collaborate with others. That means when someone does us a favour, we can’t help but want to settle the score. In this episode, Mel and Dan consider how this social and emotional drive can direct people to pay for things they didn’t even know they wanted.

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Dan: 00:15 Hey, and welcome to Bad Decisions, the podcast that helps us understand why we choose what we choose.

Mel: 00:18 Why we think, what we think.

Dan: 00:20 And how to exploit this stuff for fun and commercial gain. That right there is my co-host, Dr. Mel Weinberg, she's a performance psychologist.

Mel: 00:26 And that over there was my co-host, Dan Monheit co founder of Hardhat.

Dan: 00:30 I'm also the guy that tells Kops to play the music, play the music!

Dan: 00:41 All right. Yo Mel, hey, can I ask you a favour?

Mel: 00:44 Okay.

Dan: 00:45 Let's get right into this. Can you please introduce the heuristic that we are going to be talking about this episode?

Mel: 00:50 I could, what are you going to do for me?

Dan: 00:53 If you introduce the heuristic, I will make this podcast infinitely more fun and entertaining for our listeners.

Mel: 01:04 Sounds like a deal. All right.

Dan: 01:05 What do you got?

Mel: 01:07 The heuristic that we're going to talk about today is the reciprocity bias. The reciprocity bias is the tendency to reciprocate actions that others have done towards us. It's simple in its definition like that, you do something good for me, I'll do something good for you. It's simple as that.

Dan: 01:27 I like it. That's all we've got time for today. No, it's not all we've got time for. We have heaps of time. We have infinity time.

Mel: 01:33 Well, we can talk about the reciprocity bias in so much more detail.

Dan: 01:37 Yeah. It's a big and important one, because really it is the underpinning of most of what we would consider modern society, right?

Mel: 01:45 Yeah. I mean, there are two key reasons, I guess, why this reciprocity bias exists, right? Let me talk you through them. The first is that we have an inherent desire as human beings to cooperate with one another.

Dan: 01:56 Some more than others.

Mel: 01:58 Some more than others, but generally as part of a healthy functioning society, we need to have the system whereby I'll do good things for you and at some point you'll return those favours to me. So putting good things out into the world and expecting that at some point they will be returned, yeah?

Dan: 02:13 This is like the karma bias.

Mel: 02:16 Well, yeah, the whole idea of treat others as you would like to be treated. If I treat you nicely, the whole premise is that at some point in time, you're going to treat me nicely in return. That's part one. Part two, the other reason why we have this reciprocity bias has to do with this inherent desire for balance in our world. So I think about this as this idea of emotional harmony that we seek. Do you like that term? I've just created it.

Dan: 02:40 Emotional harmony, yeah I mean, sounds like a slightly awkward dating app, but we can go with that. What is we call it e-harmony for short?

Mel: 02:48 Oh God, maybe I'll think of something else. However, the idea is that when you do something nice for somebody else, if I do a favour for you, essentially I've put you into this state where you now owe me, right?

Dan: 03:04 Yeah. After watching Prison Break, I see how this works. Now I owe you, yeah.

Mel: 03:09 So I've induced essentially an unpleasant emotional state in you, whereby now you are indebted to me. And this is actually a really good place for me to be in, because I essentially have capitol with you, that if sometime in the future, I'm in trouble or I'm in a situation where I need help, I know that I can call on you because you owe me one. So here's the thing, you're in a situation, an emotionally unpleasant situation, because you feel indebted to me and so you're motivated to try and resolve that emotion, to try and create harmony or emotional balance. And so the only way to do that is for you to even the score and to repay me so that you no longer feel in debt.

Dan: 03:47 Yeah. So the perverse irony here is that you doing a favour for me is actually a real dog act because now I feel bad because you've done something and I've done nothing. Thanks Mel.

Mel: 03:56 This is where we realise the undoing of the human race, essentially is that there is no such thing as altruism. Nothing is for free. If I do nice for you, ultimately it's only because at some point I want to get something in return.

Dan: 04:09 Yeah. And this explains that uneasiness we've all had, whether it's like being out with a friend or going out, when you're grown up and then you go out for family dinners again, and you argue about who's going to pay. And on one hand, the person saying, "Nah, nah, I'll pay, I'll pay, it's fine." Is masquerading like they're doing a really nice thing. But by doing that, everybody else really feels like a loser or awkwardly indebted to this person. It's like, "No, seriously, can you actually just let me pay because I don't want to owe you, friend."

Mel: 04:34 Sometimes Dan, I don't know if you've ever done this and I'm not saying that I have, but what you might do to really take advantage of this situation, is that you might, if you happen to be going out for dinner with a group of people on your payday, when your bank account is all of a sudden is full, you might go, "You know what, I'll take this one." Because next week when you go out for dinner and it's not your pay week, it would actually be beneficial for somebody else to pick up the bill then. But I don't want to talk about manipulating people into-

Dan: 05:01 No, we're not doing that. But it does explain why we feel uncomfortable, if you go got with the same person often and they're constantly buying you coffee, at some point it just feels yuck and icky, which is irrational because you should just feel grateful and wonderful about it.

Mel: 05:15 Isn't it interesting that this whole thing relies on us trusting the other person's intentions. If I don't trust that you're doing something just out of the generosity of your heart, then I'm really going to feel indebted, hey?

Dan: 05:27 Absolutely. And I mean, we did talk about this as being a pretty core attribute of humans. And if I think about one of the biggest differentiators between humans and all other species, is our ability to cooperate with one another at scale and therefore organise ourselves into groups and civilisations and religions and companies and that is all just largely unspoken cooperation between people. And I imagine that the reciprocity bias has a lot to do with that because if you don't trust that other people are going to return your behaviour back to you, the whole thing's just going to fall in a heap.

Mel: 05:59 Well that's right. Nobody wants to be in a society or in a social relationship where they feel like they're being taken advantage of. So that's the downside, that if you continually trust and you don't get anything in return, then you're basically putting yourself out there at a disadvantage. So societies fall apart, relationships don't work, there is no trust in the world.

Dan: 06:16 Yeah. So this feels absolutely right, but I know that feeling is usually not good enough for you. There must be somebody who has done some research to prove that actually we all owe each other. So let's go dig into the archives. What have you got for us?

Mel: 06:28 All right. Hit the research music.

Dan: 06:32 No, I'm the guy that tells Kopel when to do the music. Okay, I thought we established this in the intro.

Mel: 06:36 Could you please?

Dan: 06:37 Kops, could we get some research music please?

Mel: 06:45 So in a study, a 2006 study by Strohmetz and friends/colleagues, they conducted an experiment in a restaurant in New York. And basically what happened was they manipulated participants. Well, I wouldn't say that, I would say that they introduced a manipulation into the study and it happened towards the end of the dining experience at the point where customers are presented with the bill. At random, some of the diners were given a piece of chocolate with the bill, you know that after dinner mint that sits with it.

Dan: 07:18 I'm so full, I'm not that full, I could eat that.

Mel: 07:21 I'll just have that.

Dan: 07:22 Small.

Mel: 07:24 And others weren't, so others were just given the check. And the results of the study suggested that those who were given the piece of chocolate, as long as there was one chocolate for each diner, so you don't just want to have one chocolate for the table, because that's going to make everyone fight over it. But if there were enough chocolates for everybody, then those who were given the piece of chocolate, tipped significantly more than those who were given nothing. And so the implication of that is that they felt the need to return the favour after having been the recipient of the kindness/the chocolate.

Dan: 07:53 Yeah. So I'm not going to lie because I heard about this and I thought this was quite interesting as well, I dived in as well. And when you say significantly more, what I saw that it was like almost 20% more that was tipped just for getting a little chocolate on the dish. Which says to me, if you're a restaurant not giving out chocolates, you got to get your shit together because you're leaving money on the table.

Mel: 08:12 Literally. So it's not just restaurants, we see this all over the place.

Dan: 08:15 All over the place. Yeah, it seems like many, many businesses have worked out that if you can just do a little favour for somebody, even though there is no legal or logical reason why they would have to return that favour, there absolutely feels like there is a moral one. So some of the places where we see this, if you've ever been to a cellar door experience. You go to a cellar door experience at a winery, there's absolutely no obligation for you to buy anything. But I pity the fool that spends half an hour, 45 minutes talking to the owners of the vineyard, learning about the different types of wine, tasting all of the different types of wine and then walking out with nothing. You can't do that, you're terrible person, you are not going to be able to sleep at night if you do that.

Dan: 08:59 We see this in new form retail stores, if you look at the best retailers in the world. So guys like Lulu Lemon who have free yoga classes happening in a lot of their retail spaces, or we see Apple stores putting on events with creators, talking about their work and showcasing films inside Apple stores. All of these create a sense of indebtedness for the person in there absorbing all of that value. And maybe the last example of this I'll give, is the last time I went to buy some running shoes, it was time to actually buy functional shoes, not just shoes that looked cool because I was actually going to use them to run quite a distance. So I thought I better go to one of those proper running shops where they have the real podiatrists and physios and stuff, actually fitting you for the shoes.

Dan: 09:42 And instead of going in and picking a nice pair off the wall, you go in, you have a little chat, they put you on the treadmill, they look at how you walk, they record it, they talk you through it, they give you a proper consultation, try a few different things. And eventually you whittled down hundreds of different shoes they've got into the ones that fit your gait, your heel strike, the way that you like to run. And you know at this point that I could buy these shoes right now, or I could walk out and find them on the internet and probably save $10. And rationally, if we were rational actors, that would be the right thing to do because the time I've just spent is a sunk cost, can't get it back and $10 is $10. But the moral obligation, the indebtedness, the reciprocity that we feel to reward the person who's just spent this time with you, is what keeps the world spinning around.

Mel: 10:25 Wow. Are you saying that people aren't always rational in their decisions?

Dan: 10:29 Occasionally it has occurred to me that people are not always rational in their decisions. In fact, some of the decisions that they make, are even bad.

Mel: 10:37 We should call the podcast after that.

Dan: 10:39 I said, I'd be doing the jokes. I'm doing the jokes.

Mel: 10:42 How about I'll stick with the research because I have another research study for you that speaks to a practical example.

Dan: 10:48 You do the research, I'll do the jokes and the bit where I tell Kops when to play the music.

Mel: 10:52 Right. Stay in your lane Mel, is the message I'm getting. Okay. So we've talked about some examples of where it would be what you call direct reciprocity, where there's a mutually beneficial relationship established where I can do something for you and you can do something for me and we can all work out even. But there are some instances where direct reciprocity isn't actually possible or perhaps appropriate and so there are some alternatives. So here's what we're going to do is we're going to hack the reciprocity bias and just level up a minute. Okay. And so I'm going to use the example in a research study that was done in hotel rooms. So you know when you go into a hotel room and you walk into the bathroom and there's that sign that says, "Help us save the environment, you can show your respect for nature, help save the environment by reusing your towels during your stay." And so they're trying to push you to reuse your towels, but all they've really got to go on is the idea that it's really good for the environment, please do the right thing.

Dan: 11:43 Yeah. And this has always struck a strange chord with me because it's like, "Okay, you guys have got five swimming pools and lush gardens to maintain and you want me to reuse my towels, even though I'm paying you all this money to stay here?" So I see why this is a situation where this direct reciprocity doesn't really work because we've got established guard rails for this relationship. I'm paying you money, you're giving me a service, you can't come back now and try and discourage me from using the service that I'm paying you all this money for.

Mel: 12:07 Right. So some researchers wanted to see if they could apply the reciprocity bias, but in a slightly different way, to help increase the rate at which people would reuse the towels. And so they had three conditions, the first was this standard one, "Please help save the environment, show your respect, reuse your towels during your stay." Okay. The next situation they said, "Partner with us to help save the environment, in exchange for your participation in this program, we at the hotel will donate a percentage of the savings to a nonprofit environmental protection organisation." So they're saying if you reuse your towels, we'll do something good in return, by donating to this third party. And then in the third condition, they had a bit of a different message. The third group were told, "We're doing our part for the environment. We've actually already made a donation on behalf of the hotel and all of its guests. Thanks for playing along with us and reusing your towels during your stay."

Dan: 13:04 The old thank me for the thing I haven't done yet trick.

Mel: 13:08 And would you believe Dan, that when it came to actually looking at the rate at which guests were reusing their towels, they found that that third condition, that what they call reciprocity by proxy condition, they were 50% more likely to reuse their towels than people in the other groups.

Dan: 13:25 Wow. I mean, I love this. This is like when you walk into shops that have a sign that says, "Thank you for not touching the displays." Versus, "Please don't touch the displays." It's such a nicer way of putting it across and no doubt more effective. Because when it says, "Please don't touch the displays." That just tells me to touch the displays, it must be good otherwise, why would they put the sign there?

Mel: 13:45 Something worth touching.

Dan: 13:46 Seriously, I'm touching everything.

Mel: 13:48 And before you know it, you've knocked everything over.

Dan: 13:50 I know, I know.

Mel: 13:51 And then talk about feeling indebted, hey?

Dan: 13:53 They should have just thanked me first for not doing it.

Mel: 13:55 I think it's important that we also highlight that this doesn't always just work for positive actions, the same works in reverse. So we got to be careful with this because there's one thing to return a favour, but the flip side of this is the idea of an eye for an eye, that if you do something to hurt or if you do something negative, the instinct and the tendency is going to be to hurt somebody back to even the score.

Dan: 14:17 This is true. And I think that's a really good segue into getting onto what brands should do about this because I mean, the baseline stuff is pretty obvious. If you're a brand, do something good for people and they'll do something good back. And we see a lot of this, especially in times of crisis, brands going out of their way to do things for people who have suffered at the hands of natural disasters or in more recent times, seeing companies do free food or drinks or dry cleaning for NHS workers, which is fantastic. It seems obvious to just say, "Yeah, do nice things for customers and they will feel indebted to you." But I think there is more to it than that and if we analyse what it takes to make this thing really work, it seems like there are three conditions.

Dan: 14:58 So the first is the brand has to be the first to give. So you can't say, "Oh, if you do this, then we'll do that. If you reuse your towels, we'll make a donation." Because then it's not reciprocity, then it's just a commercial, rational arrangement that the person can decide if they want to participate in or not.

Mel: 15:12 But this is key, we talk about this in social relationships as well, that in order to develop trust, somebody has to be the first to put themselves out there. Somebody has to make themselves vulnerable and as the brand, better that be you.

Dan: 15:23 I guess, it's up to the brand to put it out there first and then tied in with that, is to make it unexpected, and with no stated expectation of return. So it's a thing that you're doing first, it is nice and unanticipated and you are making it very clear that for coming to this yoga class or for me fitting you with these shoes or for me putting on this presentation for your team, I really am not expecting anything back. I just do this purely out of the love of it. So first, it's got to be unexpected, I think the third thing that's really important is that it's got to be personalised. Where if it just feels like this is just a deal for everybody, the level of indebtedness and reciprocity that you feel is going to be far smaller than if it feels like this brand or this person has actually gone out of their way to do something specifically for me.

Mel: 16:10 Yeah. I think these are all really good examples and really key takeaways for how to ensure that you use the reciprocity bias effectively in positive situations. But there's also the idea that sometimes you're trying to balance out a negative emotion.

Dan: 16:23 Exactly. And so I think in the same way when the customer has gone first, and the customer has gone first because they've just been massively inconvenienced by your brand/product/service that has messed up, so they've ordered food to be delivered and the food hasn't turned up. The customer's gone first and this is why it is so infuriating when this happens to you and you call the service provider and they do not feel like they are responding in kind, where all they'll do is refund you for the food that didn't turn up. But what about all the time? What about the ruined occasion? What about all the stress? What about that half hour I've just spent on the phone with you, right? So I think it's really important for a brand perspective to return to a level that is perceived as at least the same indebtedness as the person has gone to for you, if not above and beyond.

Mel: 17:08 And this can be a really hard one to gauge because what you're trying to do is reestablish the emotional harmony, right? I'm going to keep saying that term until it sticks.

Dan: 17:16 E-harmony, for short.

Mel: 17:18 You're looking to reestablish that harmony and so you've got to, if the customer has already taken a hit, actually see where their emotions are at and you've got to gauge what it is that they need to overcome that emotion and to restore balance.

Dan: 17:32 For sure. So try not to get into that situation in the first place, but if you find yourself there, that's how to overcome it. So I reckon that's pretty much a wrap for the reciprocity bias. You got anything else you wanted to kick in Mel?

Mel: 17:42 I think, from the human side of things, that we talk about how you can fall victim to the reciprocity bias in a way and what to do in those situations. But I think it's important to realize that reciprocity is a thing that has continued to spur societies forward. So it's not the thing that we necessarily need to look to overcome so much, but if we recognize if we're feeling that sense of indebtedness, then we're in more of a position to go, "Do I actually want this product? Do I actually want to return the favour?" Or can I actually separate from and go, "You know what, I recognise that I have this instinct to want to buy that wine after having so much of it, but you know what, I don't need to."

Dan: 18:24 Don't be mean. Don't be mean, they've just spent an hour educating you. Anyway, you go your way, I'll go mine. I think the other interesting perverse take away from here, is if you really want to upset somebody, just do something nice for them and walk away.

Mel: 18:36 Create that emotional disharmony and then leave them to figure it out.

Dan: 18:39 You will never buy me a coffee.

Mel: 18:42 Okay.

Dan: 18:43 All right, reciprocity bias, let's put a ribbon on it. What is it?

Mel: 18:47 Reciprocity is the tendency for us to return somebody's positive or negative act with a similar act.

Dan: 18:54 Exactly. And if you're a brand, the ingredients for this, it's not just about being nice, it's about going first, making it unexpected and clear that you don't want anything in return and as personalised as you can. That's going to work wonders.

Mel: 19:08 You know what, Dan, actually remember the start of the episode when you asked me to do that favour for you?

Dan: 19:12 Yeah.

Mel: 19:13 I feel like it's really paid back. I feel like you've really paid back your part of the deal.

Dan: 19:16 Call it even then?

Mel: 19:18 We'll call it even.

Dan: 19:19 All right, see you next time.

Mel: 19:20 Consider the act reciprocated.

Dan: 19:21 Good. All right. Bye.

#28 Ostrich Effect: Why you really should just go to the doctor

If information can help us make good decisions, why would we sometimes actively avoid it? In this episode, Mel and Dan discuss the ostrich effect, and how brands can overcome the tendency we have to bury our heads in the sand.

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Mel: 00:20 Hi, and welcome to Bad Decisions.

Dan: 00:22 The show that helps us to understand why we choose what we choose.

Mel: 00:24 Why we think what we think.

Dan: 00:25 And how to exploit this stuff for fun and commercial gain.

Mel: 00:28 I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan: 00:30 And I'm Dan Monheit, co-founder of Hardhat. So Mel.

Mel: 00:45 Yes, Dan.

Dan: 00:46 Look, I know we usually start these shows with me having some ridiculous story, sounding like an idiot. And then you come in like the smart therapist that you are.

Mel: 00:54 I wasn't going to say that you sound like an idiot..

Dan: 00:56 And explain to me how I've been doing it all wrong, but I'm not doing that today. Because today, spoiler alert, we are talking about the ostrich effect. And in doing some work, some prep, some research for this show today-

Mel: 01:09 Which we do plenty of.

Dan: 01:10 Always. I have to let you know I'm furious. I'm outraged. Not since I learned that pigs don't sweat, despite the saying 'sweating like a pig' have I been so upset for one member of the animal kingdom.

Mel: 01:25 Dan, I hear you.

Dan: 01:28 Because ... I'm not finished. Let me tell you why I'm so mad. The ostrich effect. Obviously, people are going to go, "Oh, it's the ostrich effect. It's to do with people putting their heads in the sand." Right? Because that's what ostriches do. Right?

Mel: 01:41 That's what I understand.

Dan: 01:44 Wrong, they don't! Sorry. Wrong, Mel.

Mel: 01:47 Wow. Okay. This has taken a turn.

Dan: 01:49 Well, it's not like there's hundreds of things that the ostrich is known for. Tell me some of the things about the ostrich.

Mel: 01:55 I don't know much about the ostrich.

Dan: 01:57 You don't know much about the ostrich?

Mel: 01:57 No, I believe they bury their head in the sand.

Dan: 01:59 Yeah. The one thing that people know is completely fictitious.

Mel: 02:01 So they don't bury their heads in the sand?

Dan: 02:02 They don't bury their heads in the sand; they can stand up to nine feet tall; they can run 60 kilometers an hour. They can kill a lion with a single kick. And the only thing people know is that they put their head in the sand, which is wrong.

Mel: 02:13 I can hear your frustration. Your frustration seems valid.

Dan: 02:16 Yep. Shall we move on?

Mel: 02:19 Are we done? I don't mean to dismiss your emotions in any way.

Dan: 02:22 Yeah. I don't feel dismissed. I feel heard. Let's get on.

Mel: 02:24 Good good. I'm glad. I just hope that everybody listening also acknowledges that you have this anger.

Dan: 02:31 No, don't acknowledge that I have the anger. Acknowledge that this is an unfairness. It's a tragedy to members of the ostrich family. Let's get on with it. Let's talk about the ostrich effect.

Mel: 02:39 Look, I don't mean to blame anybody, but the term ostrich effect-

Dan: 02:44 Oh, here we go.

Mel: 02:45 Was actually given to us by Galai and Sade in 2005.

Dan: 02:50 Oh wait, let me just write them down. You guys are on my list.

Mel: 02:54 They were a couple of Israeli researchers who coined the term the ostrich effect. And they defined it as the tendency for people to avoid apparently risky financial situations by just pretending they do not exist. For lack of a better phrase, we bury our heads in the sand.

Dan: 03:12 Like birds do or don't do. Regardless, I understand the appeal of that.

Mel: 03:16 Now that we all understand a little bit more about ostriches Dan, and thank you for providing us with that really important information-

Dan: 03:20 You're welcome. Just doing what I can.

Mel: 03:20 May I provide some real science?

Dan: 03:26 Oh, don't trigger me, Mel.

Mel: 03:28 Let me give you some research.

Dan: 03:37 All right.

Mel: 03:37 So in 2016, Carlsson, Lowenstein and Sepi did some investigation into this idea of the ostrich effect and what they did was they compared behaviour of investors in both Sweden and the US. So what they're looking at really was how often do investors monitor their portfolios when the market's rising or falling, right?

Mel: 03:57 They wondered whether their behaviour will change in response to what the market's doing. And what they actually found was that when the stock market was down, investors would actively avoid looking at their portfolio.

Dan: 04:07 Yeah, of course.

Mel: 04:08 Of course?

Dan: 04:09 Yeah. It's not going down if I don't know it.

Mel: 04:12 That's exactly what the ostrich effect is all about. And this tendency to avoid is something that we see a lot. I mean, I see a lot, I guess, from a psychology perspective, it's common for us to avoid it. But I guess it's a problem when we think about what it does to our decisions, because traditionally, decision-making would tell us that in order to make the best decision for us, it would surely be helpful to us to have all of the information at hand, right?

Mel: 04:39 If we know everything, then we can the best place to make a decision about what's good for us and what's not. The problem is when it comes to the ostrich effect, is that in this instance we're actively avoiding information and that information could be helpful to us. So it doesn't quite make sense. Does it?

Dan: 04:53 I mean, we might make better informed decisions, but we might also be sad because there's a letter here from my bank, which I'm pretty sure is a credit card statement, but if I don't open it, I don't know about that. I've got other things to do.

Mel: 05:04 Yeah. And I mean, look, from a psychological perspective, there's a few things that come into this, that underpin why we might avoid information. For a start, it's probably worth considering the idea of selective attention, right? We can't just attend to every single piece of information that is available to us. It's too much, it's overwhelming to us. We don't have the capacity to deal with all of these things. And so we have to, to some extent, filter out information.

Dan: 05:30 Yeah, I hear you. But also, that feels like a poor excuse.

Mel: 05:33 Well, that's the thing.

Dan: 05:34 I don't really have time to be an adult.

Mel: 05:36 I've got too much to do. I can't attend to everything. Look, the concern with regard to the ostrich effect, as we've sort of said, is that we'd ordinarily filter out information that isn't relevant or helpful. The thing is that in this instance, we're actively avoiding information and filtering out information that could help us. We're just choosing to filter it out.

