Background

• The following are some notes I took from a Coursera course I took in 2013 titled: “A Beginners Guide to Irrational Behavior” which was given by Professor Daniel Ariely of Duke University. An outline of the course is provided by I only took notes on Week 5 and Week 6

• Course Information:

  • Platform: Coursera

  • Course Name: A Beginners Guide to Irrational Behavior

  • Professor: Daniel Ariely

  • University: Duke University

  • Course duration: 6 weeks

• Reference Notes:

  • Course content and notes: A Beginners Guide to Irrational Behavior (currently private)

  • Original notes transferred from: Irrational Behavior - Course Notes (A. Zichettello)

  • Course taken: March 25 - May 1, 2013

1. Irrationality

1. Visual and Decision Illusions

• The brain interprets information by incorporating our expectations into our perceptions

2. Defaults

• Choice Architecture

  • We have the illusion of agency, but out decisions are often influenced by:

    • environment

    • defaults

    • complexity

  • We take the path of least resistance

  • We don’t realize how much defaults matter

• If you ask someone why they made a decision:

  • We create stories to justify and explain our actions

• Be aware of defaults

• The path of least resistance is especially likely when deviating from the default is more complex

  • Even for highly trained, experienced physicians

  • Defaults can be more influential as complexity increases

  • Jam study

    • 

• Ways to make you less likely to save for retirement:

  • Require opt-in

  • Provide lots of complex, difficult choices

  • Stress the importance of the decision —> Adding stress can reduce interest

• Defaults are neither good nor bad, they are just everywhere

3. Do We Know Our Preferences?

4. Choice Sets and Relativity

5. The Long-Lasting Effects of Decisions

• What is self herding?

  • Our tendency to follow the same decisions we have made in the past (future decisions are influenced by previous decisions)

• We remember our actions far better than our transient emotional states

• Once a particular number is introduced, it becomes the reference point from which prices are judged (the “anchor”)

• The first decision becomes an anchor that influence future decisions

• We make comparisons within (not across) categories

6. Learning from Our Mistakes

• Doubt your intuitions…experiment!

7. Guest: Gavan Fitzsimons

8. Guest: Eli Finkel

• Mate preference:

  • “He is attractive” —> “I ideally want someone who is attractive” —> “I like this guy”

2. The Psychology of Money

1. Opportunity Cost

2. Relativity

3. The Pain of Paying

4. Mental Accounting

5. Fairness and Reciprocity

6. Loss Aversion and The Endowment Effect

7. Market and Social Norms

8. The Price of FREE

9. Micropayments

10. Guest: Mike Norton

11. Guest: Kathleen Vohs

3. Dishonesty

1. The Simple Model of Rational Crime

2. Shrinking the Expanding Fudge Factor

3. Conflicts of Interest

4. Cheating Over Time and Across Culture

5. Guest: Peter Ubel

6. Guest: Nina Mazar

4. Labor and Motivation

1. Extrinsic versus Intrinsic Motivation

• We are motivated to do things that we find meaningful

• Doing the same task over and over without a sense of progress can be the ultimate demotivator

2. Meaning

• Purpose and meaning are so important that they can be worth a substantial investment of time and money

3. Acknowledgment

• Not being acknowledged is nearly the same as disrespecting someones work right in front of them

4. IKEA Effect

• More labor leads to more love only when participants were able to complete their creations

  • The effort we expend on our kids increases our love for them and blinds us from the perspective of others

5. Not-Invented-Here Bias

• Investing even a small amount of energy in a solution makes people like it much more

• The “Not-Invented-Here” Bias:

  • Pro: Results in more time and passion devoted to our ideas

  • Con: Hinders our ability to consider other ideas

6. Cognitive Dissonance

• When a person’s behavior contradicts their beliefs, they try to realign their beliefs with their behavior (or vice-a-versa?)

• When we work hard for something, we value it more

7. Monetary Stress and Performance

• Mechanical tasks vs mental tasks

  • Increasing incentive only increases performance for mechanical tasks, but actually decreases performance for mental tasks

• A state of “flow” drives the highest quality performance

• Bonuses can be distracting and may actually decrease performance

8. Social Stress and Performance

• When working in front of a group, social concerns are added to the financial motivation

  • However, anxiety caused by public pressure impedes performance

• Higher motivation does not necessarily translate into better performance

9. Bonuses, Labor and Motivation

10. Guest: Lalin Anik

5. Self-Control

1. Difficulty with Self-Control

• Present focus bias: the tendency to give more weight to our current environment or state

