Alexey Mitko – Second Assignment (Draft)
October 2nd, 2009 at 19:58In his talk Dan Ariely covers several issues such as
How to deliver bad news (Burn department story). Although his story about his injuries and subsequent recovery is very dramatic and sad, it does demonstrate an an inquisitive mind of a scientist that questions the assumed basics of human behavior. The author describes well the nature of a non econ person. He shows through examples that in high stake situations people tend to make mistakes, and sometimes those mistakes are allowed to accumulate to result in a snowball effect. In my opinion the overarching purpose of the video for Dan Ariely is to portray a person as a human, an alternative to a classical econ. He does so by showing several instances where human perception fails, and where logic misleads. For example in his example of visual system failures Dan Ariely used a video clip, but it was cut out. I managed to find this clip online so while you watch it try to count how many passes the white team makes and then watch it without counting. http://viscog.beckman.illinois.edu/flashmovie/15.php
The author also demonstrates how people can predictably behave in an irrational way (thus I guess the title of his book). If you recall during his examples of complex decisions (one time and successive) and suggestions (organ donation decision, hip replacement, jam study) it was quite clear that there is a set of factors that can affect one’s decision making process. He also successfully manipulated those factors to create specified outcomes. In his example of Strength of Preferences and how they can be influenced them, contrast and implicit scale he managed to direct to a specific outcome.
At this point this reminded me very vividly of the Marketing course I took during my BBA degree. The science of consumer behavior deals with exactly this kind of patterns. Except their goals usually are not academic in nature.
I think the issue how marketing people use that knowledge and whether it’s a good or bad way of going about it is very complex and involves many ethical dilemmas. But the fact is that people are not 100% efficient and there is room for improvement/manipulation (depends how you see it)
Dan Ariely’s studies into ethics and cheating + contemplation of morality are very impressive. It puts a lot of question on the table about how we are allocating our resources and constructing our policies as a society. After all a lot of people cheating by a little bit results in huge expenses to our economy. It seems like it is in nature of humans to concentrate on newsworthy events (such as Enron) and ignore events of much bigger magnitude but of lesser intensity.
Lastly authors demonstration of endowment effect is yet another pattern of behavior that is engraved into the human brain. I have experienced it myself countless times (whether showing my friends my new gadget and thinking that they are fools for not having one or getting bored hearing about an acquaintance purchasing a new supposedly awesome grill).
Ultimately I agree with the author that current models do not have sufficient power to explain human behavior and that cognitive methods of human brain can be studied and predicted. Although the result will not be a rational universe it will be a predictable one and thus more efficient than current “surprise just behind the corner” scenario”
October 4th, 2009 at 8:54 pm
Yes, I have seen that video and it is fun to go through that exercise. Definitely worth taking the two minutes out of your day. Except the version I saw was a moonwalking bear.
I laughed out loud at your line about marketing and consumer behavior: “Except their goals usually are not academic in nature.”
I think the problem of using knowledge in good or bad ways is not limited to marketing. In this age of readily-available information we should all be making better decisions because we can be well informed and possibly overcome some of the propaganda thrown our way by seeking out real facts–but do you suppose that is happening? Does quality information just add too much complexity that we can’t face? Are we too lazy to look for it? Or does quality information just not matter because they will appeal to our emotions and cognitive biases that have nothing to do with accurate information?
Personally, I am not that hopeful that we will be able to nail it all down and I actually think that is probably a good thing. This is what makes us human and interesting and we would just be automatons without it! When I worked in employee selection managing the development of psychometric assessments, predicting behavior is exactly what we were trying to do (specifically, job performance). The best instruments and methods can only allow us to predict 25-40% of the variance in people’s behavior–and that in a somewhat narrowed range of behavior and context.
October 5th, 2009 at 4:07 pm
Dear Kristine,
I think that our ability to access a vast number of information resources certainly allows some people to make better decisions with little bit of research effort. However I think the issue of the marketing propaganda comes into play when the companies play on consumers’ subconscious level. While such practices as subliminal marketing are banned, there is a lot of other tools at marketer’s disposal that appeal to the way our brains are hardwired. To illustrate my example
Can you raed tihs? If you can raed tihs, tihs mneas taht yuor bairn is albe to porecss tihs ifnroamtoin eevn wehn olny frist and lsat lettres are in tehir rghit palces.
As you can see, this simple trick illustrates that there are patterns in our brains that are subconsciously present and that can be used to marketer’s advantage without our knowledge.
We can train ourselves to see through some deceptions (for example in gorilla video you will always see the gorilla when you watch that video). However in the first time you watch it (or the moon video) can be interpreted like a marketer selling you a product. Oh You didn’t see a gorilla? You have to buy my product.
Eventually information gets so complex like in finance and investing, that professionals them selves fall prey to natural instincts and they way their brain works. It can be seen on any major financial news network, they are soooo convinced that news of this our matters and that any movement of the market can be explained by what happened in the last 24 hours.
Ps. Tell me little bit more about the psychometric assessments.
October 7th, 2009 at 3:57 pm
I posted something in our Ning network about regulating what people say about products, with an eye toward truthful representation. What advertisers are allowed to say has been restricted for some time; the other day something hit the news about bloggers not being able to pose as joe-schmo-consumer-offering-a-personal-opinion when they are actually getting paid to say something positive or to broadcast their positive opinions. I think it was the FTC that wants to regulate it.
As for the other bit, I have a background in psychological measurement and areas of applied psychology related to individual differences. I worked in the development of tests of personality, attitude, aptitude and the like. Sometimes new ones, sometimes alternate forms of old ones, and sometimes ongoing validation. I did it just for the research and statistics experience when I was an undergrad, but ended up doing it for a living for a couple of years about a decade later. The tests were used for employee selection and promotion as well as coaching and development kinds of activities. When you select employees–regardless of the job application forms, phone screens, structured interviews and tests that are part of your selection system–you are trying to pick the specific people (from a larger pool of people) that are going to be most successful at your company in the particular job for which your are hiring. It is not an exact science (development of the tests kinda is, but being able to ultimately predict the behavior/job performance kinda isn’t).