Mel: 05:56 When it comes to avoidance and this idea of avoiding particular information, there are a number of reasons why we might do it. So from a psychological perspective, avoiding things can have some benefits to us.

Dan: 06:08 Sure.

Mel: 06:08 Right? Sometimes, if we think about something that we know is going to make us uncomfortable, then we don't want to do it. So it would be much more helpful to us in some instances to just avoid thinking or feeling about things that are going to make us feel like crap.

Dan: 06:23 Yeah. So much happier. In fact, you know who probably has been a big contributor to this, knowingly or unknowingly?

Mel: 06:29 Who's that?

Dan: 06:30 Your mate, what's his name? Positive psychology guy, Martin Seligman. Is that his name?

Mel: 06:34 What about him? Not my mate, by the way.

Dan: 06:37 Your mate. The world of positive psychology is really just focused on the good stuff. Just ignore the bad things! Don't worry about addressing weaknesses, just focus on the strengths. Weaknesses: I have obesity, my credit card's due and I have a toothache that won't go away. I'm just not going to focus on those things because they are going to let me down. And instead, I'm just going to focus on everything that's good in life.

Mel: 07:01 So just in defence of all the positive psychologists out there who do some wonderful work that you probably misrepresented them a little bit.

Dan: 07:07 They do, they probably do. The thing is, if they're doing bad work, they don't want to know about it anyway.

Mel: 07:11 I'm going to leave that right there.

Dan: 07:12 Okay, yeah. Love your work everybody!

Mel: 07:15 But we're all very familiar with the idea of avoidance coping in, for example, the health industry. So I'm sure all of us have been in this situation where you might notice that there's something not quite right with you and you're feeling a little bit off, but you're like, "You know what? I don't need to go to the doctor for this."

Dan: 07:32 As a middle aged white male, I have no idea what you're talking about.

Mel: 07:35 You've never really thought, "Oh look, that's a strange thing on my skin."

Dan: 07:40 No.

Mel: 07:40 But no, I don't really want to know what it is. If I go to the doctor, they're going to tell me it's something bad. They're going to make me have some medicine. They're going to make me have some procedures that I don't want. So it's just easier to not know.

Dan: 07:50 Yeah. I think the last time I actually went to a doctor, the original series of Beverly Hills 90210 was still new.

Mel: 07:56 Great reference. And I appreciate that. And would like to talk about that further. However-

Dan: 08:01 But not for today's episode.

Mel: 08:08 There are all sorts of reasons why, as we've just discussed, why we might actually avoid certain bits of information or just not want to deal with them. If we don't deal with them, then they're not there, and then we don't get annoyed about them. We're not making any judgment call on avoidance per se, right? It's not the case necessarily that avoidance is always bad.

Dan: 08:24 Well, I would like to make a small judgment call, which is to say that I think part of adulting, becoming an adult is learning to stop avoiding stuff. There's nobody coming to pick up for you. And part of being an adult and a contributing member of society is meeting your obligations, like paying your taxes and paying your credit card bills. And generally, looking after yourself. So small judgment, if you are avoiding all of those things.

Mel: 08:47 Yeah. But all adulting responsibilities and commitments aside, I guess what I'm saying with regard to the idea of avoiding things is that it's not necessarily that avoiding is good or bad in itself. It's more that it's the outcome of it. So there are many instances in which avoiding something might actually be good for you, right?

Mel: 09:04 Like we said before, confronting something might actually introduce more distress than you're able to deal with. So in that sense, avoiding things or avoiding something in particular could be beneficial for you. We've talked about this with regard to the Choice Paradox, right? The idea that too much information can sometimes be overwhelming and can hold you back from actually making a decision.

Mel: 09:23 So in those cases, avoiding something or avoiding many things that could disrupt your decision making process is probably going to lead to you making a better decision and being more satisfied with it. But in a number of cases, intentionally avoiding information can lead us to a bad decision. And that's where we need to be careful.

Dan: 09:40 Yeah. And I think if we were to swing a marketing lens onto this now where I really think about this being a problem is if you are selling any sort of remedial product. So if you are selling a financial counselling service or weight loss or really any sort of health related products or service, people are ignoring their way out of becoming your customer. It's like if they knew how much trouble they were in or going to get in, they would gladly and willingly be your customer, but they've got their head in the sand like some unnamed bird, which may or may not do that.

Dan: 10:14 And they are not only blocking themselves from knowing about this, but they are blocking you from getting a customer. So working out how to circumvent this effect, the O effect, is ... I'm going to call it the ostrich effect, which is no endorsement of the term. But for the coherence of this episode, working on how to circumvent the ostrich effect is really important for a number of industries out there.

Mel: 10:35 I think of this with regard to the idea of ... Have you ever been in a car accident? Even just a little one.

Dan: 10:41 A little one.

Mel: 10:42 I have, I've been in a car accident. It wasn't my fault. Never is.

Dan: 10:45 Never is. That tree just jumped out of nowhere.

Mel: 10:48 I wasn't even driving, all right? But the intersection where it occurred, if I could, I'd rather just avoid it. That intersection triggers unpleasant memories for me, unpleasant thoughts. I don't like it.

Dan: 11:00 I think the official term is heebie-jeebies. It gives you the heebie-jeebies.

Mel: 11:04 I mean, I guess it's no surprise that I would use the term avoidance. However, in that instance, it's much more preferable for me to just avoid that intersection. And I'm sure many people can relate to this. The idea is this usually isn't an issue. The avoidance in that sense is helpful. It actually prevents you from actually feeling any of that distress.

Mel: 11:22 It usually only becomes a problem if, for example, you were to get a new job and the quickest and most efficient way to get to work is to drive directly through that intersection. Right? At that point, you've got a choice to make. Do you circumvent that discomfort by taking the scenic route to work, which might add an extra 30 to 40 minutes of travel time but you're going to avoid the distress of that intersection. Or do you just confront, make your way through that intersection, deal with the discomfort.

Dan: 11:53 This actually sounds like a good setup for Scooby Doo episode where there's a haunted intersection that everybody wants to avoid. And at some point, they realise it's just the owner of a shop that used to be there and missed having people around or something. Anyway, less intersections, more brands. So this is exactly what brands are dealing with that have to confront the ostrich effect.

Dan: 12:13 So the idea of people are avoiding becoming your customer because it's uncomfortable to think about the fact that they are more overweight than they'd like to be or in more financial hardship than they'd like to be. So I've actually got five things that I think brands can do to overcome this effect if they're confronted with it.

Dan: 12:29 So the first one is to make the discomfort from avoiding the issue greater than the discomfort of confronting it. So to do that, we need to dramatise, we need to extrapolate, we need to use emotion. We need to do everything we can to dial up how bad things are going to be if you don't actually deal with the thing you need to deal with, which is going to lend you to my product, business or service.

Mel: 12:47 Okay.

Dan: 12:48 So that's one. The second thing I think we could do is if we acknowledge that people are avoiding this because it's a negative and an icky thing to deal with, what we could do is reframe that negative into a positive, but the positive can't just be the bad thing's going to go away. The positive has to be awesome in its own right.

Dan: 13:06 So let's say if you're a financial counselling service, people just don't want to deal with that because I just don't want to think about how much debt I'm in and all those sorts of things. But if you actually targeted people by talking about how to start building a property portfolio or how to achieve true financial independence, all of a sudden, this is now an enjoyable, positive thing that I'm going to go explore and not an icky negative thing. But I'm pretty sure when you turn up to the first seminar about how to build a property portfolio, they're going to tell you to pay down your credit card bill. But you're there for a positive reason, not to alleviate a negative.

Mel: 13:37 So does that hark back to what you talked about before that if somebody is feeling bad, don't just say, "Oh, just be happy." That's not going to do the trick.

Dan: 13:43 No.

Mel: 13:44 Right, got you.

Dan: 13:44 Just be really, really happy.

Mel: 13:46 That'll fix you.

Dan: 13:48 All right. The third thing that I've thought about here is that people are uncomfortable dealing with something. And one of the ways that we can make people less uncomfortable with something is to make it more familiar.

Mel: 13:59 Definitely.

Dan: 13:59 And if you roll back to, I don't remember what episode it was, but we talked about the Mere Exposure Effect.

Mel: 14:04 I remember.

Dan: 14:05 Do you remember the definition?

Mel: 14:05 Of course not.

Dan: 14:09 You call yourself a doctor! With a laptop in front of you as well. So, the Mere Exposure Effect was the idea that things become more likeable just because we become more familiar with them because we're exposed to them more and more times. So I think about all of the options there, especially through digital and social channels, with subtle targeting and remarketing, to get people slowly more and more familiar and more and more comfortable with whatever it is we're trying to get them to confront, so that it's not such a huge leap to go and tackle it.

Dan: 14:38 And probably bundled in with that is giving people a really easy on ramp. So it's like just a 30 second survey or a two minute call or a 15 minute appointment, just to make it easier for people to get started back on the right path.

Mel: 14:50 Increased familiarity, reduced discomfort. Got you.

Dan: 14:52 Exactly. That's pretty much what I said in a less articulate format. So number four is the idea of trying to automate as much as you can for people. So you're basically making the trade off for them to think about it once and have it solved lots and lots of times.

Dan: 15:04 So obviously, signing up to personal trainers is one place where we see this, where you're sort of motivated to correct your lifestyle or your health wants. And a trainer is going to turn up to your door at 6:00 AM every Wednesday until you say stop. But another place where we've seen this really come to life is in the subscription meal kits. So whether that's with the Light and Easy's or the Marley Spoon's of the world, what these guys do is they take the notion that at some point in time, you have decided to try and eat better and they have automated the service of eating better by sending calorie-controlled, portion-controlled, ready to go meals basically until you tell them to stop.

Mel: 15:41 Nice. I like it.

Dan: 15:43 Yeah. And I think number five is the idea that our imagination is a pretty amazing thing. And I think often when we're avoiding something, we think that the cost of dealing with it is far greater than it is. And the impact of not dealing with it is far less than it is. So it's like, "Oh, I've got something weird, it feels weird somewhere on me. It's going to be such a pain in the ass to go to the doctor. I'm going to have to take half a day off work. I'm always going to get stuck waiting in the waiting room. I'm probably going to get sick while I'm there. And it's probably nothing anyway."

Dan: 16:13 And if we can start shredding through that with some real data that it's actually only going to take you a 15 minute online consultation and you could die! And if you could die, then you should probably deal with it now, not later. The notion of giving real data to remove people's imaginations about how good and bad things could be, I think would also massively help.

Mel: 16:35 That's good.

Dan: 16:36 Quite comprehensive.

Mel: 16:36 That's five strong tips. There's a lot there. That last one. It sounds to me like you're talking about the idea of when there's an emotion attached to something that if you can actually present them with the rational objective data and that should take people out of it, yeah?

Dan: 16:48 Should.

Mel: 16:49 That's sort of what I think about when I think about how people just in general can avoid ostriching, if we can use the term that way.

Dan: 16:57 Yeah, of course we can.

Mel: 16:57 How to avoid ostriching.

Dan: 16:59 It's completely factitious anyway. You can conjugate it however you want.

Mel: 17:02 So the idea that I think about is that if you're avoiding something, it's because you've got an emotional attachment to it. So from a psychological perspective, what I want to do is to distance you from that. So the way that I would do that or one way to create some psychological distance would be to say, "If this weren't happening to you at all, if this was happening to a friend-"

Dan: 17:21 The old asking for a friend technique.

Mel: 17:22 What would you tell your friend? What advice would you give to a friend who was in this situation? So it's the same sort of idea. I'm trying to take away that emotional attachment to it which can help people to see things in a different light.

Dan: 17:33 I would tell my friend to pay the damn credit card bill before they ruin their financial track record.

Mel: 17:38 Probably some good advice.

Dan: 17:39 Yeah. I don't need to take that advice because I haven't opened a credit card statement in years. But I'm fine.

Mel: 17:45 The other thing that I would suggest to people who may be ostriching would be, if you can identify, and it's not hard to identify for yourself when you're avoiding a task, right? I think we all know it. The whole point is we're doing it consciously. We're consciously avoiding it. Sometimes we can ask ourselves, what are we actually avoiding? In the case of going to the doctor that you mentioned, what am I actually afraid of? What am I avoiding? What am I afraid of? Oh, I'm afraid that this is actually really something bad.

Mel: 18:09 In that case, surely the best course of action is actually to do something about it. Early intervention would have to be better than letting it just sort of sit there and grow.

Dan: 18:17 Damn you and your rational arguments. That makes so much sense.

Mel: 18:23 So I think that's pretty much a wrap on the ostrich effect.

Dan: 18:25 Yeah. All right. I think so too. Do you want to give us the definition one more time? The ostrich effect is-

Mel: 18:31 Is the tendency to actively avoid information just by pretending it doesn't exist.

Dan: 18:35 Yeah. Which may or may not be named after a bird that does or doesn't do that.

Mel: 18:39 At your discretion.

Dan: 18:40 Yeah, and we talked about how avoiding information in its own right is maybe not bad, but it can lead to bad outcomes.

Mel: 18:48 Definitely if it leads to bad decisions and that's why you're here, really.

Dan: 18:51 And if pain persists-

Mel: 18:53 Please see your doctor.

Dan: 18:54 All right. And then we talked about very briefly, rapid fire succession, five things that brands can do about this. So that was about dialing up the discomfort from avoiding the issue; reframing the negative into a positive; making people more comfortable by repeated subtle exposure to what you want them to do; automate as much as possible and replace imagination with real data. And then you talked about what peeps can do.

Mel: 19:17 Just what you can do. What would you do if it was a friend in that situation? And really just identifying and acknowledging I'm avoiding something: what am I avoiding? What am I so afraid of?

Dan: 19:26 Yeah. And just get on with it.

Mel: 19:28 Confront it.

Dan: 19:28 You're probably going to be fine. Confront your demons. All right. Psychological advice provided to you by me.

Mel: 19:36 Oh dear.

Dan: 19:38 And often corrected by you. Don't do that. I'm not a therapist.

Mel: 19:42 He's really not.

Dan: 19:42 No, but I am on the internet. You can find me @danmonheit all over the place.

Mel: 19:47 And I'm @drmelw.

Dan: 19:49 All right, we'll see you all next time. Pull your head out of the sand, people.

#27 Zero Risk Bias: Why there’s so much value in nothing

Turns out that one of the most ‘sure things’ in life, is people’s likelihood of picking a ‘sure thing’. In this episode, Mel and Dan look at how we make choices around risk, and why our desire to avoid uncertainty can sometimes end up costing much more.

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Mel: 00:20 Hi, and welcome to Bad Decisions ...

Dan: 00:22 The podcast that helps us understand why we choose what we choose ...

Mel: 00:25 Why we think what we think ...

Dan: 00:27 And how to exploit this stuff for fun and commercial gain.

Mel: 00:28 I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan: 00:31 And I'm Dan Monheit, co-founder of Hardhat.

Mel: 00:44 All right, Dan. We're going to start today and I'm going to pose you a little hypothetical scenario. It's only hypothetical.

Dan: 00:50 These never go well. Anyway. What have you got, Mel?

Mel: 00:54 Dan, look, I'm sorry to tell you that you've got an illness.

Dan: 00:56 Oh, good! An illness, yes..

Mel: 01:00 Look, there's two main symptoms that you're likely to suffer. One is that you'll have excessive body odour and the other is that there's a chance you'll get severe acne.

Dan: 01:15 So you're basically turning me back into my 13 year old self.

Mel: 01:18 Pretty much. But look, the good news is that I am a doctor.

Dan: 01:23 Good.

Mel: 01:23 I can treat these.

Dan: 01:25 I'm still actually doing my background research to confirm that, but let's just roll with it for this hypothetical situation anyway.

Mel: 01:30 It's hypothetical. Dan, the thing is I can sort of only treat one of these conditions.

Dan: 01:35 Okay. The odour or the acne?

Mel: 01:38 Excessive body odour or severe acne.

Dan: 01:40 Yes.

Mel: 01:42 So look, there's a 30% chance that, with this illness you've got, there's a 30% chance that you're going to get excessive body odour. There's a 5% chance you'll get severe acne. Okay? Now, look, if I treat the body odour, the treatment's actually pretty good. It's going to reduce your chances of getting that from 30% all the way down to 5%. There's still going to be a 5% chance that you'll get severe acne. So you'll have a 5% chance of getting excessive body odour and a 5% chance of getting severe acne, okay?

Dan: 02:08 And an 85% chance of being divorced. Yeah, let's go. What's option two?

Mel: 02:14 The other treatment is that I can reduce the risk of you getting severe acne by 5%, which means we'll completely eliminate it. So there'll still be a 30% chance of getting excessive body odour, but you won't have to worry at all about getting severe acne. Which treatment would you like?

Dan: 02:30 Let me just make sure I get this because I don't know why I always end up in these situations with you.

Mel: 02:33 The first option is you do nothing. There's a 30% chance you get body odour and 5% chance you get severe acne.

Dan: 02:39 Right. 30% chance of body odour, 5% chance of acne. Treatment one brings both of those things down to 5%. I've got a 5% chance of severe body odour, 5% chance of severe acne.

Mel: 02:48 That's right.

Dan: 02:49 The next option says the acne is not going to be anything at all, but I still have a 30% chance of severe, excessive body odour.

Mel: 02:57 That's right. Which treatment would you like me to proceed with?

Dan: 03:01 Well, it's always such a pleasure recording with you, Mel. I mean it seems to me that the logical, rational thing to do here, it would be to go 5% and 5%. I can probably live with that. So I would take-

Mel: 03:13 Is that what you want to do?

Dan: 03:14 Yeah, let's take the first treatment option, which will bring my chances of excessive body odour down to 5% and my chances of severe acne down to 5%.

Mel: 03:23 Okay, so then that's the rational decision. It may therefore surprise you to know that in a sort-of-similar but not quite like this study by Schneider et al. in 2017 when they posted a similar hypothetical situation, 47.1% of participants in their study, so almost half of participants actually chose the other option.

Dan: 03:45 So they chose-

Mel: 03:47 They chose to completely eliminate one of the risks even though there'd still be a significantly higher chance of the other one.

Dan: 03:53 Right. So instead of bringing them both down to 5%, they said, "I'll take one of them down to zero and leave the other one at 30."

Mel: 03:59 Yep.

Dan: 04:00 Well that seems appalling, but also understandable.

Mel: 04:03 Yeah, it's surprising sometimes to learn that people don't always make rational decisions.

Dan: 04:07 Wow. Who would have thunk it, right? So I mean surely in your realm as both an actual doctor and a hypothetical doctor, you have some sort of a name for this thing that we're talking about?

Mel: 04:17 So let's put the hypothetical stuff aside and let's go to sort of real stuff now. There is in fact a name for this tendency and it's called the Zero-risk bias, and essentially what it means is that we have an irrationally strong preference for situations that have absolute certainty.

Dan: 04:35 Well, I have an absolute certainty that we're going to get some Zero-risk bias music happening right here, right now [music plays]

Dan: 04:42 I guess what we're talking about here is Zero-risk bias. As humans, I guess it makes sense, right? We really like a sure thing. And we all have so many things to worry about that I kind of empathise and understand why even if it doesn't make rational sense, people would say, "You know what? I'll take the same chance of that other thing happening. Just get one thing off my list. Just give me one less thing to stress about in my day."

Mel: 05:08 Yeah. That's what this is all about. This is all about our preferences for certainty and particularly so when there are multiple conditions of uncertainties, when we've got a lot of uncertain things going on, even more so, we're going to be drawn to the option that completely has no risk attached, or completely reduces risk.

Dan: 05:23 Just take one away from me.

Mel: 05:25 There's another part to this as well, where not only do people prefer to reduce their risk, but they're actually also willing to pay more to reduce the risk down to zero, to completely eliminate a risk, which is weird. Do you mind if I share some research with you?

Dan: 05:40 Oh, I love some research. Let's do it.

Mel: 05:48 So it will probably come as no surprise to you that the Zero-risk bias was first alluded to in Kahneman and Tversky's famous prospect theory article. They cited a research piece done by somebody else called Sechauser. And basically, in this research piece, you were asked to imagine that you were compelled to play a game of Russian roulette.

Dan: 06:09 Right...

Mel: 06:12 Just imagine if you can, so I give some hypothetical scenarios and Kahneman and Tversky give you other ones.

Dan: 06:17 If while playing Russian roulette, do you have excessive body odour or severe acne? Or do you just play it as you are?

Mel: 06:25 That adds all another level to it. No, just stick with me, or stick with Kahneman and Tversky, who asked you to imagine that you were compelled to play a game of Russian roulette.

Dan: 06:33 All right, and just to make sure I understand what we're talking about here, Russian roulette is a game where we've got a gun, we've got some number of bullets in the cylinder, the bit where you hold the bullets, and you kind of spin it around and then you close it and then you put it to your head and you pull the trigger?

Mel: 06:49 Yeah, so calling it a game is probably a little bit misleading but-

Dan: 06:53 It depends which position you're playing really. I guess.

Mel: 06:57 Here's what's happened. So you're actually given the option to purchase the removal of one bullet from that loaded gun.

Dan: 07:03 Yes. This makes sense.

Mel: 07:04 The question is, would you pay as much to remove the number of bullets from four to three as you would to reduce the number of bullets from one to zero? And-

Dan: 07:12 Well, having just live through this hypothetical situation about body odour and acne, I know that surely people must have decided that it would be better or more valuable to get the last bullet out of there than to go from bullets five to four, right?

Mel: 07:29 That's right. So most people would be willing to pay much more for a reduction of the probability of death from one out of six to zero than for reduction from four out of six to three out of six. And the idea is that, essentially, you're still removing one bullet either way. But you're willing to pay more for that bullet if it takes your chances of living basically up to a hundred percent or if it reduces the risk of death down to zero.

Dan: 07:51 So I'll let you do the maths because you're allegedly and actually a doctor, so you must've done stats or something. But I guess rationally, objectively, each bullet should have the same value, right? It is like the removal of one chance of dying?

Mel: 08:04 Yeah, exactly. So essentially, a bullet is a bullet is a bullet.

Dan: 08:08 Yeah. Well, what I like about this is that when you say to me that people are willing to pay more, they will pay a premium to get a risk down to zero because I get the thing I'm buying and then I also get to cross something off my list. The inner marketer in me, which is pretty much all of me, says this is awesome because we have lots and lots of opportunities to use that in our favour. And it might sound really obvious because it's a tried and tested technique to talk about why free trials and money back guarantees work, especially for new brands where there is a really hard perceived risk of would I really stop buying the soap or the shampoo or whatever that I've been buying my whole life to switch to a new one? It's kind of risky. You see why, not just reduction but complete removal of that risk, has helped brands turn up and explode.

Mel: 08:58 Yeah. I mean from a psychological perspective, what you're basically paying for is the reduction of risk and also the elimination of uncertainty. And we've talked a lot about how all these heuristics are all about reducing uncertainty. So we will actually pay a lot more to do that.

Dan: 09:12 Yeah, I mean we've seen in the local market, sampling is a huge thing we see across food businesses in Australia. And if I think about the takeover of Chobani of the local yogurt market, how they've basically gone from zero to category kings in a lot of parts of the supermarket, and they have done that almost exclusively through sampling. So turning up in busy places, giving people free samples of the yogurt, which has effectively eliminated the risk of paying money at the supermarket, not picking your usual brand, instead of taking the risk of paying money to buy something that you don't even know if you're going to lick. So yeah, free samples, free exchanges, free returns, wonderful way to take risk completely down to zero for people.

Mel: 09:53 Yeah. And look, one of the reasons why, I mean fundamentally this is a thing, is because we like to reduce, or we have a desire to reduce, our cognitive capacity. So if something's not a problem, if we don't need to worry about it at all, then we've actually got more cognitive load to devote to other things that might be more worthy to us. So eliminating one risk entirely just totally releases our cognitive capacity and then we can focus our energy on the remaining risks that there are.

Dan: 10:20 Like how do I clean up this acne or body odour problem that I seem to have inherited?