  • Climate change has all the factors that maximize human apathy

    • Far in future

    • Affects others first

    • We do not see its progression

    • We don't see a particular person suffering

    • Individuals efforts to mitigate are a drop in the bucket

• Reward substitution

  • Driving Prius provides social reward (ego boost) because it looks different and allows people to identify themselves as eco-friendly to the world

    • Can get us to act like we care about the world when we really care about our image

2. Reward Substitution

• Inflate incentives with loss aversion and probability bias

  • Pre pay the persons and take money away if they don't follow through

  • Give 10% chance of making $30 instead of guaranteed $3

• Ideal lottery

  • 1 big reward

  • Smaller regular rewards

• Regret: the comparison of where we are in life compared to where we could have been

  • Happiness is experienced (or not experienced) by picking a reality and comparing our lives to it

    • We pick a reality and compare our lives to it:

      • If that reality is better than our actual lives, we are miserable

      • If that reality is worse, we feel good

  • Regret lottery: everyone gets a ticket but only those who take medication on time get to claim the prize if they win

3. Ulysses Contracts

• Contract that the individual makes in order to enforce self-control at a later time (Ulysses had his crew tie him up so that he couldn't be tempted by the sirens)

• Bind your current self to prevent your future self from misbehaving 

• Pigeons and rats choose immediate 1 pellet reward over delayed 10 pellet reward

• But even rats and pigeons will use self control strategies to counteract this

  • Rats and pigeons sometimes will choose the pill that takes away their option to choose the pill that gives them 1 seed now vs the pill that gives them 10 seeds later

4. The Importance of Self-control: The Individual and the Environment

• Marshmallow experiment: kids given chance to get 2 marshmallows if they wait or can eat 1 now

  • Kids who were able to resist did better in college

  • Also better physical health

  • Also less criminal activity

  • Also more financial stability

• Is self control a skill or innate ability?

  • Distracting ourselves from temptation allows us better to resist

  • Ego depletion: when we continuously exert self-control, our ability to resist temptation weakens

  • Self control suffers as tempted throughout the day so better to do the things you’re liable to put off in the morning

• Human mortality rates attributed to bad decision

  • 1900: <10%

  • 2000: ~45%

  • This is due to more temptations from technology such as texting and driving

  • This will get worse as technology finds more powerful ways to tempt us

• Denver drug program

  • Used Ulysses contracts to get heroin addicts to stop

  • When they weren’t craving, they chose to sign contract, the terms were:

    • They write a letter to a loved one telling them they are back on heroin but and give letter to experimenter

    • They would be checked weekly to see if they had used heroin

    • If they used heroin, the advisor would send the letter to their loved one

  • After a week, they all wanted out of the contract

  • Experimenter said they could get out (they weren’t allowed to enforce contract) but only if they held off for 3 weeks

  • Many of the addicts were able to get through withdrawal

• We must find balance between amount of freedom we crave and controls we need to shield us from temptation

5. Guest: Leslie John

6. Guest: Hedy Kober

• Self-control is greater indicator of success than IQ

• Self-control is more tied to high SAT scores than IQ

• Prefrontal cortex is associated with self-control

• Self-control is a mental muscle

  • You have a better a chance at self-control earlier in the day

  • Over time, using your self-control will cause "ego depletion"

  • Positive emotion reverses ego depletion (a funny movie actually helps)

  • You could train it to be better

• Motivation to change is key to gaining self-control

  • If you want to change, you can

  • "How many psychologists does it take to change a lightbulb? One, but only if the light bulb really wants to change"

7. "Making Sense" on PBS

6. Emotions

1. Two Systems

• Two systems are limbic system and cognitive system

  • Limbic system controls motor functions and emotions, characteristic of animals

  • Cognitive system is higher level thinking, characteristic of humans 

• Emotions are transient and more short-lived than we expect

  • We think positive and negative emotions will last longer than they actually do

• Emotions can overtake cognition (they are not just added to cognition)

• Ariely experiment on emotions, used sexual arousal

  • Questions on 

    • Sexual preferences

    • Willingness to take risks

    • Willingness to act immorally

  • “Cold” condition (without being aroused)

  • “Hot” condition (with being aroused)

  • Predictions about behavior in “hot” states are largely off the mark

• We often do not understand the emotions of ourselves or others unless we are in the emotional state

  • Crimes of passion are largely misunderstood by the “cold” state jury

2. Intra-empathy Mismatch

• Gap between how you think will feel in an emotional state and how you actually will feel in that emotional state

• When we experience a particular emotion, we are more empathetic to others with that emotion

• Experiment: People that are very thirsty are more apt to donate to a cause to help people get water

  • This specifically for the thing you desire, that is, this works only for water

  • If they are hungry, they are more apt to donate to a cause to feed starving people, etc.