Mel: 10:24 Sorry about that.

Dan: 10:25 I guess thinking about these more broadly, I completely get it from an individual decision making perspective. I think it's also interesting to think about the collective. So if we think about as a country how we want our politicians to spend money. And sometimes it seems like this obsession with getting something to zero, completely eliminating the risk of something, can distract us from solving other problems that would give us an overall reduced risk across the board. So if I think about the obsession with trying to get the threat of terrorism down to zero or the current global pandemic of coronavirus down to zero. I'm not saying that we shouldn't be trying to do that, but we have to acknowledge that if we try and do that, we are not trying to reduce road fatalities. We are not trying to reduce domestic violence. We're not trying to reduce all of these other problems that we won't probably get to zero, but still are massive contributors to our quality of life and as a society.

Mel: 11:26 There's definitely some merit in that. And the idea that this is something that happens at an individual level but has implications at a broader societal level. What we do find with this bias is that we tend to fall victim to it when it has more direct relevance to us, obviously. So when there's a risk to your personal health, for example, or your body odour or the chances of you getting acne, you're much more likely to fall victim to that Zero-risk bias than if it was something at a more distal or societal level to you.

Dan: 11:55 I guess if we talk about things that are relevant at a more personal level, it would be remiss of us not to at least touch on the idea of hoarding and specifically the idea of hoarding toilet paper. What we've seen in recent times is this Zero-risk bias come into play where people have decided that if they buy their normal six rolls of toilet paper, their chances of running out are pretty small. If they decide to buy 60 rolls of toilet paper, the chances of running out are now zero. And next thing you know we are buying a year's worth of toilet paper every week and brawls and hilarity ensue.

Dan: 12:26 So I guess this is one of those ones where we don't need to over cook it, we don't need to labor the point. As soon as you say it, it just seems really obvious.

Dan: 12:33 So that's a good transition really into thinking about, well what can brands and businesses do about this? And I've sort of got three very related threads on this. The first one is really straightforward. It's saying, well, if people are willing to pay more for the complete removal of risk of something, for something to be a hundred percent guaranteed, risk-free, it's a sure thing. The first thing you got to ask yourself is where can you do that in your product service or brand offering? Can you give people free trials, free samples, guaranteed buyback, guaranteed trade in prices, find it cheaper and we'll refund you the difference plus 10%.

Dan: 13:07 Any of those things we know are going to have a disproportionate impact on people's likeliness to purchase your product. And I think one of the best examples of that in the local market is from MECCA Cosmetics, where they have a hundred percent return and exchange on anything you buy, even if you've used it. So you go and buy perfume, you take it home, you use it for two weeks, you decide you don't like it, you can just take it back and swap it over. And I guess that they know that the disproportionate impact that's going to have on sales and appeal of shopping with them more than compensates for the reality of the people that are actually going to bother doing that.

Mel: 13:39 You can almost say that they found a solution to reducing excessive body odour.

Dan: 13:43 Oh my God, you know what? MECCA, if anyone from there is listening, give me a call.

Dan: 13:49 So number one is: look for those opportunities to completely remove risk.

Dan: 13:54 The second thread in what brands can do about this, is find the ways you're already reducing risk, surface them and celebrate them. So if you're running a decent business, you probably already have reasonable policies or processes that let people exchange stuff anyway, or come back to you and renegotiate down the track if something doesn't work out how they thought it was going to work out. And so my second guidance is find those things, surface them, celebrate them, make sure people understand that you are doing everything you can to reduce the risk for them. That makes sense, Mel? You with me?

Mel: 14:24 That sounds good to me.

Dan: 14:25 And really the third thing is for brands to realise that a lot of the time what people are buying is not just their product, it is the outcome of their product. So I think about this a lot in terms of food brands where if you are, let's say, a brand of chicken that people might buy or a brand of pasta sauce that people might buy. Of course, you can have your guaranteed preservative free. But the other thing you could do is talk to people about the bulletproof bolognese, or the home run parma. Basically saying here is a recipe to go with this product, which it is impossible to mess it up or it is impossible that your kids will not like this, effectively taking risk off the table.

Mel: 15:01 Sounds like it could make me a better cook.

Dan: 15:03 It could.

Mel: 15:04 Better get some of that bulletproof bolognese.

Dan: 15:06 Bulletproof bolognese. Yeah, I don't really do the naming convention stuff. I think it was the Russian roulette reference earlier. It fined me for thinking about that. So that's three thoughts for brands, what can the people of the world do about the Zero-risk bias, Dr. Mel?

Mel: 15:23 I think when we consider this as it applies to us individually, we obviously have this inherent desire to reduce risk and to want to try and impose some sense of certainty on a completely uncontrollable world most of the time. I think what we tend to do, knowing that we have this desire to reduce risks to absolute zero, what we tend to do is actually underestimate our ability to cope with stuff. So I guess my message is let's actually be okay with accepting a little bit of uncertainty in multiple areas of our lives, even though we want to really reduce as much as possible, let's not forget that we actually are really good at coping with a lot of uncertainty most of the time. And so we can probably handle a little bit more than we give ourselves credit for.

Dan: 16:04 So what you're saying is even if I had excessive body odour and extreme acne, we could still record podcasts together?

Mel: 16:11 Yeah. As long as we're not doing it in the same room.

Dan: 16:13 Yeah. My camera is turned off.

Mel: 16:15 Is that going to be a problem?

Dan: 16:15 Yeah, and my camera's off, right?

Mel: 16:17 Fine.

Dan: 16:19 Awesome. All right. I think that's quick and efficient, so let's put a ribbon on it. Today, Zero-risk bias. What's our definition, Dr. Mel?

Mel: 16:27 Zero-risk bias describes how we have an irrationally strong preference for situations with absolute certainty and that we're actually going to be willing to pay more for situations that completely reduce the risk.

Dan: 16:38 Awesome. So this is a super powerful one for all of us businesses and brands out there. Three things to think about if you're a brand owner. Number one is can you add risk-free elements to what you're already doing? Number two is can you surface and celebrate the risk-free things that already exist in your product or service? And number three is to say, how can you de-risk the outcome of whatever people are using your product or service to do.

Dan: 16:59 And for people?

Mel: 17:00 Don't fear uncertainty. Embrace it.

Dan: 17:02 Just settle in. We are in uncertain times.

Mel: 17:02 Powerful.

Dan: 17:07 Speaking of which, next time, I'm going to do the hypotheticals.

Mel: 17:11 Oh, be cool.

Dan: 17:13 Yes. All right. Hey, thanks for listening. If you got any feedback, you know where to find us. Dr. Mel, where are you on the internet?

Mel: 17:20 All over it.

Dan: 17:20 All over it? What do people Google to find you?

Mel: 17:23 The people can Google "Dr. Mel Weinberg." People can find me @DrMelW on Twitter, LinkedIn, wherever else you want to, Instagram. Don't do much on there.

Dan: 17:34 And I'll be on all your favourite social channels as well. All right, we'll see you all next time.

Mel: 17:37 See you.

Dan: 17:38 Bye.

#26 Barnum Effect: Why smart people believe ridiculous things

Do you generally feel like you’ve got your life together, but sometimes wonder what the hell you’re doing? In this episode, Mel and Dan explore the Barnum effect and why 'clairvoyant' could still be a promising career choice.

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Mel:    00:18   Hi, and welcome to Bad Decisions.

Dan:    00:20   The show that helps us understand why we choose what we choose.

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

Dan:    00:24   And how to exploit this stuff for fun and commercial gain. That's Dr. Mel Weinberg. She is a performance psychologist.

Mel:    00:29   And that's Dan Monheit, co-founder of Hardhat, and this is Kops. [music]

Dan:    00:42   All right, Mel. Riddle me this.

Mel:    00:44   Yes.

Dan:    00:44   I am very, very lucky, fortunate, even "#blessed" some would say, to spend a pretty good portion of my day with pretty smart people.

Mel:    00:51   Lucky you.

Dan:    00:52   I know. It's pretty good.

Mel:    00:54   Wish it were like that for me! I'm kidding, I'm kidding all the people I work with. Love you all!

Dan:    00:57   Geez. And that's all we have time for today. Anyway, one of the things that I honestly just cannot wrap my little head around is how seemingly ... not even seemingly. Actually really intelligent people still in 2019, almost 2020, put any weight or validity in what things like horoscopes say about them. Or that do shit, and then say, "Oh yeah, but sorry. I'm a Virgo. What do you want from me?" No offence Virgos - I don't even know what it means.

Mel:    01:22   I'm a Virgo.

Dan:    01:22   You're a Virgo?

Mel:    01:22   That's awkward.

Dan:    01:25   That explains a lot. It explains nothing!

Mel:    01:28   So basically you're saying you can't believe that people can still be so stupid sometimes. Smart people can be so stupid sometimes. Is that what you're saying?

Dan:    01:36   They're not my words, but let's say that's an easy conclusion to draw from what I've just described.

Mel:    01:40   Dan, what if I told you that there was a heuristic that could explain it?

Dan:    01:43   Surely not.

Mel:    01:44   Come on, there is.

Dan:    01:45   Surely not all of our stupidity is explained by psychological heuristics.

Mel:    01:48   Given we're in front of the microphone, I feel like we should talk about it today.

Dan:    01:52   The timing could not have been better.

Mel:    01:54   In that case, let me introduce you and all of our listeners to the Forer Effect.

Dan:    01:59   The Forer Effect.

Dan:    02:07   Could you spell that for me?

Mel:    02:10   F-O-R-E-R, named after Bertram Forer.

Dan:    02:10   Bertie.

Mel:    02:12   Old Bertie. In 1949 and the Forer Effect described the tendency for people to accept vague, ambiguous, general statements as descriptors of their unique personalities. Would you believe?

Dan:    02:27   Awesome. That is totally a thing.

Mel:    02:30   Here's what Forer did in his classic experiment of 1949. I mean, if it's okay for me to indulgence in some research?

Dan:    02:36   Yeah, please.

Mel:    02:36   Can I have some research music? [music]

Dan:    02:44   Such a Virgo. Anyway..

Mel:    02:48   What Forer did in his classic psychological experiment, was he asked his students ... I think there were 39 of them. In 1949, that's a decent class size. He asked them to take a personality test. They all took what they believed to be a personality test that was designed by their instructor, Bertie Forer. Then he said a week later when you come back for the next class, you're all going to be given a paragraph or a list of statements that describes your personality. They all thought, "All right, this is cool. I'm getting my own set of results. Awesome." So next week they all come to class and professor Forer hands around the results to each individual. Here's what they receive: "You have a great need for other people to like and admire you. You have a tendency to be critical of yourself. You have a great deal of unused capacity which you have not turned to your advantage. While you have some personality weaknesses, you are generally able to compensate for them. Disciplined and self-controlled outside, you tend to be worrisome and insecure inside."

Dan:    03:52   Oh Bertie. You know me so well!

Mel:    03:53   Now look, these are just five of the 13 statements that were given. But as you might've guessed, each student was actually given the exact same report.

Dan:    04:01   No, surely not.

Mel:    04:02   Yep.

Dan:    04:02   Each student was given the exact same unique individual personalised result?

Mel:    04:06   But here's the cool bit. So they all read them and professor Forer, or Bertie, as you seem to like to call him.

Dan:    04:13   I only called him that once, you seem to like calling him that. Such a Virgo.

Mel:    04:16   He says to them all, "Hey guys, just before we finish up, like would you mind giving me a rating of how accurate you think this description is of you?"

Dan:    04:27   How accurate is this description that says I'm pretty much awesome. I would say very accurate.

Mel:    04:30   Of course, they all rated that this was a highly accurate description of themselves. Then he revealed the deception and said, "Ha ha, suckers. You've all got the same thing." And they never came to class again... But this is what Forer did. The Forer Effect, as it was known at the time, described how people will just take anything that is positive about themselves.

Dan:    04:54   Right.

Mel:    04:54   Then a few years later in 1956, a Paul Meehl, who's pretty cool and his writing is quite funny and a little bit satirical for somebody who writes about some serious psychological stuff. If you're interested, good read.

Dan:    05:06   Like an early Dr. Weinberg, yeah?

Mel:    05:06   Oh geez, wow. That's so positive and complimentary. Wow. That applies to me.

Dan:    05:16   I'm an Aries.

Mel:    05:16   Meehl wrote a follow-up paper on it. He thought that rather than giving Bertie Forer the credit for the effect, that it should actually be termed the Barnum effect.

Dan:    05:26   What?

Mel:    05:27   Yes, the idea was reminiscent to him of P.T. Barnum who people might know from the Greatest Showman.

Dan:    05:33   Circus dude?

Mel:    05:34   Yeah. So he was a circus owner and his whole formula for success was this idea that his circus has a little something for everybody. So sort of universally applicable to everybody.

Dan:    05:43   Oh my God. So basically he like took some liquid paper, for those of you listeners old enough to know what that is, and just whited out Forer and put it in Barnum. And that's it. Everybody knows about this as the Barnum Effect.

Mel:    05:54   He actually just said in he's 1956 paper, like, "I suggest that going forward we call this the Barnum effect."

Dan:    05:59   That is so outrageously disrespectful.

Mel:    06:02   Now it is referred to as the Barnum Effect.

Dan:    06:04   Oh my God.

Mel:    06:05   The sorts of statements that he used to illustrate the Barnum Effect are referred to as Barnum statements.

Dan:    06:10   I just loved that if this happened in Australia, he'd be the Johnny Barnum. It'd be the Johnny Barnum effect.

Mel:    06:21   I love it that this is in the context of us talking about how really smart people can say really dumb things.

Dan:    06:23   What do you mean? People love Johnny Farnham.

Mel:    06:27   Johnny Barnum?

Dan:    06:28   Also. It's like a more positive introspective version of John Farnham. Maybe I really am the voice?

Mel:    06:35   Anyway. We digress. These Barnum statements, things that are typically used in all sorts of ways to basically fool people.

Dan:    06:45   Right. It's basically that you tell somebody something that sounds like it's profound and personalised.

Mel:    06:49   Yeah.

Dan:    06:49   But actually it just applies to everyone.

Mel:    06:52   Yeah.

Dan:    06:53   I could totally do these. Do you want to try? This is like what crystal ball people and stuff do.

Mel:    06:58   Exactly.

Dan:    06:59   All right, we're going to do this. I'm going to have a crack at 2019, almost 2020, Barnum statements.

Mel:    07:05   Go on, this should be fun.

Dan:    07:07   I can't just do it, I need your palm, please. Whoa. Wow. That is interesting. The first thing that I can tell here: do you sometimes feel that your barista is judging you when you order coffee in the morning?

Mel:    07:25   Yeah.

Dan:    07:26   Do you feel that if you really look deep down inside, you know you should probably be plant based but can't quite commit to that at this stage of your life?

Mel:    07:34   A little bit.

Dan:    07:35   Do you sometimes feel like you might have something stuck in your teeth especially after eating meals containing quinoa?

Mel:    07:39   All the time.

Dan:    07:41   Do you ever find yourself looking at things on the internet when you know you actually should just be doing work?

Mel:    07:46   Guilty.

Dan:    07:47   Yeah. Do you ever feel that you wear too much black? No?

Mel:    07:51   Sometimes.

Dan:    07:51   Sometimes, but other times you don't.

Mel:    07:53   Sometimes you just feel like wearing black, right?

Dan:    07:56   I know it happens, but sometimes you wonder why you feel like that, right?

Mel:    07:58   Yeah.

Dan:    07:58   Yeah, I think I could do this. I think I can be a fortune teller. Your barista is definitely judging you, by the way.

Mel:    08:05   To make affective Barnum statements, you basically have to be as bored as possible. There are key ways to do this. Like writing, "at times" at the start of a statement.

Dan:    08:14   Yeah, that makes sense.

Mel:    08:15   Or couching something negative within a positive. So like while you mostly do this, you'll sometimes do this.

Dan:    08:21   The "at times" thing makes sense, right? Because really everyone is everything some time. In the right circumstances everybody feels self-conscious, everybody feels confident, everybody feels quiet, everybody feels gregarious.

Mel:    08:33   Yeah, in different contexts. We all have different versions of ourselves that come out.

Dan:    08:35   At times you feel unsure of whether you've actually taken the right steps in life. Like at times, yeah, but not usually!

Mel:    08:40   Who doesn't? Typically people will look at this and go, "Yeah, this is horoscopes." Which it is. Interestingly, there was a study in 1971 by Silverman on this idea-

Dan:    08:53   Is 1971 the golden age for horoscopes? I feel like people would have been very open minded to such things then.

Mel:    08:58   Yeah. Sounds right. Yeah, we'll go with that. So here's what he did in his experiment to test the Barnum Effect/the OG Forer Effect.

Dan:    09:03   Would you please just have some respect. Won't anybody think of Forer, please?!

Mel:    09:10   What Silverman did was he had 12 personality sketches. Which might be like what you would find in the back pages of the Herald sun. Do they still do that?

Dan:    09:17   I don't know. A personality sketch is not like a drawing.

Mel:    09:21   No, like a vignette. They gave people the option to read through them and say, "Look, which one of these sounds most like you?" They were just numbered one through 12. People would pick the one that was most relevant to them, that they felt best described them. But then there was another group of people who were given the same vignettes, if you will, but this time they were each labeled with one of the star signs. Of course, it just so happened that people tended to default to pick the one that was their aligned star sign.

Dan:    09:57   The description of me under the title of me seems to match me.

Mel:    10:00   Sounds more like you.

Dan:    10:01   Than the other possible descriptions of me that are assigned to people not like me.

Mel:    10:06   People are really gullible and that's what really the Barnum Effect does. It just plays on people's gullibility.

Dan:    10:12   You're gullible, yes. But I mean it seems like we're especially gullible or especially want to believe nice things about ourselves. Because your alternative to being gullible is to be realistic and say, "No, I'm actually not generous at all. I hate people."

Mel:    10:27   Yeah, and I'm an awful person.

Dan:    10:28   Yeah, I'm terrible. I don't even like me!

Mel:    10:31   And that's what this is all about. It's about your personal validation, right? Feeling personally validated and feeling like you are understood. That your thoughts and emotions are accepted by other people and that's something from an ego perspective that is really important to us and to our development and to our sense of who we are.

Dan:    10:46   We are all so fragile.

Mel:    10:47   Aren't we?

Dan:    10:47   Looking for validation on the back page of the Herald Sun. Hey if that's where you've got to go. That's fine. You do it.

Mel:    10:53   That's what it takes. So here's the thing, there are three factors that can influence whether or not the Barnum Effect is going to be in play and whether people are going to fall victim to it.

Dan:    11:04   If you're a shyster and you really want to be getting one over on people, these are three things you have to do really well to make sure it works.

Mel:    11:10   Here's how you really take advantage of people's gullibility by Dan and Mel.

Dan:    11:13   Oh God. Normally I don't feel awkward about this. You seem really into this. I feel kind of awkward.

Mel:    11:20   Yeah, okay.

Dan:    11:21   Ethically.

Mel:    11:22   Who's wearing the ethical hat now?

Dan:    11:22   Yeah, yeah, yeah. Let's do it.

Mel:    11:27   If people are going to fall victim to this, if people are dumb enough, like we sort of said at the start-

Dan:    11:29   No, you said at the start.

Mel:    11:31   Then that's on them. That's on them!

Dan:    11:32   They're not dumb, they're just victims of the Barnum Effect. Did you know sometimes some really, really intelligent people ... in fact, often very intelligent people can feel victim to the Barnum Effect? Especially if they're also generous.

Mel:    11:41   Is that what you've learned?

Dan:    11:42   I've learned that today. All right, give me the magic three.

Mel:    11:46   The first thing is the more that you believe that the statement applies only to you, the more likely you're going to fall for it. There's magic words like "for you" which you'll see put out there, which just play on people's gullibility.

Dan:    12:02   Spotify do a wonderful job of this. "Your daily playlist". We made this just for you. Like somebody who's been up all night basically listening to the whole internet. They've picked the 30 best tracks, put them together, your name is on it. Go and enjoy.

Mel:    12:15   Wow.

Dan:    12:17   Netflix kind of do this as well with your personalised recommendations. Which usually, just because one of my kids watch something that I really have no interest in. But they're trying, I appreciate that they're trying.

Mel:    12:21   They're trying, that's all they can. The next factor that influences is how much you believe in the authority of the person conducting the evaluation. In Forer's study all of his students believe that he professor Forer like, he's hot shit. He's good at this and he knows. So what he says must be true.

Dan:    12:40   Right. This manifests everywhere. If I think about fortune tellers and those people who really kind of ham it up and try and look mystical and special because that adds some authority to them and makes you want to believe. I don't know if it has anything to do with it, but I find it weird that when you go to the chemist or the pharmacy that the person who is like dispensing drugs to you. Just for you, drugs just for you is like elevated on a platform. Must you be on a stage? There's no other retail environment that I go into where the person serving me is on a stage. I'm very unlikely to question them.

Mel:    13:18   Yeah, so you believe that they are a figure who is worthy of being able to dispense those drugs particularly for you. I'm sure there's nobody else in the world who takes these drugs.

Dan:    13:25   No, I mean those anti-histamines. Which has come down from the stage to me, I couldn't challenge it.

Mel:    13:30   It's like it come down from God himself!

Dan:    13:31   I know, from God through my pharmacists, to me. I also think it's really interesting- when you go into a Footlocker store, all the employees there wear polo shirts that make them look like basketball referees.

Mel:    13:47   Yep.

Dan:    13:47   The black and white stripes. Everyone's just used to it. But it's kind of weird. Like why would you just your staff like a referee? But it's kind of this idea that Footlocker is a multi brand store. There's Nike and Adidas, and everything else in there. You feel like the person serving you is a neutral and an authority.

Mel:    14:02   Supposed to be, yeah.

Dan:    14:04   They're neutral and they're an authority. They are basically going to give you the best decision that is right for you, what you need from your footwear in this instance. Well-played Footlocker. We had personalisation, just for you, we had authority.

Mel:    14:17   Yeah, and I mean I'm Dr Mel so obviously everything that I say.

Dan:    14:20   Yeah, absolutely.

Mel:    14:20   Because people believe in my authority. It's true and it's all relevant to every single one of you out there.

Dan:    14:25   It's true.

Mel:    14:26   The last one, is that it should be mainly positive. Because what we talked about before, our ego likes to be flattered, and that gets you a long way. So mainly positive traits that we talk about and sort of in a general ambiguous way. If we have some mostly positive traits, then we're able to tolerate some negative ones within that. It's like "You're mostly generous and amazing, but can be a little bit selfish." "Ah, yeah. Okay. I'll own up to that."

Dan:    14:48   That thing what you just did is actually called rainbow rusing, where it's like-

Mel:    14:51   Oh, excuse me?

Dan:    14:53   I know, I know. It's like a real straight scammer stuff. But it's like where you give people a personality attribute. What's the thing you just said?

Mel:    15:00   Well, I said you like you're really generous and awesome, but can be selfish at times.

Dan:    15:03   Yeah. So you give people an attribute like, you're really generous and awesome. But then you also give them the exact opposite of that. But sometimes you're this. "You're really, really outgoing, you like making new friends, but sometimes you just want to be by yourself." It's like everybody can subscribe to that.

Mel:    15:18   Everybody fits into that.

Dan:    15:19   But as long as it's overridingly positive that makes sense. I guess where we see this everywhere is in things like product descriptions. I always find it's weird that all moisturisers are for people with sensitive skin. Like is there anybody going, "No, my skin is just hard as fuck. I don't need your sensitive moisturiser. I can handle it."

Mel:    15:36   I just want to be treated gently though.

Dan:    15:37   I mean that's what everybody says. I think the athletic apparel categories are really interesting place for this, as well. If you look at, I don't know, like a long sleeve t-shirts for running in winter. Obviously you're wearing a long sleeve in winter. Its like "This is a garment for people who know that bad weather is no obstacle for a good training program." Or people who know that pain is just weakness leaving the body. It's like, "That is totally me. I am that runner. I know the bad weather is no excuse for a good training program. That top has clearly been made for me."

Mel:    16:08   Yeah. We see the Barnum Effect coming to play in all sorts of different circumstances. One of them, like with horoscopes like a part of it is just for entertainment value. Have you ever done those tests online? The which personality type are you? Or which Harry Potter character are you? Have you ever done those?

Dan:    16:26   Yeah. Not the Harry Potter one. Actually I haven't seen Harry Potter. So I figure unless I got Harry I would not even know who it was. Could I be Harry?

Mel:    16:32   But I imagine that most people listening would be familiar with the sort of tests that we're talking about.

Dan:    16:36   Yeah, I'm going to keep doing the test until I get the person that I want.

Mel:    16:39   Well you can because most of the time you'll score something different on these tests every time you do them. Which is testament to the point I'm about to make, about the validity or lack thereof.

Dan:    16:47   No, surely the which Harry Potter character are you is not invalid from a psychologist perspective.

Mel:    16:52   I'm not going to go into it.

Dan:    16:54   Don't wave that doctor card around like that.

Mel:    16:55   I'm not going to go into it.

Dan:    16:55   Those tests are highly researched!

Mel:    16:58   People will sometimes pay a lot of money for these sorts of tests. Like people might be familiar with the Myers Briggs inventory, which is promoted as a psychological assessment or a common personality assessment used often in hiring, recruiting, these sorts of things. But basically what it does, is it asks people some questions and then puts them into one of 16 categories and gives you a code for that. For example, you might be an INTJ or you might be an ESFP. This four letter code, that's yours. And you just happen to share it with a lot of other people. But there are 15 other different types. You feel special enough to feel that it's your category. But also different enough to everybody else. Because there are so many different options.

Mel:    17:40   It's commonly believed that the Myers Briggs test is helpful or useful in some regard. In reality, and without going into too much detail, it's not that much different to a horoscope. But people tend to believe it and people will identify very strongly with their result on the Myers Briggs.

Dan:    17:57   Wow. Gloves off!

Mel:    17:58   There's lots that you can read about if you're interested. But it does speak to just because there is a personality test out there and the Myers Briggs is known to not be ... just in defence of all psychologists out there, the Myers Briggs was not developed by psychologists. When we're talking about measuring personality, there are a lot of different tests that we use. Their aim is typically to discriminate between people and to recognise individual differences rather than chucking people into groups. Which I'm personally not a fan of. But that's my little rant over.

Dan:    18:26   So are we meant to discriminate more, or not discriminate more?

Mel:    18:28   Well, I'm just saying that it's the intention behind the test.

Dan:    18:31   Because I for one, am very anti discrimination. You should know.

Mel:    18:34   When I'm saying discriminate, I mean looking at understanding differences between people and that's what's key. Rather than looking at what's similar between people and chucking them into a group. Then giving them advice that they're all going to take as their own because they feel special.

Dan:    18:46   Right. Okay. So personality test are fine as long as they have been developed and issued by trained registered psychologists.

Mel:    18:51   Yeah. As an authority figure in the area-

Dan:    18:53   That is such a weird view for you to hold. So you, as a psychologist, think that personality tests developed by psychologists are superior to personality test developed by people who are not psychologists.

Mel:    19:03   Yes.

Dan:    19:04   It's so weird how even smart people are affected by it.

Mel:    19:06   Do you have anything else to say that would help us to finish off this episode?

Dan:    19:09   Yeah, yeah. You want to get out of here. Okay. Well I think the takeaways here from a marketing perspective are pretty straightforward. If you can wrap your product up in a way that is personalised and coming from a position of authority and is flattering for people - like this is a product for people who aspire for greatness, but you have to do it from a credible place - it's going to do well. And it's almost meaningless what thing you pick it as. Like I was imagining before if I was going to start a range of peanut butter. So get this, I could just say I have really good peanut butter, you should come and buy it. It's natural. But I could say, "Dan's peanut butter is made for choosy mums. Mums who know what's best for their kids. They want mealtime to be fun, great tasting and memorable."

Mel:    19:50   Well that's the sort of mum that I want to be. So I'm going to buy Dan's peanut butter.

Dan:    19:54   Yeah, but do you know what? I also have another product. Well, an alternative way that this could map out. Which is, "Dan's peanut butter made especially for choosy grandpa's. Grandpa's who know what's best for their grandkids. They want mealtime to be fun, great tasting and memorable."

Mel:    20:11   That's the kind of grandpa I want to be.

Dan:    20:11   Yeah, you see.

Mel:    20:12   Dan's peanut butter sounds amazing.

Dan:    20:13   It's crazy, it kind of doesn't matter, but as long as it's for someone. You just put it out there and let people connect themselves to it. If it's positive, people will. It's really going to stand out a lot more than something that doesn't offer such a thing.

Mel:    20:24   Yeah.

Dan:    20:24   The other thing I think about from a B2B sales perspective is one of the things I've learned over the years is that if we go in and meet a client and they sort of tell us all of their problems and what they're trying to achieve. If we can come back and articulate the problem or the opportunity in a really positive, flattering way better than anybody else, we are 90% there.

Mel:    20:46   Okay.

Dan:    20:46   If we can understand what the issue is ... "Really the problem here is that you have all of this greatness you just can't get out." But it has to feel real. It has to feel researched there actually has to be some greatness that you dig up from their past or their DNA. That is usually music to a prospective client ears. Because they can see the vision for that, they want to align with that and you're on your way.

Mel:    21:05   Yeah. I think from a personal perspective or from an individual perspective, this is about the need to feel validated. The need to feel validated by somebody who you think is important. But maybe if we can focus more on self validation or looking at who is important to us and looking at how we can get our validation needs met in other ways, then maybe we'll be less likely to be insecure. It's the insecurity that makes us more vulnerable to this Barnum Effect.

Dan:    21:30   Right. Well that's a nice feeling to end on. All right, so Barnum Effect ... actually Forer Effect. Yeah, I'm going to-

Mel:    21:37   I think it has been called the Barnum- Forer effect.

Dan:    21:40   Oh my God, that's just embarrassing.

Mel:    21:41   It's should be Forer- Barnum.

Dan:    21:43   Exactly. Anyway. All right. So the three core things, make it personalised, make it come from a position of authority, make it flattering. People will come along for the ride.

Mel:    21:52   You guys are awesome listeners. Every single one of you is actually really special to us and really fantastic.

Dan:    21:57   What I find actually is that it's only super intelligent people that enjoy the show. I'm just going to put that out there.

Mel:    22:03   Yeah.

Dan:    22:03   All right. Cool.

Mel:    22:04   The nicest people in the world.

Dan:    22:07   See you next time.

Mel:    22:07   Thanks guys.

Dan:    22:08   Peace out. 

#25 Halo Effect: Why judging a book by its cover is pretty much unavoidable

Why is it that the baddies in cartoons are always so ugly? And why do we assume that handsome people are also going to be charismatic? In this episode, Mel and Dan look at why neat hair and a firm handshake are more important than we could ever imagine.

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Mel: 00:19 Hi, and welcome to Bad Decisions.

Dan: 00:21 The podcast that helps us understand why we choose what we choose.

Mel: 00:23 Why we think what we think.

Dan: 00:25 And how to exploit this stuff for fun and commercial gain.

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

Dan: 00:30 And I'm Dan Monheit, co-founder of Hardhat.

Mel: 00:42 So Dan, today I would like to introduce you and our listening audience to a man by the name of Edward Thorndike.

Dan: 00:49 Eddie Thorndike.

Mel: 00:50 You can call him Eddie if you like.

Dan: 00:52 That's a good name. Destined for greatness, with a name like that.

Mel: 00:54 Edward Thorndike. So he was an American psychologist, and he was doing a lot of work in the late 1800s, beginning of the 1900s.

Mel: 01:01 He is typically known for his work around the Law of Effect.

Dan: 01:06 Cool. One of my favourite laws.

Mel: 01:09 Simple. One of your favourite laws. The Law of Effect basically states that any behaviour that's followed by pleasant consequences is likely to be repeated, and any behaviour that's followed by unpleasant consequences is likely to be stopped.

Dan: 01:20 Wait. That's a law?

Mel: 01:21 Yep. Back in the late 1800s, this was huge news.

Dan: 01:26 Was this some sort of a gold rush? Like, to be a psychologist in the 1800s, you could say "I'm famous for the first person that called out that if something has a reward at the end people are going to do it more."

Mel: 01:36 Now look, people typically associate-

Dan: 01:38 Wait, wait. No, no, no. I'm not done. "If somebody gets punished for something, they are less likely to do it."

Mel: 01:43 To do it again, yeah.

Dan: 01:44 "People are going to talk about me, saying this 150 years from now."

Mel: 01:47 But as basic as it may seem, this stuff needed research.

Dan: 01:50 Right.

Mel: 01:50 Right? This needed evidence to back it up.

Dan: 01:52 Because who knows? Maybe putting your hand in fire is a thing that you would just repeat over and over again.

Mel: 01:56 So here's what Thorndike did. Thorndike and the Law of Effect was basically the precursor to what we understand as operant conditioning. So people who have done some sort of undergraduate or high school psychology are pretty familiar with the idea of operant conditioning. This is the idea based around reward and punishment that if we reinforce certain behaviours, people will do them again, and if we punish, they won't. It's really important when it comes to parenting. You love parenting, right?

Dan: 02:20 Training animals and training children.

Mel: 02:21 So Thorndike did this, and typically when we think of operant conditioning, people think of Skinner the Skinner box.

Dan: 02:26 The Skinner box, yeah.

Mel: 02:27 The Skinner box. But before that there was the Thorndike box.

Dan: 02:30 What?

Mel: 02:31 Yeah.

Dan: 02:31 Similar thing, just a less catchy name. The Thorndike box. A box of Thorndikes.

Mel: 02:35 Thorndike was putting... Well, it was a box of cats, or single cats, really.

Dan: 02:40 See where Skinner really took this ... Skinner did dogs, right?

Mel: 02:43 No. Pavlov did dogs.

Dan: 02:45 What did Skinner do?

Mel: 02:45 Skinner did pigeons or rats.

Dan: 02:46 Anyway, okay.

Mel: 02:46 Rats pressing leavers. Sorry. So you know, people think of like rats and stats when they think of like-

Dan: 02:53 People think of that?

Mel: 02:55 Sorry. I think of that, and I've been told that when people talk about what first year psychology is about, it's rats and stats. It's basically doing experiments with animals and research methods.

Dan: 03:03 It's not cats and stats?

Mel: 03:03 Well, it was cats and stats when Thorndike was doing stuff.

Dan: 03:07 I'm going to do bats and stats.

Mel: 03:09 You are weird.

Dan: 03:10 Yes.

Mel: 03:10 However, so what Thorndike was doing was putting a cat in a box, and there was a bunch of different things that the cat could essentially play with, or I guess interact with, but just sitting just outside the cat box was a fish. We all know cats want to eat fish.

Dan: 03:25 Like, in a fish bowl?

Mel: 03:26 It was just sitting there. It was like-

Dan: 03:26 It's like a dead fish.

Mel: 03:29 It was a fish that was available for the cat to eat.

Dan: 03:32 Yeah, okay.

Mel: 03:33 Right? Obviously the cat wants to get to the fish, so that provides the motivation to get out of the box. So the cat's interacting with all the things in the box, and it presses the lever. The lever releases a catch. The door opens, the cat gets out, gets the fish, reward.

Dan: 03:46 Boom.

Mel: 03:47 Okay. You put the cat back in the box, doesn't have to play around very much. It quickly figures 'alright I know what I want, I know how to get it. I'll press the lever. Out we go, I get my fish.' So basically Thorndike was showing that the cat can actually learn how to escape by giving it a reward afterwards.

Dan: 04:00 Mm-hmm (affirmative).

Mel: 04:01 Once Thorndike had finished playing with all the cats. And the fish. And feeding the fish to the cats. He extended his thinking to wonder how this would apply to people.

Dan: 04:10 He's like "so I finished with the middle of the animal kingdom, and I'm going to straight to the top now."

Mel: 04:14 Straight to the humans, right? And more straight to children. So principles of reward or punishment. So his work has influenced the way that we think about what is good and what is bad.

Dan: 04:23 Right. I mean, it's funny in the way you say it, it sounds like there's this binary kind of worldview that some things lead to good outcomes and some things like to bad outcomes, and that's the end.

Mel: 04:33 Well, pretty much that's how it is when we're little. Like in terms of how much our brain can take on, when we're little, it's helpful for us to think in binary terms, good or bad, right or wrong. That's about the extent to which we can conceptualise things.

Dan: 04:43 Yeah. So I guess if I think about kids' stories or fables or fairytales and things like that, there are always very good characters in those who, you know, are also usually very good looking or handsome or beautiful. Handsome Prince and the beautiful princess. Then there's also bad people.

Mel: 05:02 The bad characters.

Dan: 05:02 Ugly stepsisters or like deformed baddies or, you know, Gargamel.

Gargamel [clip]: 05:07 "I'll get you. I'll get all of you if it's the last thing I ever do!"

Mel: 05:15 Yeah, I remember Gargamel.

Dan: 05:16 You know, they never looked quite right. There's no handsome baddies.

Mel: 05:19 But all we have to think about is the ugly stepsisters and the contrast between the beautiful Cinderella and her ugly stepsisters..

Dan: 05:25 Or He-Man and Skeletor. It's not a fair beauty fight.

Mel: 05:30 So these dichotomies influenced the way that we're taught as children, right? So we're very ingrained to believe that there is good or bad, there is right or wrong, and also that good is associated with other good things.

Dan: 05:42 Yes.

Mel: 05:42 Other things that we perceive as good. Like beauty, like intelligence.

Dan: 05:46 Being funny and generous.

Mel: 05:47 All those sorts of things, right. Bad is associated with being ugly, with being evil, with being nasty.

Dan: 05:54 Stingy.

Mel: 05:54 Selfish. All of those things. So this is where some of Thorndike's more influential work in the field of cognitive biases comes in. Because-

Dan: 06:06 I feel a heuristic coming on.

Mel: 06:08 There is a heuristic coming on.

Dan: 06:09 I feel a Beyonce track coming on.

Mel: 06:10 You do?

Dan: 06:11 Yeah, what do we got?

Mel: 06:12 We got the Halo Effect.

Beyonce [clip]: 06:15 [music]

Mel: 06:26 So the Halo Effect describes the tendency for positive impressions that we have of a person or perhaps a brand to positively influence the opinion that we have about them in other areas. So like what we just said, that if we think that somebody is physically attractive, we're also more likely to think that they're intelligent, that they're funny, that they're just a genuinely, really good person.

Dan: 06:45 Yeah. Which I mean, feels like a weird thing to admit, but I think we all know we've had the experience. Maybe somebody turns up for a job interview or you meet somebody new in a corporate setting, and they're well dressed, and you just therefore assume that they've got a little bit of a headstart in how you think about how they might be able to perform their job. Even though dressing well might have nothing to do with being a great copywriter or a great artist or a great programmer, or even a great salesperson.

Mel: 07:07 Yeah. I mean the halo effect is fundamentally at the origin.... It's where stereotypes start.

Mel: 07:12 Right, we think of one positive thing and then that sort of brings to mind all these other positive things. Or the flip side is that we think of one negative thing and that lights up all these other negative attributes about a person.

Dan: 07:21 It's a dirty halo.

Mel: 07:23 Yeah, well it's actually known as the Horn Effect.

Dan: 07:25 The Horn Effect?

Mel: 07:26 The Horn Effect is the opposite of the Halo Effect.

Dan: 07:28 Right, not like a [horn sound] horn, like a devil.

Mel: 07:31 Like a devil's horn, yeah. That's where it comes from. So may I offer you some research?

Dan: 07:36 You know I love research. Let's do some research.

Mel: 07:43 So Thorndike's 1920 research in which he started talking about the Halo Effect was based on his observations that people were disproportionately rating other people on factors that they didn't know anything about based on limited information. Simply, what he did was he asked commanders in the army to rate their subordinates, so to rate their soldiers basically on different characteristics. He actually specifically asked them to rate them independently on four qualities.

Mel: 08:12 So he asked to rate them on their intelligence, their physique, their character, and their leadership. He specifically said to them, don't let your answers influence each other, you know? Like, I just want you to rate them on their intelligence, not on anything else.

Dan: 08:25 Yeah, so can you just give me those four again?

Mel: 08:26 Intelligence.

Dan: 08:27 Yes.

Mel: 08:27 Physique.

Dan: 08:28 Yes.

Mel: 08:28 Character.

Dan: 08:29 Yep.

Mel: 08:29 And leadership.

Dan: 08:30 Yeah.

Mel: 08:31 Now some of these should be related to each other. Like intelligence and leadership usually go hand in hand. And character and leadership usually go hand in hand. But what Thorndike found was that the correlations between the ratings made by these commanders were way higher than they should have been for things like intelligence and physique.

Dan: 08:49 So, sorry. So what you're saying is if they rated somebody as high, as having good physique, then they also were far more likely to rate them as highly intelligent or highly charismatic or good leaders?

Mel: 08:57 But also, like too intelligent.

Dan: 08:58 Yeah.

Mel: 08:59 Like even more intelligent than they're supposed to be. So their ratings on these four qualities were hugely correlated. Right? To a point that's just not realistic.

Dan: 09:08 When you say she hugely correlated, to the non-doctors amongst us, so I guess what you mean by that is-

Mel: 09:12 They were too strongly associated.

Dan: 09:13 Yeah. So basically somebody came out as high on all four or low on all four?

Mel: 09:17 Pretty much.

Dan: 09:17 When really that should be kind of mixed, right?

Mel: 09:20 So it reminds me of having rose colored glasses that when you see somebody as intelligent, you're also going to see them as attractive and this and this and this. Right? As opposed to what I refer to as crap colored glasses.

Dan: 09:29 Right.

Mel: 09:29 So this is the thought, the Horn Effect. I keep getting horn and Thorndike.

Dan: 09:34 Horndike.

Mel: 09:34 Anyway. Not his name.

Dan: 09:36 No.

Mel: 09:37 But the idea that, when you think something negative about somebody or when something looks crap, everything's just crap.

Dan: 09:44 All right. So Thorndike found out that behaviours that get rewarded get repeated more often than those that don't, and also found out that you really should judge a book... Well, we really do judge a book by its cover.

Mel: 09:54 Yeah.

Dan: 09:54 Pioneering work, Thorndike. So I mean, it's interesting because that intuitively makes sense, and then it's interesting to look at the research. Well, it's interesting for you to look at research and tell me what you found. So if you're rating people and you rate them as good looking, you are naturally going to also give them a headstart in, you think that they're charismatic and competent and...

Mel: 10:13 Yeah.

Dan: 10:13 So from I guess a brands or business perspective, for me, this comes to light in two different ways. One of the first things this makes me think about is 20 years ago when I was working at a Nike factory outlet. I was there at the time when Nike launched a new cushioning technology, which was called Nike Shocks.

Mel: 10:30 Wow, you're old. You're old.

Dan: 10:32 Yeah, very old. So they had these things called Nike Shocks, which they're still kind of around; a lot of them are coming out in retro models now. As opposed to air cushioning, shocks were these kind of, almost like springs. They were like these little mini columns which had some sort of magical gel or something in them.

Dan: 10:49 These things had, if I remember correctly, 16 years of R&D, which is basically half of Nike's life at the time, right? 16 years of R&D had gone into them. Hundreds and millions of dollars in research. When they were released, they came out at the time, an eye water-ingly high price point of $300 for a pair of shoes, which 20 years ago was just insane.

Mel: 11:09 Yeah.

Dan: 11:10 You know how these things sold?

Mel: 11:11 Tell me.

Dan: 11:12 Horrifically.

Mel: 11:13 Right.

Dan: 11:14 In fact, the year that they came out, when Christmas rolled around, every employee in Australia got a free pair of Nike Shocks because they just couldn't clear them. Right? 300 bucks, people just weren't willing to pay for it.

Mel: 11:25 Yeah.

Dan: 11:26 But at the same time as this was happening, the business was selling thousands and thousands of pairs of the $79 cross trainers at Rebel Sport.

Mel: 11:35 Okay.

Dan: 11:36 You know? It sort of really crystallised for me this idea, this was very early on, that what we sell, and what people buy are usually not the same thing.

Mel: 11:44 Right, it's like leakage. It's like a spillover effect.

Dan: 11:46 Exactly. Because if you didn't have the $300 shoes that nobody bought with 16 years and billions of dollars of R&D in it, nobody's interested in buying the $79 cross trainers just to try and get a piece of the same brand that did it.

Mel: 11:57 Yeah.

Dan: 11:58 So what we sell and what people buy are usually not the same thing.

Mel: 12:01 Yeah. So Nike Shocks are like the best marketing fail that ever happened for Nike.

Dan: 12:05 Well, I mean, yeah, I guess you could say that. Like they're one of those things that really cemented at the time people's view of them as a pioneering, innovative technology-first sporting company. Even though in reality if you looked at the direct sales of those shoes, they didn't do very well.

Mel: 12:21 Okay. This plays out in other areas. Like, there are other examples of this throughout.

Dan: 12:25 Yeah, absolutely. So this idea that because the company did one thing great, they do lots of other things great is everywhere. One of the most commonly cited examples is what happened with the iPod. So back in 2004 we got granted the fourth generation iPod, which basically is where iPod went mainstream.

Dan: 12:41 So the fourth generation iPod was the first one with the color screen, and you can have like little pictures on there as well. A lot of people, that was the first iPod that they had. So we were all still using our PC computers mainly. But I've posted-

Mel: 12:54 I don't know about you, I was using CDs for music. No iPods.

Dan: 12:56 Yeah, yeah. Or shitty MP3 players. But the 2004 fourth generation iPod was really the one that kind of went berserk.

Mel: 13:04 Okay.

Dan: 13:04 So a funny thing happened the following year, sales of Apple's computers when up 68%.

Mel: 13:10 Right.

Dan: 13:10 Where they weren't really new computers, but people had seen the iPod and said "holy crap, whatever company made this must be unbelievable."

Mel: 13:17 They're doing some really cool stuff, yeah.

Dan: 13:19 I'm going to go and halo, like take the halo, the shine of the iPod and go and apply it to other things in this company's range.

Mel: 13:24 Yeah.

Dan: 13:25 Same happens with music as well when an artist brings out a new song or a new album, and it does really well, not surprisingly, the back catalog sales usually tend to go up as well.

Mel: 13:34 Right.

Dan: 13:35 Because the Halo Effect says, well the new song's good, so the old stuff must be pretty good as well.

Mel: 13:39 Right, so the Halo Effect is super powerful in marketing.

Dan: 13:42 Yeah, absolutely. So that's one way that it plays out for brands that we have to be mindful that what we sell and what people buy aren't necessarily the same thing.

Mel: 13:49 Yeah.

Dan: 13:49 The other place where I think it plays out is particularly around first impressions because this whole heuristic really is about first impressions count.

Mel: 13:57 For sure, yep.

Dan: 13:58 So when I think about the disproportionate impact first impressions can have. So if you have heard about a brand, you go onto their website, you try to use the search feature on their website, and there's actually some really interesting research, which I won't quote like you would. But trust me, there's research on this that if people try and use a search function on a website, and the search function is crap, you straight away deduce that the whole website is crap.

Mel: 14:22 Yep.

Dan: 14:23 Then by extension that this company is crap.

Mel: 14:24 Yeah.

Dan: 14:25 Right? If you try and call a business to speak to one of their customer service representatives, and they leave you on hold for a long time-

Mel: 14:32 Been there.

Dan: 14:32 Your association is going to be, this business is slow and can't get shit done-

Mel: 14:36 Ineffective.

Dan: 14:36 -is running inefficiently and is running ineffectively and that's my whole view on it. I was thinking about customer on-boarding processes, so if you're letting customers onboard themselves through a website, what the simplicity or difficulty of that says about the company as a whole.

Mel: 14:51 Yeah.

Dan: 14:52 The company that is hard to sign up with is probably going to be a hard company to deal with, and it's probably going to be not that good at actually delivering their core service even though the two probably don't have that much to do with each other.