3. The Identifiable Victim Effect

• The Trolley Problem

  • Cognition: 4 people > 1

  • Emotion: 1 person > 4

• Mismatched money and needs

  • Katrina and 9/11 raised over $2.5 billion each (few people affected)

  • Asian tsunami, tuberculosis raised ~ $1.5 billion each (many people affected)

  • AIDS, malaria raised less than $1 billion each (many many affected people)

• We care more about suffering when it is represented by one individual

  • “One man’s death is a tragedy, a million deaths is a statistic” - Stalin

  • “If I look at the masses, I will never act.  If I look at the individual, I will” - Mother Teresa

• The more we think with our cognition, the less we care but the more we think emotionally, the more we care

  • Statistical life is worth little

  • Identifiable life is worth a lot

  • Statistical life with identifiable life is worth less than identifiable life

    • Adding statistics to the equation dampens our emotional response

  • A single, specific victim inspires action, whereas general information about masses of victims (or even small groups) does not

4. Emotional Decision Making

• Spammers use emotions to take advantage of people

  • They message people and establish emotional relationship with them before they ask for money

  • They use misspellings to identify gullible people

  • They are in convenient position to learn about human behavior

• Decision state versus consumption state

  • If we make decisions based on our consumption state we are more apt to buy things we will use

  • Decision environment should match with consumption environment

  • In the store, tiny differences in stereo sound quality could impact decision to buy stereo more than appearance but at home, without the relative sounds comparison, appearance weighs more heavily

5. Risk Assessment

• Our perception of risk is higher when:

  • The event is salient in memory

  • We have emotional response

• The death toll from car crashes in developed countries is almost 400 times greater than the number of deaths caused by international terrorism

• A terrorist attack is intentional and beyond your control, which causes a higher emotional response AND the event are salient in memory

6. Disgust

• Disgust is instinctual for purpose to keep us away from harmful things

• It is more powerful and more difficult to control than other emotions (more primal)

• Some people are more easily disgusted than others

• We are also disgusted by things that are contaminated by things that disgust us

  • A box of sealed tampons that touches a box of unopened cookies will make us less likely to want those cookies

  • A thoroughly cleaned fly swatter (or unused) that was dipped in bowl of cereal would make us disgusted by the cereal

• Disgust is also applied to people and actions

• Disgust has been used in history to influence people

  • German propaganda described the jewish people in a disgusting way to elicit ill feelings about the jews

• Disgust and politics

  • There is a clear correlation between how easily someone is disgusted and what they believe about certain social groups

    • Conservatives are easily disgusted

    • Liberals are less easily disgusted  

7. What Makes Thing Funny

• Actually big influence to our choices

• Humor is

  • Judgment response, cognitive

  • Emotional response

  • Behavioral response, tendency to laugh

• 3 theories in history

  • Release of sexual tension (Freud)

  • Superiority (Hobbs)

  • Incongruity (Conte)

• Humor comes from benign violations

  • Starts with a violation, something not right about it in the world

  • But needs to be benign, that is harmless, ex: a threatening act by someone you trust

  • This is best theory of humor

  • My pen is huge is funny because we think of the violation but the statement is benign

• Why is the benign violation theory most supported?

  • Humor vs. severity and proximity

    • Distance in time and place are factors of humor

    • The more severe, the more distance there needs to be for it to be funny (hit by car)

    • The less severe, distance needs to less to be funny (stub toe)

  • Mixed emotions

    • Refer to "cat rubbing statement"

    • The one being violated must be in approval for it to be funny

  • Individual differences

    • Humor is influenced by social norms, culture, beliefs

    • Some people see something as a violation that other donts

    • Some people see something as benign that others don't

    • Refer to "church raffling hummer statement"

  • What is not funny

    • "Keith snorted ashes story"

    • People who saw this as wrong and not okay didnt find it funny

    • People who saw this is not wrong and okay didnt find it funny either

    • People whonsaw this as wrong but okay found it funny

• Antecedents -> Humor -> Consequence

  • We like the people that could see or create humor out of the things that are wrong in the world

  • Humor is a effective at helping people deal with

    • Pain

    • Stress

    • Adversity

  • Reappraisal

    • If we are able to reappraise something that we thought was not benign, as now being funny, then we could now think of that thing as benign...so humor could reshape are belief about something