Mel: 15:02 Yep, and we've talked before about, you know, in the context of how important first impressions are. We've talked before about how we're really simple in the way that we'll take a first impression, and we will generalise that to other aspects.

Dan: 15:13 Yeah.

Mel: 15:14 Of somebody's personality, of other things that they're good or bad. Look, we mentioned at the start about how important that is to us about how ingrained that is; that's the way that we learn things fundamentally.

Dan: 15:22 Because grey is hard. Grey is really hard. Black is easy, white's easy. Grey's like, I don't have time for time for grey.

Mel: 15:27 This is where these shortcuts come from.

Dan: 15:28 Yeah.

Mel: 15:29 From like, basically shortcuts we use because life is hard.

Dan: 15:33 Exactly. So it's not going away, right? Halo Effect is for real.

Mel: 15:36 We're all vulnerable to it.

Dan: 15:38 All vulnerable-

Mel: 15:38 Even if we know that we're vulnerable to it, we're still vulnerable to it.

Dan: 15:41 Exactly. So really what this tells us is that old saying that first impressions count is absolutely true. So we have to be mindful on what other first impressions that we're going to make and knowing that they can have a far bigger impact than we might realise.

Mel: 15:54 Yeah, and then so going back to like the human, you know, just the general day-to-day person experience and what we do, if we're aware of the Halo Effect, it's about the way that we judge people, right? If we're talking about the way that we make impressions of people or the way that we treat other people, it's fundamentally about questioning ourselves and challenging our view of that person, and go, hang on, do I have evidence to actually back up that this is true about a person? Or is this the Halo Effect?

Dan: 16:19 Yeah, and really, where I thought you were going with this is knowing that people are going to judge you on your first impression. Like, just brush your hair. Wear something nice.

Mel: 16:26 Keep it simple.

Dan: 16:27 Have a firm handshake.

Mel: 16:29 Smile.

Dan: 16:29 Look people in the eye. Yeah. It matters. Maybe if you do have negative things about yourself, maybe just hold off until the second meeting when you tell people about them.

Mel: 16:36 Yeah, yeah. Give only positive things on a first date.

Dan: 16:39 Yeah.

Mel: 16:40 No need to tell people too much about yourself too early.

Dan: 16:43 I think that is sound advice.

Mel: 16:46 That's dating advice. Plus marketing advice plus parenting advice. This episode really has it all.

Dan: 16:51 So from a brand perspective, what I think we should do about this, what I encourage my clients, what I encourage other businesses to do is look for your Nike Shocks equivalent, right? Look for your thing that people are going to see from a distance and say, holy crap, even if I don't buy that thing, I want to buy something from the company that made that.

Dan: 17:07 I think there's a saying in the car industry win on Sunday, sell on Monday. You know, so for car manufacturers to make super high powered race cars or crazy concept cars that they're never actually going to move units of, does help move the everyday station wagons and SUVs that mum and dad's going to buy because they want a little piece of that halo magic. I would also say within that, if you're going to think about making something great, really focusing on doing something that is going to make you famous and epitomize what your organisation is all about, you get bonus points if you put it as the first interaction that people are going to have with your brand. Knowing that the earlier on that interaction and that impression is formed, the more important it's going to be for people's long term perceptions of your business or brand.

Mel: 17:47 Sounds good.

Dan: 17:48 So if you're a person, brush your hair. If you're a brand, brush your hair.

Mel: 17:52 Same thing applies.

Dan: 17:53 Yes. All right, is that a wrap on the Halo Effect?

Mel: 17:55 I think that's all we got.

Dan: 17:57 All right, we got to that textbook definition one more time?

Mel: 17:59 Halo Effect is the tendency for positive impressions that we have about a person or a single positive impression to unduly influence other aspects or other things that we think about that person.

Dan: 18:08 Yeah, so if you're a brand, give people a positive thing to have an unduly large impression about.

Mel: 18:12 Sounds good.

Dan: 18:13 If you're a person, do the same thing.

Mel: 18:14 Do the same thing.

Dan: 18:15 Cool. All right. Well, hope you've enjoyed that.

Mel: 18:19 I learned a lot.

Dan: 18:19 I learned a lot.

Mel: 18:20 So everybody must have learnt a lot.

Dan: 18:22 People must also think we're pretty good looking.

Mel: 18:24 Yeah, they'd be right.

Dan: 18:25 And generous.

Mel: 18:26 Yeah.

Dan: 18:27 And funny.

Mel: 18:27 We're hilarious.

Dan: 18:28 Hello.

Mel: 18:29 Don't forget intelligent.

Dan: 18:30 I think we should wind this down.

Mel: 18:31 All right. Thanks for listening, guys. Catch you next time.

Dan: 18:33 Bye.

#24 Mere Exposure Effect: Why turning up is half the battle

What is it that makes retro fashion take off, and is the Eurovision completely rigged? In this episode, Mel and Dan explore what happens when we see, hear or experience the same thing over and over again.

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Mel: 00:19 Hi and welcome to Bad Decisions.

Dan: 00:21 The podcast that helps us understand why we choose what we choose.

Mel: 00:23 Why we think what we think.

Dan: 00:25 And how to exploit this stuff for fun and commercial gain.

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

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

Mel: 00:41 So obviously this is a podcast about different heuristics, right?

Dan: 00:44 Yeah. That's what we're here for.

Mel: 00:46 Technically that's what we do. And we've been talking about all sorts of different heuristics and ways that we come about making decisions. And some of them have gotten quite complex. We've talked about all sorts of different things, but most of them have to do with things like social conformity, classical conditioning - how to make things more inherently attractive, right? And I feel like in all of this complexity and us trying to sound really smart about this stuff, we've sort of overlooked something really quite simple.

Dan: 01:17 Okay. So, what? We're going to wind it back? We're going back to basics?

Mel: 01:18 We're going back to basics and we're going back to the idea of simple exposure, mere exposure, if you will.

Dan: 01:26 If I will. I will.

Mel: 01:29 The Mere Exposure Effect was not even called a heuristic originally. It's an effect that describes our tendency to prefer things simply because we've been exposed to it repeatedly.

Dan: 01:41 Just hang on one sec. Did we just drop what the topic for today's thing is without any fanfare whatsoever?

Mel: 01:46 We did.

Dan: 01:46 Can we cue some fanfare for the Mere Exposure Effect, please?

Dan: 01:54 Adequately fan-fared.

Mel: 01:56 The Mere Exposure Effect was introduced to us in around the 1960s by a Polish social psychologist, Robert Zajonc.

Dan: 02:06 Can I just say before we get too deep into the Mere Exposure Effect, as a title of a heuristic, I like that it doesn't-

Mel: 02:14 Doesn't oversell itself.

Dan: 02:14 Yeah, it doesn't promise too much. It's just literally going to do what it says on the tin.

Mel: 02:19 Yeah, it's like "We know we're not a crazy amazing heuristic. It's just Mere Exposure Effect." Very subtle, unassuming, mere.

Dan: 02:26 Yeah. The mere, good looking enough husband.

Mel: 02:30 That's all. That's all we're talking about.

Dan: 02:32 Yeah, it's a humble heuristic. I like it.

Mel: 02:34 So, Zajonc back in the 1960s, way before a lot of the more contemporary behavioural economics stuff was happening. The research that he was basing his whole effect on, I guess we'd say a little bit basic, maybe, in terms of some of the research that we do now.

Dan: 02:53 The guy's a pioneer.

Mel: 02:54 And remember, it's the '60s, and so there's a lot of research on animals. Before we had real ethics.

Dan: 03:00 The '60s ... what a bunch of savages.

Mel: 03:01 This is Poland in the '60s. So, one of the early studies that is cited with regard to the Mere Exposure Effect has to do with experimenters playing tones to unhatched chicks.

Dan: 03:14 Okay. So, I was bracing for something pretty bad from an animal cruelty perspective. Playing music to eggs ..okay? That's alright.

Mel: 03:21 Yeah, playing music to unhatched chicks. And they were playing ... Music might be a bit generous. They were playing tones of different frequencies.

Dan: 03:31 Poland's greatest hits of the 1960s.

Mel: 03:31 One of the tones would be repeated more frequently than the other. And then, when the chicks were hatched, they were assessing which tone the chicks preferred. And granted, I have no idea how they were doing this.

Dan: 03:42 Yeah, what are chicks buying in iTunes?

Mel: 03:44 I'm assuming that they're doing some sort of little chicken dance to one of the tones, and the other one they're just going, "No, I don't like this." But however they assessed it, they established that chicks had a preference for the tone that they'd heard more frequently when they were unhatched.

Dan: 04:01 So, DJ Zajonc in the Chicken Club knows how to get the dance floor pumping! He knows which tracks are the bangers and which ones are just going to clear the floor.

Mel: 04:13 That's what was happening, right?

Dan: 04:14 I wish I could have been there to see this happening.

Mel: 04:18 Another study that Zajonc cites in 1968, I'll actually read to you the story because it's better when it's read. It says, "A mysterious student has been attending a class at Oregon State University for the past two months enveloped in a big black bag."

Dan: 04:37 I'm imagining, "They had an exchange student?" It's like-

Mel: 04:40 There's a new kid in class, but he's enveloped in a big black bag.

Dan: 04:44 He's wearing a giant black bag.

Mel: 04:46 Yeah, "Only his bare feet show. Each Monday, Wednesday, and Friday at 11:00 AM, the black bag sits on a small table near the back of the classroom."

Dan: 04:54 What?!

Mel: 04:55 "The professor of the class only knows the identity of the person inside. None of the 20 students in the class do."

Dan: 05:01 How does he get into the classroom? Does it have a little mailbox eyehole cut out?

Mel: 05:05 He must, can you imagine?

Dan: 05:08 It's like, "I really wanted to put him in a mascot costume, but I had $1.30, and so all I could do was buy a garbage bag."

Mel: 05:14 Find a big black bag. Research funds were not going very far.

Mel: 05:19 Here's what happened. So, he's coming into the class-

Dan: 05:21 Stumbling over tables.

Mel: 05:23 -and at the start-he's not talking, he's not engaging, he's just literally sitting there. And obviously at the start, everyone's looking at him going, "Dude, this is a bit weird. What's going on here?" Right? But the professor's acting as if he's completely normal.

Dan: 05:33 I just would love to have been in the brainstorm when they were coming up with ideas for this experiment. It's like, "What about we take a student and we put them in a black bag and just sit them up the back of the room and see what happens?" And what happened?

Mel: 05:46 At the start, obviously people think this guy's a bit weird. They were approaching him with a bit of defensiveness and hostility, as you would because everybody's dressed normally and this guy's come in enveloped in a big black bag. But after a couple of classes, as he keeps attending, people's attitudes towards him change. And his classmates started to actually have an affinity for him. And actually, they even liked him.

Dan: 06:08 What?!

Mel: 06:08 And they acted a lot more friendly towards him.

Dan: 06:09 This is bazar. This was also in Poland in the '60s?

Mel: 06:11 To be fair, Zajonc was onto something. He just maybe didn't have, I guess the integrity of the research to really back it up.

Dan: 06:21 But just like a manikin maybe, or like a pet? There's a lot of options, really, rather than putting a guy in a black bag for three days a week. Can we do a followup story and try and find that kid?

Mel: 06:33 Should we just repeat the experiment?

Dan: 06:36 I want to find the guy and just see how his life has panned out for him. "So, people liked me better when I was covered in a black bag."

Mel: 06:42 Maybe a side project for you and I to explore. But black bag guy, if you're out there, reveal yourself. We'd love to hear from you.

Mel: 06:50 We can think about why this happens, I mean, it's basic, right? This is the Mere Exposure Effect.

Dan: 06:58 Totally, totally basic. This is why I wear a black bag Mondays, Wednesdays and Fridays. It's bloody obvious.

Mel: 07:04 Any time you're exposed to something for the first time, you're wired to see it as a threat. It could be dangerous to you. For all your brain knows, and remember, we've talked before about how your brain is fundamentally driven to keep us alive. Anything that is new or that you have not encountered before is going to be seen as threatening. So, you respond to black bag guy with hostility, right?

Mel: 07:27 With each repeated exposure, you learn, "Hang on. This thing, this black bag guy, or whatever new stimulus it is, and I can actually coexist in this world. So, this thing is in fact no threat to my survival whatsoever. In which case, this is safe to engage." And you start to sort of become more curious about it and become more interested in it and effectively like it more.

Dan: 07:48 Yeah, and next thing you know, you and Snoop Baggy Bag are just hanging out.

Mel: 07:53 Dancing at the chicken club.

Dan: 07:55 Getting milkshakes. Wow.

Mel: 07:57 It's all happening. So, it took until 1992 for people to develop a more real life, I guess, version of the black bag experiment. And they thought, "How can we try this a different way?" And they went back into college classes where all good psychology studies happen.

Mel: 08:15 And what they did was they chose four women who were not at all involved in the college, but were sort of college age, maybe from a different college. They wanted them to be completely unknown to the actual people attending the class. They had four different women who were rated equally by others on their attractiveness, all those sorts of things. And they popped them into the classroom, but at different times or for different amounts of time.

Mel: 08:39 So, for example, one of these women might have attended the class five times, one of them attended 10 times, one of them attended 15 times, and one of them attended not at all.

Dan: 08:48 In bags? Or just in their normal wear?

Mel: 08:49 No, just regular outfits.

Mel: 08:51 But they'd sit up the back of the class and they weren't participating in the class. They weren't really talking to anybody, just sitting by themselves. At the end of the sort of experimental time, what they did was they presented photographs of these four people to all of the people in the class, and they asked them to rate them all on their likeability.

Dan: 09:07 Rate for hotness.

Mel: 09:07 And what they found was that the person who had been exposed to them the most, so the one who'd attended 15 times was rated as much more likeable than the ones that they'd seen less frequently.

Dan: 09:17 I mean, this is great. Look, if you are not the most attractive person in the world, and I'm going to put my hand up and say, look, I'm probably not top 10 in the world, this is very encouraging. Like, if I just keep turning up, people are just going to find me more and more attractive.

Mel: 09:31 They're just going to like you. You don't even have to talk.

Dan: 09:33 Maybe I shouldn't talk at all.

Mel: 09:34 I think that's the cool thing for me about this effect is that a lot of the other effects have to do with people interacting or engaging with the stimulus. And this is mere exposure. Like, you don't need to have spoken to this thing, you don't need to have interacted in any sort of way. It's just for some reason that when this thing or when this person enters your perceptual awareness, and if it does so repeatedly, you're going to like it.

Dan: 09:57 So really at a fundamental level here, what we're saying is the more often you are exposed to a thing, the more familiar it becomes, the more open and likeable you might feel towards it.

Mel: 10:08 Yeah.

Dan: 10:08 Which is wonderful for advertising! Because basically, that's what we're trying to do, right?

Mel: 10:12 Yep.

Dan: 10:13 But before we get into the guts of advertising, some of the other things that come to mind for this are the ability for cover songs, you know? So, a song that was done 30 years earlier to come back, and it's instantly racing up the charts because everybody's preconditioned to like it.

Dan: 10:28 I think about retro fashion at the moment in the sneaker world. Like, these Filas that were massive in the '90s have just blown up and they're everywhere. And it's like, people were ... I guess people have been pre-exposed. Like, if you need, let's say 1,000 exposures to like something, if people already had 980 exposures back while they were growing up .. then all you've got to do is just top them up with the extra 20. And so, all of a sudden, I start seeing why cover songs and retro fashion and styles and retro brands can come back so quickly and with such ferocity because we're kind of like ... the mere exposure is pre-baked.

Mel: 11:06 Yeah, it's already in there. I'm actually glad you took us to the music industry because I do have another research study that I stumbled across when I was looking up the Mere Exposure Effect

Dan: 11:13 More research. Yes.

Mel: 11:19 It's just from last year. It's a 2018 study about mere exposure effects in the real world. And what Georgios Abakoumkin, and I'm sure I haven't pronounced that properly, but what he did was he looked at Euro Vision. We have some Euro Vision fans out there. I'm sure we've got some great Euro Vision music.

Dan: 11:52 I'm sure we have Euro Vision music. I wish you could see the Euro Vision costumes.

Mel: 11:55 So, with Euro Vision, I'm not a big Euro Vision fan, I must admit.

Dan: 12:00 Yes, you are. Maybe you just need to watch it more.

Mel: 12:03 Maybe.

Dan: 12:03 That's what I'm learning today.

Mel: 12:04 Maybe that's what would happen. But the voting system and the way that you sort of get through, my understanding at least, is that countries or performances will compete, and so there will be exposure to the audience. And the top 10, say, who were voted in will make it through to the finals. But in the finals, they are met by the top 10 from the previous year. And so, when you get to the finals, you've got a naturally existing Mere Exposure Effect, where you've got half of the contestants who have been heard before and half of them who you're hearing for the first time.

Dan: 12:38 Yeah, I can see where this is going to end.

Mel: 12:39 Yeah, we can look at the voting patterns. And what actually happens is that when you account for other factors, like the actual quality of the song, which can be questionable when it comes to Euro Vision, the songs that were performed, or that were exposed more, like performed twice to the audience, placed higher than those that were only performed once. So, this was between the years of 2008 and 2015.

Mel: 13:06 And this just gets me thinking, "Why don't I get to watch this sort of stuff and count things and do this sort of research?"

Dan: 13:11 Yeah, you've wasted your career, basically, not watching Euro Vision.

Dan: 13:14 I think this Mere Exposure Effect is as basic as it is profound. It's like so obvious that the more often you see something or the more often you're exposed to it, the more open you are to it. Like, I notice this even in my own news feed where I'll see an article once and I won't click on it. And I'll see it twice, I won't click on it. By the third time I see it, it's like, "Maybe I actually am kind of curious about this." I feel it has worn me down. It's so fundamental, so basic, but also so profound. Like, maybe we've just over-engineered everything. And really, all we need to do is just-

Mel: 13:44 Merely expose.

Dan: 13:45 ... merely expose. Yeah.

Mel: 13:45 Maybe that's as basic as it gets.

Dan: 13:47 I mean, one other thought on this whole retro thing, and I've sort of watched on with interest at the Pokemon Go craze from a couple of years ago. I think a lot of people really misinterpreted what happened there. So, there's this augmented reality app that came out where you got to use your phone to try and hunt for Pokemon characters around the cities that you lived in. And I think a lot of people looked at that and decided that the success here was it was a really good application of the technology, that augmented reality and gamification and all these other buzzwords are what had come to play there.

Dan: 14:16 And it would seem to me that the bit that people really missed out on understanding the success of Pokemon Go, was the pre-exposure or the pre mere exposure of all these people in their 30s now had watched this show in their 10s and teens, so were pre-exposed to like this. And so, it wasn't just putting together a cool new phone application. It was like putting a cool new phone application together for a thing that millions of people had already been exposed to and built favourability for 20 years earlier.

Mel: 14:49 So, you're capitalising on the pre-exposure.

Dan: 14:50 On pre-baked exposure.

Mel: 14:53 Yeah, so you've got to plant the seed early for this stuff, right?

Dan: 14:54 Yeah. And I wonder if in a lot of ways, the window for this has closed, right? Because we've got the last generation that grew up, at least in Australia, with three commercial TV channels and two newspapers, right? And where we had people at scale exposed to the same jingles, the same TV shows, the same cartoons. And I think about the way kids consume media today, and there's this infinitely fragmented landscape where people just watch what they want when they want from all over the world. And that idea of having a mass strata of the population all pre-exposed to the same thing at the same time, I think is finished. So, I think retro ... trying to retro stuff in 20 years is going to be hard because you're not going to have that baseline that we have to play with today.

Mel: 15:38 Yeah, unless you create it now.

Dan: 15:40 Yeah, but what I'm saying is it's hard to create now because that mass exposure of a whole population to the same TV show or the same jingle or the same message just isn't possible like it used to be.

Mel: 15:51 Fair enough. Give us some tips for advertising because I've got plenty more to talk about in regards to the Mere Exposure Effect, but give us some practical stuff.

Dan: 15:58 Okay, cool. So, the really obviously thing with this, is that we just need to get our brand in front of people. So, when you're an advertiser, you are paying for every exposure, whether people understand that it is from your brand or not from your brand. I think the biggest takeaway from this is that there is no point in making stuff that is not easily associated with your brand. Because mere exposure to your brand will build likeability. And so, core to that is understanding what we call either distinctive assets or brand code or some small collection of unique attributes that are very easily identifiable as your brand. So, that might be shapes, it might be words, it might be font, it might be tones, logos and typefaces, all of that sort of stuff, so that people immediately know, "That was a piece of communication from that brand."

Mel: 16:49 It's actually interesting how we've talked about things that you can see or people or tones that play to chicks. But one of Zajonc's early studies actually looked at Chinese characters. So, for people that had no exposure to Chinese symbols or characters, etc., and they would show the different characters. And they found the same thing that people actually had a preference for the characters that they'd seen more times. Even though it meant nothing to them, they didn't understand it. And so, it's just a visual image of something. It's just a character.

Dan: 17:20 Yeah, and so there is no question in my mind that we would pick brands and we would pick stocks and we would pick all sorts of other things in life for no objective reason other than they're more familiar. And so, if I think about some applications of this in the real world, if you think about some of the most iconic brands that we have, whether that's in the automotive world or in fashion or in fast food or in food and beverage, their logos and their key visual distinctive assets stay the same, you know? The Coke logo looks the same. The Nike swoosh looks the same, and you just get exposed to it over and over and over again. And there's no question when you see a Nike logo whether that is a logo for Nike or from somebody else.

Dan: 17:59 Sometimes one of the places where this goes wrong is as marketers, we get bored. And we like to create new brands and sub-brands and we like to update our look and feel to stay more contemporary. And I think we forget that we get bored and move on much quicker than our consumers do. And actually, what the great brands of the world show us is that if we just hold the line, and just keep using our distinctive assets early over and over again, it's going to be far more successful than chopping and changing.

Dan: 18:25 A great example of this at the moment is Coca Cola, who's brand architecture really spiraled out of control where they had sub-brands and different products that looked completely different. In the last 12 months, they've brought everything back together under this one Coke. So, every can is red, every bottle basically looks the same. And there's maybe a 15% variation. There's a colour stripe at the top, so the normal Coke is red and Coke Zero has got a little black strip and Diet Coke has a little silver strip at the top. But 85% of the can or the bottle is exactly the same for every product, because you're just getting exposed over and over and over again to the same visual assets.

Mel: 19:04 One of the cool things about mere exposure for me is ... and something that makes it different to a lot of the other heuristics that we've talked about, is how we don't even have to be aware that it's happening to us. Like, I mentioned before how we don't even have to interact with it, or we don't have to ...

Dan: 19:20 You can be an egg.

Mel: 19:24 You could be an egg and it still works. But there's some research that shows that the Mere Exposure Effect occurs subliminally as well, which of course is super important for advertising. To speak to that a little bit, there was a study by Bornstein, Leone, and Galley in 1987. And basically, they had people doing a task that was completely unrelated, just something that was sufficient enough to capture their attention. And say they're doing it on this old style computer screen. That would be sort of, I guess, a modern take on it.

Mel: 19:50 So, imagine you're doing something on a computer screen and you're not aware of what's going on because you think you're just doing this task. But actually, what's happening is that you're getting flashed photos of faces that sit on the screen for about four milliseconds. So, not even enough for it to sort of register cognitively. And some of these ... There's different faces getting shown, but some of them are getting shown more than others, right?

Mel: 20:13 At the end of you doing this task, when they ask, "Did anything weird happen? Like, did you notice anything?" And you're like, "No. I wasn't actually doing anything .. "

Dan: 20:22 "There's just a guy in a black bag sitting up the back of the room, but other than that, everything's normal."

Mel: 20:27 No, but this is the bag! It's subliminal, right? So, you actually aren't even aware that anything is happening to you, that you're being exposed to anything. And still, when you're asked afterwards which of those ... you know, to rate the attractiveness of these faces, you're going to rate the ones that were flashed more times as more likeable. How crazy is that? You're not even aware of this in the slightest. You have no idea this is even happening to you. This is scary when it comes to advertising. Well, for consumers.

Dan: 20:49 Yeah. So, for me, I mean, straight away two things jump out about this. One is that there's a lot of bemoaning in the industry about how a lot of the digital platforms like Facebook and YouTube will count an ad view as three seconds or five seconds or two seconds. And it's outrageous-

Mel: 21:06 People haven't actually viewed it, right?

Dan: 21:06 Yeah. But what we're going to see is in two seconds, you only need four milliseconds for somebody to subconsciously notice what the brand is or what the image is. The rest of it, you can just stretch out.

Dan: 21:18 I'm not saying this is the cure for advertising. I mean, obviously we want to build emotional connections with people and we want to be able to tell great stories. But just the exposure, the mere exposure is important. And that is a thing that you can do if you get your key distinctive assets in within the first one second of the ad.

Dan: 21:35 The other thing that this brings to mind is what a dangerous slippery slope stalking is. If you kind of like someone and then you look at this heuristic- it's like, "if I look at them more from across the street in a tree with binoculars ..."

Mel: 21:50 I'm going to like them more. But the other side is if you just walk past them, you don't even have to interact with them, you don't have to say anything, just creepily happen to walk past them more than a couple of times, you will become more familiar to them. And then, they actually like you. This is not how we promote going about meeting new people ...

Dan: 22:08 But, there is hope for stalkers.

Mel: 22:10 We don't endorse stalking.

Dan: 22:11 The problem with stalking-

Mel: 22:11 But we can understand.

Dan: 22:13 The problem with stalking is that it's one way. What you need is a mutual stalking appreciation and everyone's just going to fall deeply in love with one another.

Mel: 22:19 You know, thinking like that ... Well, not thinking like that. But in sort of the same vein, you can see how online dating apps have sort of taken on the Mere Exposure Effect to a degree. And whether they've done it on purpose or not, I'm not sure. I'm sure they have because there's smart people behind them. But you know those apps where you're shown literally just a face of somebody who you've never seen before, usually? And you're given the option to like it or reject it, one or the other.

Mel: 22:45 I think at the start what was happening with this was that you'd just go through the pool, right? And you'd just go through the pool of options, like, dislike, whatever. But the apps became a bit more clever, and they started actually repeating some of the ones that you'd already rejected, right? This is mere exposure. You have no idea about this person, you have no interaction with this person, but you're seeing them more. And they're banking on the fact that because of the Mere Exposure Effect, at some point you're going to go, "Yeah now I like them."

Dan: 23:10 Yeah, or you're going, "Wow, this pool is a lot shallower than I anticipated. I can't believe I'm seeing this guy again. I just swiped no four people ago. Maybe I should give him a shot."

Mel: 23:18 Either way, there are clearly a lot of applications of this in the real world.

Dan: 23:21 So, for brands, really, it is as simple and as complex as getting your brand code, your key distinctive assets in front of people as often as possible. And this idea from a few years ago that maybe we should just make great content and not actually tell people that it's from our brand. If your objective is just to entertain the people of the world, go for it. But if your objective is to sell some stuff, make sure people know what brand it's from, and make sure they know early. What about as just normal people going about life? How can ... Other than a mutual stalking appreciation, where can this take us?

Mel: 23:53 I think this is about how we go about choosing new things or trying new things, right? Because we've got to remember that because of the Mere Exposure Effect or because of the way that we're just fundamentally wired, the first time we're exposed to something, we're probably not going to like it. So, when it comes to trying a new food, for example, first time you taste it, you're probably going to be a bit hesitant. Try it more than once.

Dan: 24:11 I think this is the thing with kids when you start introducing food. You're meant to make them try it like three or four or five times because they're just not going to like it the first time.

Mel: 24:19 Yeah. And we're not supposed to. It could be dangerous, it could be disgusting to us. So, what we actually need to do is commit to trying something new more than once. I'm not sure how many times is the right number, but it has to be more than once because the first time, chances are we're not going to like it.

Dan: 24:36 Right. So, if you decide, "I would like to be a more sophisticated version of myself. I'm going to go to the ballet." Once is not adequate. I must commit to going-

Mel: 24:45 Get a season ticket.

Dan: 24:46 Season ticket, go at least three times, and then make a call on if you like it or don't like it.

Mel: 24:50 Sure.

Dan: 24:51 What have we learnt here?

Mel: 24:53 I think at the end of the day, what we come back to is that if you were to walk in somewhere, your best chances of being liked are to envelope yourself in a big black bag because the world would be a much better place.

Dan: 25:05 Not immediately, but you need to envelope yourself in a big black plastic bag and turn up for a whole semester, and eventually people will love you.

Mel: 25:13 Yeah, just stick it out.

Dan: 25:14 All right, life advice from Doctor Mel.

Mel: 25:16 Sounds good, right?

Dan: 25:17 All right. Awesome. So, Mere Exposure Effect, just seeing it more, you're going to like it.

Mel: 25:21 Just the tendency for us to like something just purely because ... merely because we've been exposed to it.

Dan: 25:25 Yeah, brands, get your stuff out there early and consistently. People, go to the ballet at least three times before you decide you don't like it.

Mel: 25:31 Sounds like a prescription.

Dan: 25:31 Is that all right? Yeah. Awesome. All right. Catch you next time.

Mel: 25:53 See you.

#23 Status Quo Bias: Why old, stubborn people kind of have a point

Everybody loves change, right? Hell no! And it’s not entirely our fault. In this episode, Mel and Dan explore why we'll often go to huge lengths just to make sure everything stays exactly the same.

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Mel: 00:00 I can think of two fundamental reasons why we would want to maintain the current state of affairs.

Dan: 00:05 Sorry, I'm slightly confused. Are you telling me what you're about to do or is this actually recording for the show?

Mel: 00:08 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 to exploit this stuff for fun and commercial gain.

Mel: 00:35 I'm Dr. Mel Weinberg. I'm a Performance Psychologist.

Dan: 00:38 And I'm Dan Monheit, Co-Founder of Hardhat.

Mel: 00:39 Let's do it.

Mel: 00:50 Hey, Dan?

Dan: 00:51 Yes, Mel?

Mel: 00:53 Want to do an experiment?

Dan: 00:55 Yes. Yes, I do.

Mel: 00:57 Once again, you are becoming a somewhat unwilling participant in one of my studies.

Dan: 01:03 Life as a guinea pig.

Mel: 01:03 It's not really my study though, let's be honest. I'm putting you in somebody else's study. We're just replaying somebody else's study.

Dan: 01:10 All right. This is going to get weird. Let's just do this.

Mel: 01:12 Okay. So I've got something for you, Dan. It's a virtual reality headset that you can wear and when you're in this virtual reality world, you're going to have a fantastic time. Everything that happens is going to be really fun, extraordinarily pleasant, exciting, it's going to just be full of positive emotions. You're really going to love it.

Dan: 01:37 Okay. This sounds like a good experiment so far.

Mel: 01:38 Okay, the thing is that once we put the headset on, you can't take it off.

Dan: 01:43 Ever?

Mel: 01:44 Ever. So I guess what I want to know is, do you want to subject yourself to a life of virtual reality that is absolutely wonderful and only going to be happy, not particularly real, happy nonetheless, but you're not going to know that it's not real, it's going to feel really real to you. Or do you want to stay with your current life, which may or may not be as happy as what you might get in virtual reality world of happiness?

Dan: 02:09 Well, for the record, my current life is just fine, thank you very much.

Mel: 02:12 That's good to know.

Dan: 02:12 But it's not ... Real life is not wall to wall happiness. We already have a parental advisory, right? This sounds weird as fuck. I want no part in this.

Mel: 02:25 Why not?

Dan: 02:27 In this thing forever?

Mel: 02:28 Yeah. It's going to be fun.

Dan: 02:30 It's a terrible idea. Life is surely about more than virtual ... Virtual reality experiences are kind of cool and fun for a little bit, but a full life and a fulfilling life is surely about real reality-

Mel: 02:44 Real reality? Yeah, this is some of your best work here.

Dan: 02:48 More so than reality of the virtual kind.

Mel: 02:49 Okay. So you don't want to play?

Dan: 02:50 Don't want to play.

Mel: 02:51 Okay, fine. I have another question for you.

Dan: 02:53 Okay. I thought there might be because otherwise this is a very lame experiment.

Mel: 02:57 So you're just chilling in your mansion on a Saturday afternoon with your supermodel wife.

Dan: 03:04 Yep. Got it.

Mel: 03:04 Just everything is just going wonderful. You've got a whole ... You're pretty much drowning in chocolate, but it's amazing. This is my idea of virtual reality heaven.

Dan: 03:12 This is bad for the carpet in my million dollar mansion, but let's go with it.

Mel: 03:16 Whatever. You're having a great time and then somebody knocks on the door and you're like, "Ah." Well, you've already said fuck, so you go, "Ah, fuck. I don't want to get up."

Dan: 03:23 Oh, the doctor says fuck as well? Jeez.

Mel: 03:26 Yeah, but what I'm saying as if I'm you and I go, "Fuck, I don't want to get up and go to the door. I'm just having such a good time."

Dan: 03:31 Yep, with my supermodel wife, and my chocolate bath in my living room.

Mel: 03:35 But you go answer the door and there's this curious looking, formally dressed ... we'll make it a man ... standing there. The man looks very official and he says to you, "Look Dan, I've got something to tell you. I'm from a virtual reality company and you've been living in a virtual reality world your entire life."

Dan: 03:54 Right. Feels very Men in Black. Is the man at my door Will Smith?

Mel: 03:59 It could be if it makes it seem better for you.

Will Smith: 04:00 "You know what the difference is between you and me? I make this look good."

Mel: 04:12 "And look, I'm really sorry. You've been part of this world, but actually you weren't supposed to be. We've made a huge mistake. Look, I want to give you a choice. Do you want to stay in this wonderful virtual reality world that is all that you've ever known or would you like us to take this headset off for you and go back to your real life? I should let you know that your real life is nothing quite like this. What would you like to do?"

Dan: 04:36 Well, this is an annoying question, isn't it? I mean, it's different. Maybe I would be more inclined to stay in my mansion and chocolate bath and with my supermodel wife - all of which things I obviously have in my real life as well ... but this, yeah, it's different. It's just different, okay? Maybe I-

Mel: 04:55 It's different!

Dan: 04:56 I want to stay! Go away I'm shutting the door!

Mel: 04:59 Okay. So what we've just demonstrated, and the reason that I asked you the first instance, and I guess we talked it through that you actually found it, sort of in a way, immoral to choose that virtual life because you have this preference for reality.

Dan: 05:12 Yes.

Mel: 05:12 In the second instance, all of a sudden reality didn't seem so good to you, did it?

Dan: 05:15 Well, I had a different reality, but yeah.

Mel: 05:19 You had a different reality. And this is an illustration. It's a thought experiment that has been commonly used to illustrate what's known as the status quo bias.

Dan: 05:25 Ooh.

Mel: 05:26 Yeah, the status quo bias. And the status quo bias is our tendency to prefer what is familiar and what we already know and to maintain the current state of affairs.

Dan: 05:36 So this sounds ... I feel like we did something like this. This was the default bias maybe, which is exactly like-

Mel: 05:42 It's similar to the default bias.

Dan: 05:42 ... like the default option?

Mel: 05:43 Yeah, which is that we stick to what we already know, but ... So it basically has a similar outcome in that we will stick with the current state of affairs most of the time or whatever's presented to us. The motivation underlying it is different. In the default bias, we talked about how when we have a whole bunch of different choices offered to us that the default one just seems easy. So we'll stick with what we know, but we'll do it because it's the easiest. It's just out of fatigue and laziness.

Dan: 06:06 Yeah. Just like going with inertia.

Mel: 06:08 Yeah. Not doing anything is easier than doing something. With status quo bias, we'll still maintain the current state of affairs, but the motivation behind it is different. The motivation behind it is not to avoid making a choice, it's to avoid change.

Dan: 06:20 Ah, so this is like old people getting angry about society progressing, perhaps.

Mel: 06:25 Sure. Yeah. It could be something like that.

Dan: 06:25 Or maybe like if, let's say, if I lived in a cute little village and there was a lake running by my house and there was a factory and the factory wanted to start dumping chemicals into the lake.

Mel: 06:36 Yeah?

Dan: 06:36 Go with me on this. The default bias, I would to do nothing because that's the easiest course of action. The status quo bias, I would be up in arms campaigning for that factory not to be there.

Mel: 06:49 That's right. So it actually motivates action to maintain-

Dan: 06:52 Got it.

Mel: 06:52 ... the current state of the affairs which are different to doing nothing.

Dan: 06:55 Yeah. It's like, "I'm going to do a whole bunch of work right now so I don't have to change later."

Mel: 06:58 Yeah. Hey, so I know we already did some research and you've already been a participant in one of my studies. Do you want to hear about some other research?

Dan: 07:04 Do I ever!

Mel: 07:04 I know you do.

Dan: 07:04 Let's look at some research.

Mel: 07:13 Okay. I sort of already gave you the most fun research about this, so what I'm left with is some really boring research to tell you.

Dan: 07:20 What? You don't find research boring.

Mel: 07:20 I know, but it's just not the most exciting. So we'll just sort of skim over it a little bit, but we will pay credit to the researchers.

Dan: 07:28 You've got to work on your sales game. We can talk about this.

Mel: 07:30 In 1988 Samuelson and Zeckhauser introduced the status quo bias to us and they basically did it by presenting different scenarios to participants where they had a choice to make that involved making a change. In some situations they were just given all these neutral options of what they could choose. So you're a serious reader of the financial pages, right? You know your shit when it comes to that. But until recently you haven't had the money-

Dan: 07:56 Potty mouth today. Jeez.

Mel: 07:58 Sorry. Sorry, mom.

Dan: 08:01 Kids in the car.

Mel: 08:01 You haven't had the funds to invest, but you've sort of known what to do. Then all of a sudden, Great Uncle Dave dies, so it leaves you with a whole bunch of money and now you've got the option. And your options are that you can invest that money in a high risk company, a moderate risk company, some municipal bonds, whatever it is the options that they were given, and treasury bills. So four neutral options are given and it's up to you. In the second option, participants were presented with the same scenario except this time that they were told that a large portion of the portfolio was already invested in a moderate risk company.

Dan: 08:32 In Great Uncle Dave's portfolio?

Mel: 08:34 Yeah. So there was already sort of a status quo of current state of affairs that you are probably going to be motivated to maintain and that's exactly what they found. That when the second scenario was presented, a much greater proportion of participants opted to just invest it all in the moderate risk company. Just stick with what we already have. Don't make a change.

Dan: 08:54 Yeah. I guess maybe where this comes to play as a heuristic is sometimes, I guess, our status quo bias gets us to make suboptimal choices. Maybe investing in a high risk or a lower risk company would have been the better option.

Mel: 09:05 Would actually be better.

Dan: 09:06 Objectively, rationally that would be the better option. But our over desire for status quo kind of overrides the better outcome.

Mel: 09:12 Yeah. So let's explore this a little further because why on earth would we be motivated to make a decision that is not in the best interests of our future, perhaps?

Dan: 09:20 Yeah, because being human is hard.

Mel: 09:22 So following this 1988 article by Samuelson and Zeckhauser, we had some helpful input from our buddy, Great Uncle ...

Dan: 09:29 Great Uncle Dave?

Mel: 09:31 No.

Dan: 09:33 Will Smith?

Mel: 09:33 Great Uncle Danny Kahneman.

Dan: 09:34 Oh, Danny Kahneman.

Mel: 09:35 Yeah. Kahneman, Knetsch, and Thaler in 1991 shed some further light on why we fall victim to this status quo bias. Now first of all, there's one sort of fundamental go-to reason that I can think of. Before we even go into Kahneman, this is Dr. Weinberg's view. Hasn't published it in a paper, but-

Dan: 09:52 Weinberg and Monheit, 2019.

Mel: 09:56 And it comes down to a simple word, survival. Because ultimately, before we do anything else, our underlying motivation for everything is to keep ourselves alive.

Dan: 10:06 Okay. Yeah, I see where you're going with this.

Mel: 10:06 And if you think about maintaining the current state of affairs, basically we might be wanting to stick with what we know because simply it has kept us alive to this date.

Dan: 10:16 Well, I'm alive right now. So therefore, whatever I'm doing right now is working.

Mel: 10:19 You've been doing something right. And so there's a huge risk involved in actually making a change.

Dan: 10:24 Yeah, like right now. Breathing, alive. What if I stopped breathing? Not alive.

Mel: 10:28 Don't do it. Not worth the risk.

Dan: 10:29 I see why this works.

Mel: 10:30 Right? So fundamentally we can understand why we would be inherently motivated to just keep things as they are.

Dan: 10:35 Yeah.

Mel: 10:36 Cool. It keeps us alive. Kahneman, Knetsch, and Thaler put it their own language of loss aversion.

Dan: 10:44 I remember this one.

Mel: 10:44 Yes. So we're highly averse to making changes because we don't want to take the chance that we might make a bad choice.

Dan: 10:51 Yeah. And so if I were to wind back to episode two, three, whatever it was, early we talked about loss aversion, was it where we feel losses twice as much as we feel gains?

Mel: 11:02 Yep. Yep. So if we were highly motivated not to lose, we're actually more motivated not to lose than we are to gain something.

Dan: 11:08 Twice as motivated not to lose.

Mel: 11:10 You could say.

Dan: 11:10 I just did that maths in my head right now.

Mel: 11:12 Wow.

Dan: 11:12 So I guess with the status quo thing, it's like, "Well, unless I can clearly see that changing is going to get me at least twice as good, I'm just going to stay with this."

Mel: 11:21 Right. So it's much easier to stay with what ... Well, it's not that it's much easier because that would be default bias, but we are much more highly motivated to not make a change than we are to make a change. Okay?

Dan: 11:31 That makes sense.

Mel: 11:31 The reason is that they say that disadvantages of leaving something loom larger than the advantages.

Dan: 11:38 Say that again?

Mel: 11:39 The disadvantages of leaving the current state of affairs loom much larger than the advantages or the possible advantages.

Dan: 11:47 So when you say loom larger, it's like in our mind we blow them up to be potentially disastrous?

Mel: 11:52 Yeah. Yeah.

Dan: 11:52 I mean, so I think that and also the wanting to stay alive survival thing make a lot of sense of why we would favor status quo. They're both kind of negative, like kind of fear-based.

Mel: 12:01 Welcome to psychology.

Dan: 12:04 Yeah, yeah. I mean, something else I was thinking about was maybe there might be some positive reasons why we're wired for this as well. And I mean, one of these is around the idea of compound interest ... just go with me on this. So in financial and wealth creation circles, what a lot of longterm level-headed wealthy investors talk about is the, in air quotes "magic of compound interest" and the idea that putting a dollar aside a day in your teens and in your 20s just has this insanely huge impact on your ultimate wealth in your 50s, 60s, and 70s because of compound interest. Every extra dollar you put in, you get interest on and then you get interest on the interest and that multiplied over days and weeks and months and years ends up being ginormous.

Dan: 12:46 And so it makes sense and it's very demonstrable through the data with money and you can calculate it for the money, but there's also, I guess, an idea that compound interest and the untold gains you get from compound interest extend to other parts of our lives as well. So it might be relationships or our health and wellness or fitness or our fields of study. And the idea that if you invest a little bit in the same relationship every day for 10 years, you are going to end up with a deeper, more fulfilling relationship by a significant order than if instead you'd invested in five relationships for two years each.

Mel: 13:17 Got it. I like this.

Dan: 13:18 Or if you study a little bit about psychology everyday you're going to be-

Mel: 13:22 Better for it in the long run.

Dan: 13:24 Than just trying to plunge yourself for a year into studying for it. So this idea that holding the line and just chipping away and doing a little bit of the same thing over and over and over again actually has exponential benefits, not just incremental benefits. Go status quo bias.

Mel: 13:41 Yeah. And it's funny how we think that we want change. How much do we think that we want change? We're like, "I don't like doing the same thing over and over again."

Dan: 13:49 Because change is interesting. It's fun. It's exciting.

Mel: 13:50 But compound interest says that actually we do change, it's just a more gradual sort of less-

Dan: 13:56 It's a boring change.

Mel: 13:57 It's a boring change, but that's okay. And the funny thing is, and we get this in happiness research all the time, that even though people are highly motivated to change their mood or to change their circumstances, we actually don't like it very much. And as soon as we do change our circumstances, we're highly motivated to adapt to it as quickly as possible. We want to make it as familiar as possible because we actually prefer familiarity even though we think we want change. It's like when we think we want choice with default bias and choice paradox and that. We think we want a whole lot of choice, but then when we're faced with a whole lot of choice, we're actually uncomfortable with it. It's like we think we want change, but actually we don't. As soon as we change something, we actually want to get to know it better. So if you moved to another city, you think, "Oh, it's going to be wonderful," but then things are unfamiliar so you'll just start taking the same road to work everyday to try and make it more familiar again.

Dan: 14:43 That makes sense. And I guess you look at the explosion of McDonald's in every country in the world and Starbucks in most countries in the world and people go to these countries for new experiences and then there's just a line of Westerners outside of McDonald's in Japan. Guys you all could have just stayed home.

Mel: 14:56 Yeah. We just want to know what ... We just want stability.

Dan: 15:00 Yeah. So I mean, this is interesting from a sales perspective because when you're selling to somebody, you have to convince them that change is good, but you also have to convince them that it's going to be okay and it's going to be familiar. And I guess it's interesting to think about the way that you play those two sides of the same coin.

Mel: 15:18 Yeah. I mean, because the whole thing is that people don't want to change because it's perceived as dangerous. So your job, I guess, is to show them that, "No, it's okay. It's safe. It's safe. Make this change. Let me take you along on this change. You'll be fine."

Dan: 15:29 I think it's interesting to think about this from two perspectives. One is from retaining existing customers, so selling more and different things to existing customers versus acquiring new customers. So if we think about retaining existing customers or upselling, upgrading existing customers, there's a principle from the world of design that I'd like to borrow and that principle is Maya, M-A-Y-A. It's an acronym for most advanced, yet acceptable. And so the idea with this is when you are designing a new interface, a new product, a new service, what your job as a designer is, is to push the design as far as you can, as advanced as you can, with a caveat - yet acceptable. So you can't push it so far that people don't know what to do with it. If you were going to redesign a remote control, it should be sufficiently better than the current remote control, but not so much better that people-

Mel: 16:21 People don't like it.

Dan: 16:21 ... are just confused and don't get it.

Mel: 16:23 And it's interesting to think because if you're a designer you probably want to be as creative and as innovative as possible and design the most incredible, amazing thing. The thing is you're not going to have much luck selling it, are you, if people aren't ready to accept it?

Dan: 16:35 Exactly. Exactly. So if you've got a client who's doing a little bit of work with you and you have this vision for them of how far you want to take their business and where you want to go, I guess the job as a salesperson is to work out, what is the furthest I can push them along this journey? Which might only be 10% of what you've got in mind at a time, but still making it acceptable-

Mel: 16:52 Keep it safe.

Dan: 16:52 ... and just the right amount of exciting and tantalizing, but everything's still kind of going to be cool. We're not going to change everything straight away.

Mel: 16:59 Okay, that makes sense.

Dan: 17:00 I think that MAYA principal is interesting from a retention perspective. From a new business perspective, where I really think about status quo bias coming into play is especially in B2B sales, so companies trying to sell things to other companies. And the reason this is a bigger issue in B2B sales is ... Well, there's a couple. Number one, usually with B2B sales the risk of changing from one software provider to another or one agency to another is high and kind of obvious. So it's like, "If I switch over from one IT system to another and it doesn't work, it is going to be disastrous and I'm going to lose my job and my whole team's going to be fired and we're going to cost the company millions and millions of dollars." Whereas, the benefits are a little bit hazy, a little bit unclear and they're probably not that good, like moving to a slightly better email system or a slightly better file sharing system. It's a marginal benefit traded off for a potentially catastrophic disaster. So that's one issue. And yeah, there's that saying, "Nobody ever got fired for hiring IBM." It plays right into that status quo bias. Just keep doing the same thing, don't mess it up. Don't shoot for the stars, don't mess it up.

Dan: 18:05 The other thing that makes B2B sales really susceptible to status quo bias is usually B2B sales are group decisions, and what we have when we have group decisions is you have lots of people with different opinions and different criteria for how they're making the decisions. Procurement might have a different lens to IT, and IT might have a different lens to Sales and Marketing, and Sales and Marketing might have a different lens to the Legal team. And what happens is all these people have different lenses and different things and different risks they're thinking about when they make these decisions, and all of these differences create conversations and arguments between lots and lots of people. And the more conversations and debates and arguments that you have, the more complicated it gets. And what happens when it gets more complicated and it gets too hard?

Mel: 18:45 It's not fun.

Dan: 18:46 It's not fun and we just default to status quo, and we just push the decision off. So because of that, status quo bias can be a real issue in trying to sell something into a business. And what's interesting here is the conventional wisdom of what you're meant to do in this situation is you're meant to divide and conquer. Let's say you're trying to sell on a new software system to a cross functional team, and you can see that everyone's got different criteria. So what you do is you basically build a case for the IT guy about what it's going to do for them, and then you build a separate case for the marketing people and what it's going to do for them, and then you build a separate case for the procurement people.

Mel: 19:20 This sounds like a lot of work.

Dan: 19:22 It's a lot of work, but these are usually big multimillion dollar deals, longterm deals, because once you're in the status quo is going to keep you in there. Normally the conventional wisdom is divide and conquer, win over one person at a time. And actually what seems to happen when you do that is you make it worse because you give people more things to think about and they just throw more complexity into the mix and you get less agreement between the group because they're all thinking about their own different things that you've given.

Mel: 19:47 They're all thinking from different perspectives. Yeah.

Dan: 19:48 Yeah. More conversation, more confusion.

Mel: 19:51 Much easier to just stick with the status quo.

Dan: 19:53 Exactly. So instead, what you're meant to do from a new customer acquisition perspective based on trying to overcome the status quo bias, is try and get everybody to unite around the common idea that doing nothing is the riskiest thing that you can do.

Mel: 20:07 Mm-hmm (affirmative). So you're talking about in terms of what we said before about the disadvantages looming larger than the advantages-

Dan: 20:14 Absolutely.

Mel: 20:15 ... of change and what you're saying is actually, what if we make staying the same actually look really disadvantageous?

Dan: 20:21 Yes. So rather than trying to sell each person in on the benefits, "It's going to save you some money and it's going to make you look better in your job and it's going to make your stuff a little bit quicker." That's really hard. Instead get everybody focused on, we call it the burning platform, the disastrous consequences that are only going to happen if we stay with the current situation and everybody can then agree, "Yes, you're right. Staying with where we are is terrible. We do need to change."

Mel: 20:45 And that even if change is terrible, actually staying with what we have is worse.

Dan: 20:49 More terrible, exactly. So think in B2B sense, that's like a multilayered, multivariate way of having to overcome this problem and when you move it over into the B2C lens, it becomes a lot simpler. So where we see this playing out in the B2C world is in the phone wars where now a lot of the conversation is around cameras, and Google are running a lot of ads showing how bad the photos will be with an Apple phone ... Sorry, an Apple phone? An iPhone. And how you're basically going to miss all these amazing moments of your kids or of your friends and family because you're using an inferior camera and it's too dark or it's blurry. So they've done that to make people feel like the status quo is really risky, and then at the same time they've invested in a lot of software that makes it very, very easy for people to pour their whole life from an iPhone over to an Android phone and, hey presto, they've been able to steal a lot of market share over the last couple of years.

Mel: 21:40 Cool.

Dan: 21:41 So that's what brands can do.

Mel: 21:42 Good tips.

Dan: 21:43 Yeah. Big. Dense. You can play it in slow-mo if there was too much in that. What about peeps?

Mel: 21:48 So just for the ordinary people out there, we've got to think of this status quo bias as something that is there to help us. At the end of the day, it's there to keep us safe. Yeah? That's what it's there for. Sometimes, and it becomes problematic when that emotional survival-based decision stops us from making a decision that's actually rationally in our best interest. So we need to actually be maybe more conscious of doing something so that we can actually flip the decision from an emotional one to a rational one. And this sort of applies for all things but specifically in the context of the status quo bias, when it comes to weighing up the pros and cons of making a change, sometimes something that's just really simple but very effective is just to make a list. Because when you think about the disadvantages and the possible advantages, we might go, "Oh, there's a few disadvantages but there's a whole lot of advantages" but the disadvantages actually seem in our head to be a lot bigger. They loom larger.

Dan: 22:41 Yeah. And they feel real.

Mel: 22:42 We focus on them. They feel a lot stronger, and so we're sort of more emotionally invested towards not going with the change and just because we don't want to lose. So sometimes if we just literally make a list, if we can turn the subjective experience into an objective one by literally writing down, seeing a list of, "Yeah, there's a couple of disadvantages. There might be three disadvantages, but there's 45 advantages," we're making or we can then make a more rational decision. We're better placed to make a more rational decision.

Dan: 23:10 Yeah. So what you're saying is, status quo bias prevents us making better rational decisions because we're deciding emotionally.

Mel: 23:16 Emotionally, yeah.

Dan: 23:16 What we should do is get out of that emotional decision making state and make it a rational decision.

Mel: 23:20 Make a list!

Dan: 23:20 Make a list!

Mel: 23:20 Simple.

Dan: 23:21 My mom was all over this. How many years did you study for?

Mel: 23:25 Simple things. Not relevant.

Dan: 23:32 Awesome. All right, so put a ribbon on this.

Mel: 23:32 Well-

Dan: 23:32 Oh, there's more?

Mel: 23:32 One last thing.

Dan: 23:33 Oh, good.

Mel: 23:33 We talked about things staying the same and sometimes people with status quo think, "Oh, but I don't want to stay the same. I want a change." So I just want to say, be okay with being boring.

Dan: 23:43 Oh. Are you saying I'm boring?

Mel: 23:46 No, just in general. It's okay to stick if you're sort of doing the same thing over and over again and being familiar. Recognize that being boring, like you said with compound interest, being boring and doing little things over time can actually have some advantages in the long run as well.

Dan: 24:00 All right, nice. Wrap it up for me. Status quo bias is ...

Mel: 24:03 The preference to keep things as they are.

Dan: 24:05 And sometimes that's good. Sometimes that sucks.

Mel: 24:08 You figure it out.

Dan: 24:09 For brands to get over this, we need to look at how we basically cause more risk to be associated with the current status while smoothing the transition over to something new. And for peeps, make a list.

Mel: 24:21 Make a list.

Dan: 24:21 That is five-star advice from Dr. Mel.

Mel: 24:26 That's what you get.

Dan: 24:26 I'm just trying to keep up here.

Mel: 24:27 All right, thanks for joining us and we'll see you next time.

Dan: 24:30 You'll hear us next time.

Mel: 24:31 That too.

Dan: 24:32 Awesome.

#22 Projection Bias: Why shopping whilst hungry is a terrible idea

We all know that empathy is in short supply, but we often don’t realise how hard it is to be empathetic towards our future selves. In this episode, Mel and Dan look at what happens when we try to make decisions for tomorrow based on how we feel today.

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Mel: (00:20)
Hi. Welcome to Bad Decisions.

Dan: (00:22)
The podcast that helps us understand why we choose what we choose.

Mel: (00:24)
Why we think what we think.

Dan: (00:25)
And how to exploit this stuff for fun and commercial gain.

Mel: (00:28)
I'm Dr. Mel Weinberg. I'm a performance psychologist.

Dan: (00:30)
I'm Dan Monheit, co-founder of Hardhat.

Mel: (00:40)
So Dan.

Dan: (00:41)
Yes, Mel?

Mel: (00:41)
So a lot of the time I found in our episodes gone by, that we talk a lot about your heroes. And it's fine, because you have crushes And that's fine. Everybody has crushes.

Dan: (00:54)
They're all called Dan. Did you notice that?

Mel: (00:56)
Wow.

Dan: (00:56)
Dan Ariely, Dan Kahneman, Dan Gilbert.

Mel: (00:59)
Yup. Yeah, wow. It's like it was meant to be.

Dan: (01:02)
Yeah.

Mel: (01:03)
So today we're going to start by talking about one of my heroes.

Dan: (01:07)
Someone called Dan. Is it Dan Monheit?

Mel: (01:10)
No, it is not you.

Dan: (01:10)
Because it's going to be awkward, I can leave the room if you like.

Mel: (01:12)
It is not you. But he does have a lot to do with ego.

Dan: (01:16)
That's awkward. I don't see what the two have to do with each other, but let's roll with the punches.

Mel: (01:20)
So we're going to talk about Freud.

Dan: (01:22)
Freud, Dan Freud?

Mel: (01:23)
No, no. Sigmund Freud, good old Sigmund Freud, grandfather of psychology, really and-

Dan: (01:31)
Sorry, in 2019, he would just be a pervy old man, let's be honest.

Mel: (01:34)
Look, currently you might think of him like that. However, when you actually go deep, reading deep into Freud, I wasn't going to say go deep into Freud.

Mel: (01:45)
You read deep into Freud and when you read deep into psychology, what you figure is that Freud had something to say about absolutely every phenomenon in psychology before anybody else said it.

Dan: (01:55)
I think he had the same thing to say about every phenomenon, which is it's all sexuality. He's basically Charlie Sheen before his time.

Mel: (01:59)
That's what happens when you don't read deep into Freud.

Dan: (02:04)
Okay, all right, I'll go deeper ... anyway, shortcut me, tell me what I need to know.

Mel: (02:05)
So I'm going to tell you something else about Freud. Freud did some really good work, you know who did some even greater work?

Dan: (02:09)
Who?

Mel: (02:10)
Freud's daughter, Anna. Yeah, Freud's daughter Anna because men start off stuff and then it takes their daughters to really clarify their thoughts and write things down in ways that make sense. Shout out to my dad.

Dan: (02:23)
Definitely no unresolved childhood issues here. Let's keep rolling for the people at home. What's so good about Freud?

Mel: (02:28)
Freud, Sigmund and Anna talked a lot about defence mechanisms, things that we do to protect our ego, and one in particular is the concept of projection. The idea that sometimes we will have feelings or thoughts or motives that are so unacceptable to us that we can't actually handle them ourselves. And so we externalise them onto other people.

Reporter Clip: (02:50)
"Well, that's because he'd rather have a puppet as president of the United States."

D. Trump Clip: (02:53)
"No puppet, no puppet."

Reporter Clip: (02:55)
"It's pretty clear."

D. Trump Clip: (02:55)
"You're the puppet."

Mel: (02:56)
So a classic example of this would be a person who thinks that everybody is judging them. And thinks that there's something in the environment that is threatening to them. Everybody's judging them, they don't feel safe doing something. And actually nobody's really thinking about them at all. And we've talked about this with regard to another heuristic. That actually, nobody's thinking about them at all and it's rather a projection of their own internal lack of confidence.

Dan: (03:22)
They think they're shit so they think everybody else thinks they're shit.

Mel: (03:25)
That's right. And another way that we can think of projection is into ... if you look at an example from couples.

Mel: (03:40)
For example, you've got a couple and you've got the man, because it's always the man, who is considering being unfaithful. And has had some thoughts that perhaps they're going to be unfaithful. That makes them feel really guilty. They don't like it at all. So sometimes what happens is they'll project that onto their partner and what they'll do is they'll start acting in ways that suggest that they are suspicious or somehow distrusting of their partner. Their poor partner is left going, "Wait, I haven't done anything. I don't know what you're talking about." It causes a lot of conflict and it's all coming from the one member or the one partner who's actually feeling like they might do something bad.

Dan: (04:21)
"I'm not cheating. You're cheating."

Mel: (04:22)
Exactly. So we project things onto other people. It's part of our basic defence and it's an external projection.

Mel: (04:29)
Something that I thought might be relevant for discussion today is actually that we tend to project intrapersonally as well as interpersonally. Intrapersonal, within ourselves. And what I mean by that is that we actually project our current self onto our future self. And this is the idea that's referred to in the field of behavioural economics as the Projection Bias.

Mel: (04:57)
It took me a while to get there. But I got us there, didn't I?

Dan: (05:01)
Yeah, yeah, I'm here now. Projection Bias. So hang on. For those playing along at home, this is a thing that, classical psychology, we talk about projecting our feelings onto others and kind of maybe lacking the empathy that not everybody would think the way we think or feel the way we feel. I'd say one of the people we have a lot of trouble empathising with is actually our future selves. Like thinking that future Dan would actually have a different set of preferences than current Dan.

Mel: (05:24)
I guess one of the people who was really a pivotal in this space was Loewenstein. Loewenstein's done a lot of work in this space. And in 1996, he termed this, the 'intrapersonal empathy gap'.

Dan: (05:35)
All right, well, I'll tell you what, I just had some firsthand experience with the intrapersonal empathy gap, not knowing that's what it was called at the time. But I was back at my parent's place over the weekend and you know how you just kind of rummage through your old stuff. And yeah, really struck me in the face that at some point in my life, probably as 15 year old Dan, I just could not imagine a time my life where I would not think Green Day was the greatest band of all time. I had all of their music and I used to listen to them religiously and I spent all this extra money on these limited-edition things and T-shirts thinking that I'm always going to like these guys. It didn't take long for me to not like them so much anymore.

Mel: (06:14)
No. Past Dan who was current Dan at the time, couldn't actually project that future Dan might think differently. Sad when it comes to preferences for Green Day.

Dan: (06:25)
Are they still around, Green Day? If you're out listening to the show, hit us up.

Mel: (06:29)
Longtime fan.

Dan: (06:29)
Yeah, love you guys, love the work you do. Hope you had the time of your life and the early stuff, Dookie that.

Dan: (06:34)
Anyway, the thing that got me thinking though is back when I was a boy, you know, in the late nineties, yeah, late nineties still most of them-

Mel: (06:43)
Eighties? What sort of a boy?

Dan: (06:45)
We're talking about high school. When you're at an age where you actually can make terrible decisions that ignore what your future self is going to be like. I did absolutely make some terrible decisions. I listened to some shit music. I bought some terrible clothes, like I had yellow pants that I was really proud, like baggy yellow pants I thought were really cool and couldn't understand why I'd get knocked back from night clubs in them.

Dan: (07:03)
I had some really bad haircuts.

Mel: (07:04)
Yeah, I've seen pictures. It's true.

Dan: (07:06)
Yeah. I had some good haircuts. If we had show notes, we'd put them in there but we don't so we won't. And I got some piercings, that was the thing to do late nineties, early 2000s-

Mel: (07:14)
Dare I ask where?

Dan: (07:15)
Eyebrow, tongue ... we'll probably leave it at that. But the thing is all of these were basically temporary so that even though I didn't realise at the time that future Dan is not going to want to always wear yellow pants or have an eyebrow piercing, like it's fine. It was all pretty forgiving. And one of the things that got me wondering about is like the youth, youth of today-

Mel: (07:35)
Oh, young kids today.

Dan: (07:36)
Yeah. I mean, a lot of the decisions these guys are making are not that temporary. Your older self might not want their neck tattooed. And it's like if I had just permanently tattooed yellow pants on and was living with that now as a 38 year old going to client presentations, I think it'd be difficult. So anyway, I understand. I empathise.

Mel: (07:54)
And that feeds right into the Projection Bias, which is the tendency to project our current preferences into the future, as if our future tastes and preferences will match our current ones. So yes, of course we would want that neck tattoo in the future because future self is just me plus neck tattoo.

Dan: (08:07)
Exactly, and I'm already happy now, so imagine how much happier I'm going to be then!

Mel: (08:10)
Exactly. I guess the sort of key research in this space, because I love to talk about research.

Dan: (08:15)
Yep, love the research.

Mel: (08:22)
It's Loewenstein again, Loewenstein and his buddies in 2003, they were the ones who coined the term, Projection Bias. The paper is quite economical, but-

Dan: (08:31)
As in it's printed on very cheap paper?

Mel: (08:34)
No. They look at it from a perspective of ... from an economical perspective in the sense that they have formula to try to predict people's behaviour based on the Projection Bias. That's what I mean. They draw on a piece of research from Read and van Leeuwen in 1998 that had to do-

Dan: (08:51)
Big year for Green Day. That was, actually.

Mel: (08:52)
I'm sure it was. That had to do with predicting hunger. Because hunger's one of the things that is ... we're really vulnerable to the Projection Bias when it comes to hunger. They ask people to predict in one week whether you would like to receive some fruit or some junk food, healthy or unhealthy option.

Mel: (09:13)
Okay? And what they found was that people's preferences were entirely dependent on their current state. Which means if you are hungry now, you'd really love some junk food in a week's time, because you're projecting your current hunger onto your future self and saying, "Future self don't want fruit, future self is going to be starving. Give me some cake."

Dan: (09:31)
Yeah, because I'm starving now, can't imagine not being starving, what would that even feel like? Who knows?

Mel: (09:36)
Exactly. Exactly. So isn't it interesting though, how we make a lot of these decisions about what we want in our future based on how we feel right now? And we've talked about this in the context of some of the other heuristics that's come into play in temporal discounting, the planning fallacy, the focusing illusion, right? It's all part of that. But this is all about how we project our current state onto our future self and how we're so bad at predicting what future self wants and needs. Because current self totally dominates our awareness.

Dan: (10:06)
So wait, just to tie up that piece of research and make sure I understand it. So what we're saying is people have to decide, in a week you're going to get a snack. It's either going to be fruit or chocolate. If I'm hungry now, I want chocolate now, so I'm going to just assume I want chocolate in a week. If I'm not hungry now, I'm probably going to make the better health choice and pick fruit now and I can't imagine being starving in a week and actually preferring chocolate. So I'm going to pick the fruit.

Mel: (10:23)
Yeah. And this is all very much being related to the concept of affective forecasting, which our boy Kahneman had a lot to say about. And we really can't go an episode without mentioning one of your heroes that-

Dan: (10:32)
DK.

Mel: (10:35)
... this idea that we imagine when we project into the future, that our future self is just the same as our current self, but they have that extra thing that we desire. And what we do is we fail to account for the fact that our future self is actually different to our current self. Our future self might have different beliefs. Our future self has had different experiences that might lead them to have different attitudes, different values, different feelings about things.

Dan: (10:57)
Yeah, people change.

Mel: (10:58)
We don't take any of that into account. And there are some instances, I guess, in which we are more likely to totally ignore that. And it depends on the thing that we're, or I guess, the need that we're looking for at the moment. So if it's a more primal need like hunger, then our desire for food in the moment is going to completely outweigh anything else.

Dan: (11:17)
So you were talking about infidelity before. I guess it's kind of the same thing, right? It's like ... we're going to get into weird territory here. It's like I really want to indulge in that experience right now and I can't imagine a time that I wouldn't want risk my whole life and livelihood to indulge in that experience.

Mel: (11:33)
I think of it the other way, if we're going to talk about it in terms of relationships, I think about it in terms of what happens when people have a breakup, right? You know that instant feeling of disconnection and detachment and feeling completely alone and it's a miserable feeling to go through a breakup. A lot of people are familiar with that and in those times, it's so difficult for you to imagine a future self that could be happier.

Dan: (11:54)
"I will never love again!" It could be guys and girls saying that.

Mel: (11:58)
Yeah. But we get so caught up in that and because that need for connection and closeness with another person is so primal, it heavily dominates our perception of future self. So it's just too hard to think of a time in the future where this could not be a problem for us because it is such a big problem for us right now.

Dan: (12:13)
Yeah. I mean I know you looked at some research, which is great. I also looked at some research. I don't know if ... Kops do I have different research music?

Dan: (12:21)
And that is what I call research music. I can't imagine ever not loving that research music. Anyway.

Dan: (12:51)
It's interesting to look at purchase decisions that people make today, for things that they are going to have or use for a long period of time. And it's interesting you think that sales of convertible cars would tend to be more in summer than they would be in winter, but they also spike on days where it's kind of wintery but you get a short burst of hot weather. And the same thing happens with sales of houses with pools as well, where you get one beautiful, perfect day where it would be amazing to drive around in a convertible. Even though it's kind of in the middle of winter.

Mel: (13:22)
Yeah. And all of a sudden, everybody wants a convertible then.

Dan: (13:24)
Yeah. And even though your rational self knows it's not going to be like this every day, there's still clearly a part of a lot of people that just says, "Yeah, this is a great day to buy a convertible because I'm always going to want to do this, it is always going to be like this." I think same thing happens in the world of apparel where if you're selling seasonal goods, so if you're selling hats and scarves and things like that, a whole week of kind of chilly weather is not going to be as good for you as-

Mel: (13:48)
As one freezing cold day.

Dan: (13:49)
... one or two freezing cold days, where people are like, "Holy crap, I need gloves and mittens and scarves and hats and everything." Even though the forecast says it's not going to be like this in three days. "I just can't imagine it ever not. I can't ever imagine not feeling this cold again."

Mel: (14:02)
Yeah. I guess, from a brand perspective, how can you take advantage, not that we want to take advantage of people, but how can you leverage the Projection Bias in your marketing?

Dan: (14:13)
Yeah, like we're certainly not here to take advantage of people. We're just here to read the play and make the appropriate move. So I think there's a couple of things here. I mean, one as as a quick hitter is that conditions are not always perfect for selling whatever we sell. And so this is probably more of like a media recommendation, where it's like being able to be really agile and so that if you are selling scarves and it is a day where it is unseasonally cold, how hard can you go? How much of your marketing concentration can you focus on times when people are most likely to buy and people are most likely to buy when they're projecting that the future is going to be much like today and today's the perfect time to buy the thing that you're selling. So that's one thought.

Dan: (14:54)
The other thought is this idea of taking people's motivation, that is often a short-term, shortlived thing, knowing that they think they're going to be motivated like that for a long period of time and wrapping something around it. And where we see this quite prevalently is people turning product purchases or one-off purchases into subscription purchases. So you might imagine at some point in time, not that long ago, going to the gym was probably a thing that you would turn up and you would pay five bucks and you would go and have a workout-

Mel: (15:20)
Pay as you go.

Dan: (15:21)
Exactly and then leave. And what gyms very quickly realised was that hey, you're here and at six o'clock in the morning, you must be feeling pretty motivated and your Projection Bias is probably telling you you are always going to be this motivated.

Mel: (15:31)
You can't even imagine a time in the future when you're not this motivated.

Dan: (15:35)
Exactly. "Gym's great! Here I am." We're going to just leverage that into a 12-month membership. Because why wouldn't we? Because clearly you're always going to want to do this.

Dan: (15:44)
And so gyms are quite a common example. But I think what we've started to see through the explosion of e-commerce and especially direct-to-consumer businesses, lots of things that were just bought once as products are now bought as services. So you think, okay, it's a Wednesday, I've got a few people coming around this weekend, I'd like to buy a bottle ... some mixed wines, six bottles of wine. I can go and do that once, or, people are going to try and sell me on a subscription service where I get six bottles of wine delivered every month and because I'm in a hot state now and think that would be a great thing, I can't imagine who would not want a mysterious box of goodies, be it wine or chocolates or anything else to turn up every month?

Mel: (16:18)
Yeah, it'd be wonderful, isn't it? Because we are the same person, month to month to month.

Dan: (16:22)
I always want wine and chocolates.

Mel: (16:23)
Says Projection Bias.

Dan: (16:24)
Yeah. Here's my credit card. That's the one thing that doesn't change, my credit card details. You just keep running that until it don't work no more.

Mel: (16:30)
Yeah. And look, the Projection Bias, like all the other biases and heuristics that we discussed can lead people to make, well maybe decisions that are not in their best interests, but your job I guess, as a brand or as a marketer is to convince them that actually it is in their best interests.

Dan: (16:45)
Well, sometimes buying things on a longer-term basis is in people's best interest. One of the biggest issues in our industry, in the ad industry at the moment is how much work has moved onto project-by-project basis. And I think what, as an industry, we're not doing a very good job of is taking all of that excitement that a client has about engaging an agency and saying, "You are going to want this often." You do not just want this for six weeks while we deliver this one thing for you and then desperately wait for the phone to ring again. You want the benefits of this all the time and that is not just beneficial for agencies. It's actually beneficial for clients to have people in agencies thinking about them all the time, not just for that short window that they've been set on a project for.

Mel: (17:21)
Yup, that makes sense.

Dan: (17:22)
That's what I think.

Mel: (17:23)
Have you got any other examples?

Dan: (17:26)
No. That was not enough examples for you?

Mel: (17:27)
No, I'm hungry for more.

Dan: (17:29)
To be honest, when I wrote these examples down, I just thought my future self would only want two or three.

Mel: (17:34)
Well-played.

Dan: (17:34)
Here I am, enjoying them. Wishing that I packed some more.

Mel: (17:37)
Well-played, so what do we do about this? We know what brands do about it. What do people do about it?

Dan: (17:41)
Why are you asking me?

Mel: (17:44)
Well I'm not, I'm just sort of putting it out there as a rhetorical question. And here we go, I will answer it.

Dan: (17:47)
Because I'm going to struggle to answer. I don't know, Mel, what should we do about this?

Mel: (17:51)
Well, I mean, one thing is to maybe have a bit more empathy for future self, right? Because this is all based on us not having or having an empathy gap. And maybe taking into consideration that if we have this empathy gap, maybe making a decision in the long-term is not in our best interest, is it or isn't it? What's going to change, what's likely to change? What are some ... almost like we talked about in the planning fallacy, playing devil's advocate to our own future selves and going "future self wants this. Wait, does future self really want that? Is this tattoo really a good idea?" Just second guessing.

Dan: (18:26)
Tattoos are cool if you have one on your neck. That's great. I just hope you still like it when you're old.

Mel: (18:30)
Yup. So another time that we see this, another time that we can actually do something about it is the old trip to the supermarket. You know everybody says, "Don't go to the supermarket when you're hungry." Why not?

Dan: (18:40)
This is because Projection Bias.

Mel: (18:42)
Because current self is hungry. We go to the supermarket, we buy all sorts of things. We think we're going to make dinner for the next four nights in a row and turns out we have a couple of bites and yeah, we're not that hungry anymore. So if we understand that future self is actually not going to be as hungry as current self is right in this moment, once I've had a couple of bites, then we can sort of slow down, probably save a lot of money.

Dan: (19:05)
So you're advocating stealing grapes in the supermarket as you walk around. Just to take the edge off the hunger and make better decisions.

Mel: (19:11)
I've never done that.

Dan: (19:13)
Melissa Weinberg this is scandalous!

Mel: (19:16)
No, but it is. It can be a good idea. Have a snack as you go through the supermarket ... no, no, you pay for it! You know what you do? You go to the nuts section. And you fill the bag up with some of those nuts. You print it based on weight and you pay for it, but you eat them on the way.

Dan: (19:30)
Life advice, life advice, guys.

Mel: (19:30)
So by the time you've got to the register the bag's empty. But the price tag, you're still paying for it.

Dan: (19:36)
Of course you are.

Mel: (19:36)
It's not stealing. No. It's just having a snack as you go through to counteract the Projection Bias.

Dan: (19:40)
You know what? I feel like we were really wrapping up this episode, but we've just gone down a whole different rabbit hole.

Mel: (19:46)
So don't go to the supermarket when you're hungry. The other thing is when it comes to supersizing meals. You know how you're often asked, "Oh, would you like to up-size or would you like the regular or the large?" And me, because I'm somebody who loves to eat with my eyes. I'm like, "Oh my God, I'm starving. I want the large." I never need the large. Never, never need it.

Dan: (20:03)
So what's your advice? Don't order the large. That's profound.

Mel: (20:07)
Don't always get the large.

Dan: (20:08)
We've really gone deep on this episode.

Mel: (20:10)
I mean if it's, look, if it's a marginal ... if it's a dollar difference and you can afford it, go the large, but really you don't need it. Future self is not that hungry. Future self has actually eaten.

Dan: (20:22)
Future self can come back and buy dessert later, if you're still hungry. Get a medium and see how you go.

Mel: (20:25)
That's it.

Dan: (20:25)
All right.

Mel: (20:26)
But current self is not probably the best person to make decisions for future self, especially when it comes to food.

Dan: (20:31)
Let future self decide for future self?

Mel: (20:32)
Let future self be his or her own person. Let her evolve and let her be a person who has the right to make her own decisions about what she wants.

Mel: (20:41)
The last piece of advice. That when we're not, it doesn't have to be in the supermarket, but remembering that Projection Bias is going to occur in the current moment. Let's just slow down a moment. Sometimes we don't always have to make decisions right here and now. Sometimes there are decisions that we can wait a little while and so that's like what we were saying before that if future self is a little bit in the future, a little bit further in the future, let future self make that decision.

Dan: (21:02)
That's where future self tends to be.

Mel: (21:04)
Yeah, we have worries, and I talk about this with clients all the time in practice that sometimes there are worries for now, and sometimes there are worries that belong to you, and sometimes there are worries that belong to future you, and let future you have those worries because future you is actually going to be okay and future you can handle those worries.

Dan: (21:19)
Oh, that's an optimistic way to end. All right, so let's put a wrapper on all of this. So Projection Bias, inability to empathise with our future selves and therefore making decisions today on the assumption that we will always feel like we do right now.

Mel: (21:34)
It's a bias. Yeah. And it'll work out.

Dan: (21:36)
Things we can do if we're selling stuff are to go hard when the conditions are right or look for ways to convert a one-off purchase into an ongoing subscription-type service. Because people will think that they're always going to want that thing. And as individuals we need to slow down. Leave future decisions for future self.

Mel: (21:53)
Perfect.

Dan: (21:54)
And buy the nuts.

Mel: (21:55)
Don't go to the supermarket hungry.

Dan: (21:55)
Don't go to the supermarket hungry. Good. That's a wrap. All right. Thank you so much. Seeya.

#21 Effort Bias: Why you should let them see you sweat

Why do we teach kids that it's all about the effort, when as adults, we're far more concerned about the outcomes. In this episode, Mel and Dan look at why 'quicker and easier' could be the exact opposite of what we really want.

---

Mel: 00:18 Hi, and welcome to Bad Decisions.

Dan: 00:20 The podcast that helps us understand why we choose what we choose.

Mel: 00:23 Why we think what we think.

Dan: 00:24 And how to exploit this stuff for fun and commercial gain.

Mel: 00:27 Ethically.

Dan: 00:27 Always ethically.

Mel: 00:28 I'm Dr. Mel Weinberg, I'm a performance psychologist.

Dan: 00:31 And I'm Dan Monheit, co-founder of HardHat, a creative agency built for today. So, you wouldn't believe it, Mel.

Mel: 00:43 Tell me.

Dan: 00:44 Once again, Australia was going to the polls. This morning or yesterday or something. Who's our current Prime Minister?

Mel: 00:50 Who knows?

Dan: 00:51 It's Joe Moe? Momo. ScoMo. Anyway, someone's decided that everybody needs a free hotdog and we're going to go and vote. Are we voting for a new prime minister again?

Mel: 01:02 Apparently.

Dan: 01:02 This has got me thinking about this weird thing that we seem to do where voting for a new Prime Minister, you need to ask yourself what millions of people will be asking themselves, "Will this person be a good Prime Minister?"

Mel: 01:17 It's a tough question.

Dan: 01:18 It's a really hard question, and there's a lot of facets to what would make someone a good or a bad prime minister, and it made me realise, one of the things we seem to do is we substitute easy questions for hard questions almost without out brain knowing.

Dan: 01:31 So it's like, "Will this person be a good Prime Minister?" "I don't know. That's really hard, ask me an easier question." "Is this a nice person? Would you like to have a beer with this person?" "Yeah, okay, yeah. I probably would. Well, therefore they would probably be a good Prime Minister”.

Mel: 01:44 Much easier question, "Hey, who do I want to go to lunch with?"

Dan: 01:47 Yeah, and I was thinking how the same thing probably happens with investing in publicly listed companies as well. So, you say, "Should I buy shares in Tesla?" And you go, "Well, is the current Tesla share price the right price?" "I don't know. Like there's a lot of very hard maths that I would need to do to work out, a lot of things I don't understand." So, an easier question I can substitute for myself is, "Do I like the Tesla brand?" "Yes, then I should buy shares in it."

Mel: 02:12 Yeah, I mean this is basically why we have heuristics. Right? Heuristics are shortcuts. They substitute really hard questions for easier ones that we much prefer.

Dan: 02:22 Yeah, totally, and so I guess one of the places where we often are asking ourselves a hard question is, "Is the price for this thing correct?" Or "How much is this thing really worth?" And we found a lot of ways to give ourselves easier questions to answer. So, we look at tricks like, "What is the price of this item?" Or "What is the brand of this item?" Or "What is the shop that I am buying this item from?" And we try to use all of those things as easy answers, and it seems that one of the other interesting ways that we try and determine the value of something is, "How much effort went into making this?"

Mel: 02:59 Good, Dan. See, you're giving us the effort heuristic!

(music)

Mel: 03:11 The effort heuristic basically describes how we will ascertain the quality or the worth of an object by our perception of how much time and effort went into it. So, we substitute effort for quality. Effort's our shortcut for quality, and we've talked about shortcuts in a lot of different episodes, one of the ones that quickly comes to mind is the availability bias.

Dan: 03:36 Is it available for you? That episode?

Mel: 03:37 It's easily available to me, yes. In that episode we talk about how availability is a shortcut for the frequency of something, and just like that, in the effort heuristic, effort becomes a shortcut for quality.

Dan: 03:49 Yes, I mean it would be great for people to know that each of these shows take us like, what is it? 17-18 hours of research?

Mel: 03:55 So long. Yeah.

Dan: 03:56 30 hours of recording, which we lovingly edit down to 18-22 minutes. But there's no point telling people that, but if they knew, they would really rate these shows a lot more higher than they do.

Mel: 04:08 There are a couple of reasons why this effort heuristic exists and sort of why it's there to help us. You've got an example from an evolutionary perspective?

Dan: 04:15 I was just thinking that today things are pretty complicated. Trying to work out the value of a set of AirPods is pretty tricky, because there's a complex process for how they somehow get invented and then end up on a shelf in front of you, but at some point in our past there's probably a much tighter correlation between effort and quality, because you're probably buying things from the people who made them by hand.

Dan: 04:36 Everyone was kind of like a craft person or an artisan, and within reason, the more time somebody spent making a horseshoe or a sword, or a basket, probably the better and higher quality that item was.

Mel: 04:50 Yeah, so you're basically saying that there was a reason why effort would be a good substitute for quality. It makes sense, right? Back in the day, and if we take that to today's society, there's a concept called learned industriousness. Yeah, fancy word. To basically describe how effort gets rewarded, especially when you're younger. You put a lot of time into something, you put a lot of effort into something and you're told that will get you the outcome, because of that, effort itself gets rewarded and it's a weird thing, because if you think about effort, about what effort involves, if it involves physical exertion, you're putting in effort when you're fatigued by it, right? So, it's something that we would typically avoid, but according to learned industriousness what actually happens is because that effort gets reinforced we learn to love it.

Mel: 05:33 You've run marathons?

Dan: 05:36 I've ran a marathon. I ran most of the marathon and hobbled some part of it.

Mel: 05:38 Right, and you put yourself through a lot of hard work. You put yourself through a lot of physical exertion, you put in a lot of effort, but you loved that. The effort actually got rewarded.

Dan: 05:47 Yeah.

Mel: 05:48 So, instead of the effort being something aversive, something that you avoided, you trained week, after week, after week, and you pushed yourself. A lot of athletes do this, I'm putting you in the category of athletes.

Dan: 05:56 Whoa, yes.

Mel: 05:57 A lot of athletes do this.

Dan: 05:57 I'm an e-sports athlete now.

Mel: 05:59 That'll do. But you put in the effort, and you actually enjoy it. People say they loved the grind.

Dan: 06:04 Yeah, so you reckon that's a learned thing. Because that's not natural, right?

Mel: 06:07 Well, we've been conditioned to actually enjoy the effort.

Dan: 06:15 Yeah, I think you're right. If I think about school, there is this idea of romanticising effort, that hard work is good, which it probably is to a degree, but also sometimes people need to work harder just because they're less good to start with, right?

Mel: 06:26 Speaking of hard work and degrees takes me back to my academic days with loads of marking, and one of the worst things that you have to do in academia is marking, and one of the things that happens is the students will come back and complain about their grades. If I can tell you the number of times that students came to me and said, "I only got a credit? But I put so much time into it, but I put so much effort into it!" and I don't know, call me a hard ass, but it still wasn't any good.

Dan: 06:53 They were trying to punk you with the effort heuristic, right?

Mel: 06:56 I'm not falling for that. You're still getting a credit.

Dan: 06:59 So what we're saying is often times effort does not directly correlate to goodness.

Mel: 07:02 Right, and so we can make errors because of the effort heuristic. We sometimes overestimate the correlation between effort that gets put into and the outcome. Sometimes there are a whole bunch of reasons why the effort doesn't necessarily correlate so strongly with the outcome. Like if somebody's just not very talented for example, you could put in all the effort in the world, but the outcome's still going to be subpar.

Dan: 07:26 I guess this all feels pretty natural and we can all think about how we could convince ourselves to think that something that took more effort would be worth more, but surely somebody somewhere in the world has put in the effort, the highly valuable effort, of connecting some research on this.

Mel: 07:42 Well, would you believe they did?

Dan: 07:45 This is amazing.

Mel: 07:51 And it took four authors of the study back in 2004.

Dan: 07:54 Wow, this must be a pretty good paper. Four authors!

Mel: 07:56 Yeah, Kreuger et al. It's known as the Poem Study, and they split people into two groups, and they gave then a poem to read, and they asked them to rate the quality of the poem. They asked them, "Did you enjoy the poem? And if this poem were to be sold to a poetry magazine, how much do you think it would be worth?"

Dan: 08:21 A poetry magazine?

Mel: 08:21 Yes, that was the study.

Dan: 08:22 What year was this study done?

Mel: 08:23 2004. When poetry magazines were all the hype.

Mel: 08:26 But they gave both groups a whole bunch of information about the author of the poem, about where they came from, their name, etc. the only thing that was manipulated was how long they told participants that the author spent writing the poem. Group one were told that the poem took four hours to compose, and group two were told all the exact same information except that the poem took 18 hours to compose.

Mel: 08:55 Would you know it, at the end of the study what they found was that the group who were told that the poem took 18 hours to compose rated the quality of the poem as much higher, and it's worth much higher.

Dan: 09:06 Surely not. Surely not.

Mel: 09:07 Uh huh. Believe it.

Dan: 09:09 Surely these guys didn't stop at poetry, though.

Mel: 09:11 There were a couple of other studies.

Dan: 09:16 Yeah. Which we aren't going to talk about?

Mel: 09:16 Well, we could talk about one of them had to do with rating the quality of paintings for example. They had a group of non-experts and then a group of self-identified experts, and just to throw it out there, I'm critical and curious, and suspicious of anything that asks people to self-identify as experts.

Dan: 09:31 Well, I think what's great about this story, because what happened to the self-identified painting experts?

Mel: 09:36 Well, wouldn't you know it, they rated the quality of the paintings much higher, if they were told that the hours spent painting them were longer.

Dan: 09:45 Yeah, so basically everybody got punked, including the self-identified experts.

Mel: 09:48 Exactly.

Dan: 09:50 So, I mean this is really interesting, but also kind of troubling as somebody that has a business that is in the world of selling ideas. It's really hard to assign a value to an idea, and a weird thing that's happened in my industry, and in a lot of other industries like ours, is that clients want ideas. They don't know how to value them. So, what everybody just kind of agreed we're going to do, is we're just going to quote and pay based on time/effort. Even though everybody really knows that this is a horrific approximation for how much value is created.

Dan: 10:26 The idea of trying to break the paradigm that we pay people for hours is just far too big and far too confusing. So, the approximation we use in our industry for value is also effort.

Mel: 10:37 Yeah, so the people will have ideas like a light bulb, it will come to them.

Dan: 10:40 Yeah, I mean how long does it take to crack a campaign idea, like your whole life plus five seconds. So, you can charge a client for your whole life. Tried. Didn't work. You can't charge a client for five seconds, because that's going to come out like $1.30, on a good day, so you kind of have to find something in the middle and some businesses do manage to crack some model where you do value based pricing.

Dan: 11:00 Like "What is the value of this idea to your business, and how much can we improve sales, or other key metrics?" But the reality is, it's so complicated, if you come up with a new tagline for a brand, and then you see sales go up, it might have been because of the tagline, or it might have been because of better distribution, or it might have been because they're competitor ran out of stock and nobody could buy them, or it might have been because the weather was good or bad. It's so hard. So, it's like, "How about we just pay you for the hours that somebody spent thinking about this, or not thinking about this, but were meant to think about this?"

Mel: 11:27 Right. So, if we understand that effort is used as a substitute for quality, tell me please how can brands use this to their advantage?

Dan: 11:34 This is exactly the right starting point, because while it would be good to try and convince people that this is not always the best way to value something, that's really hard. So, if we just lean into the fact that this is what people think is happening, the long and the short of it is, what we need to do is find ways to, I want to say make our processes longer and more complicated, but really what I mean by that is, not to manufacture fake things. Most things that people do, do have long complicated processes, and I think the way we need to play this heuristic is to make those long complicated processes more visible to the people we're selling to, than they otherwise would be. And a lot of the time we don't even notice the complexity, because we're in it all the time.

Mel: 12:14 Yeah, so there's some examples of that, right?

Dan: 12:16 Yeah. Of course there are. So, we see this in a bunch of places. One of the things I like to think about is restaurants. If you designed and built a restaurant anytime up until, I don't know, call it 10 years ago, there was a pretty predictable format where you have all of the service areas out the front, and then kind of hidden away behind a wall you have all the kitchen staff.

Mel: 12:36 So nobody sees the mess.

Dan: 12:37 Nah, don't see the mess, don't see anything. The food just magically appears through these doors. If you look at the trending restaurants in the last 10 years, every hot restaurant, at least in Melbourne and Sydney, I'm sure other places in the world, the kitchen is smack bang in the middle of the restaurant.

Mel: 12:51 So much fun. It's so much more fun that way.

Dan: 12:53 It's so much more fun! And not only is it in the middle of the restaurant, but there are seats, and I think often the best seats in the house are sitting around the kitchen watching the people craft the food. So we are not only exposing, but we're probably celebrating and romanticising the effort that goes in, and it seems that people are more patient and happy to pay more when you can actually see what is taking the time and the effort going in.

Mel: 13:15 And if somebody were to do research on that, if there isn't some already that we just haven't looked up, I'm sure they would enjoy the quality of their food and rate the quality of their food much better.

Dan: 13:23 Yeah, without a doubt. When you've seen the chef cut the sashimi right in front of you, you can't help but think that it's fresher and more expertly prepared.

Dan: 13:34 Some other places we see this stuff happening: we often used to talked about comparison websites on the internet, and when I say we used to talk about this, nerds in my industry used to talk about this, and the idea that often historically, and maybe it's still the case, those comparison websites were slowed down. So, you go into one of these websites and you say "I want to find flights from Melbourne to LA," and it could find that for you in half a second, or faster, but the perception is, "Well, if it only took half a second, like did you really go out and have a look at all of the possible places you could find airfares?" So, the idea was that these websites were slowed down a little bit to give the perception that they were doing a better job, there was more effort going into it, and therefore a more valuable outcome that come out the back of it.

Mel: 14:17 Tricky, isn't it?

Dan: 14:19 Yeah, the last probably interesting example I see of this is, if you think about tracking packages that come from overseas, we've all become accustomed to the idea that you buy something on a website, then you get a tracking number, and you go and look it up, and while in one respect you're looking it up just because you want to know where it is and how far away it is, what companies like DHO and FedEx have done an amazing job of, is showing all of the little steps that have happened.

Mel: 14:43 Every time somebody's touched it.

Dan: 14:44 Yeah. It got moved from the left side to the right side of this warehouse in this city, and then it got put on a truck and moved 200 meters down the road to a different dispatch facility, and then somebody put a sticker on it with your name on it, and so all of these things add steps, and add complexity. Well, they don't add steps and complexity - they surface the steps and they surface the complexity that's inherent the process, and you can't help but marvel at how this one box of shoes has been touched by dozens of people in dozens of cities or facilities just to make its way to little ol' me in little ol' Melbourne.

Mel: 15:18 When you think about it, it seems so unnecessary, but we just accept that, "Oh, it's getting tracked, there are people along the way doing things, it's getting to me, it's being worked on." I'll accept it. I'll wait.

Dan: 15:24 Yeah, all that effort is making this a more valuable process.

Mel: 15:27 That's right.

Dan: 15:28 So I think for brands, the goal is to show people what is happening and celebrate it, and surface it, and make sure people understand all of the effort that's going in knowing that they can't help but assign that effort to value.

Mel: 15:41 Cool.

Dan: 15:42 What about peeps?

Mel: 15:43 Well, for just the little ol' people in the picture, one of the key things for this is to understand that people are going to judge your value based on the effort, and not necessarily based on the actual effort, but based on the perceived effort. So, it's really important that you make it look like you put effort into whatever it is that you're doing, which can't be overstated.

Dan: 16:03 Wear a clean t-shirt, right?

Mel: 16:07 Right. I'm going to touch on something that some people might think is a little pedantic, but we're going to talk about spelling mistakes. Spelling mistakes, and even grammatical mistakes, is a sure fire way to let people know that you haven't put in effort, and people say, "Oh, it's just a spelling mistake, it's just a typo." It's not, because people are actually judging your worth and your value based on your spelling mistakes. So, if you're writing something, if you're writing an email to somebody, perhaps to a client, and you're trying to get on good terms with them, and you want them to think that you can produce really high value work, the absolute worse thing you can do is put a spelling mistake in there.

Mel: 16:45 Because they are going to see that, and it's going to give them a very quick indication that you haven't proof read it, that you haven't put enough effort into it. They might even know that you can spell. So, it's not even about whether or not you can spell, but it gives a very quick indication that effort just hasn't been put in, and that means that maybe you're not very good at what you do.

Dan: 17:06 Yeah you lose count of how many times you see comment threads on the web. Somebody writing, really like a brilliant piece of prose that's rebutting an argument of something that somebody else has put forward, and the whole thing is incredible and intelligent and compelling, but they've used the wrong "your."

Mel: 17:24 Your and you're.

Mel: 17:26 Or there, their, and they're?

Dan: 17:27 Yeah, and all of a sudden the whole thing is discredited. Because you've used the wrong "there", and that means you haven't put the effort in, and means this is not valuable.

Mel: 17:35 That's right. So, even if you don't care about spelling, everybody else reading your work does.

Dan: 17:40 Yeah, all right, that's a tough, tough pill to swallow, but thems the breaks.

Mel: 17:46 It's just not that hard, just check your spelling.

Dan: 17:47 Yeah, I mean, you even get little squiggly lines underneath the things.

Mel: 17:49 Exactly. You're going to take me back to my marking days, which we've already touched on once this episode. I'm not interested in going back there.

Dan: 17:55 Yeah, you are starting to shake a little bit.

Mel: 17:57 Yeah, sorry.

Dan: 17:59 All right, probably a good time to wrap up.

Mel: 17:59 Let's wrap up.

Dan: 18:00 All right. So, the effort heuristic.

Mel: 18:07 Is a shortcut that we use when we're trying to estimate the quality of something that we don't really have much else to go on.

Dan: 18:12 Yeah, so you can try and change the world, and bust the paradigm and convince people they should be paying based on value, or you can just lean into it and say, "Yes, you are paying for effort, and look how much we put in."

Mel: 18:20 Yep, and remember, it's the perceived effort. More than even the actual effort.

Dan: 18:25 Awesome. Well, I think that concludes take 192 for this episode.

Mel: 18:29 We really put so much into this, guys.

Dan: 18:31 Yeah, I feel my dad jokes have really lifted over the course of the show as well.

Mel: 18:35 Yeah, well done.

Dan: 18:35 Cool. All right. We're out.

Mel: 18:37 We are out.

Dan: 18:37 We're done. Thanks. See you guys next time.

Mel: 18:39 See ya.