[Kolovorotkes]

I hate it when people only post vids

Just say what this is about

[bebeacc]

Fine Bebro, here's part of the transcript:

I'll give you one more example for this. This is from a paper by Redelmeier and Schaefer. And they said, "Well, this effect also happens to experts, people who are well paid, experts in their decisions, do it a lot." And they basically took a group of physicians. And they presented to them a case study of a patient. Here is a patient. He is a 67 year old farmer. He's been suffering from a right hip pain for a while. And then they said to the physician, "You decided a few weeks ago that nothing is working for this patient. All these medications. Nothing seems to be working. So you refer the patient to hip replacement therapy. Hip replacement. Okay?" So the patient is on a path to have his hip replaced. And then they said to half the physicians, they said, "Yesterday you reviewed the patient's case and you realized that you forgot to try one medication. You did not try ibuprofen. What do you do? Do you pull the patient back and try ibuprofen? Or do you let them go and have hip replacement?" Well the good news is that most physicians in this case decided to pull the patient and try the ibuprofen. Very good for the physicians.

The other group of the physicians, they said, "Yesterday when you reviewed the case you discovered there were two medications you didn't try out yet, ibuprofen and piroxicam." And they said, "You have two medications you didn't try out yet. What do you do? You let them go. Or you pull them back. And if you pull them back do you try ibuprofen or piroxicam? Which one?" Now think of it. This decision makes it as easy to let the patient continue with hip replacement. But pulling them back, all of the sudden becomes more complex. There is one more decision. What happens now? Majority of the physicians now choose to let the patient go to hip replacement. I hope this worries you, by the way -- (Laughter) when you go to see your physician. The thing is is that no physician would ever say, "Piroxicam, ibuprofen, hip replacement. Let's go for hip replacement." But the moment you set this as the default it has a huge power over whatever people end up doing.

I'll give you a couple of more examples on irrational decision making. Imagine I give you a choice. Do you want to go for a weekend to Rome? All expenses paid, hotel, transportation, food, breakfast, a continental breakfast, everything. Or a weekend in Paris? Now, a weekend in Paris, a weekend in Rome, these are different things. They have different food, different culture, different art. Now imagine I added a choice to the set that nobody wanted. Imagine I said, "A weekend in Rome, a weekend in Paris, or having your car stolen?" (Laughter) It's a funny idea. Because why would having your car stolen, in this set, influence anything? (Laughter) But what if the option to have your car stolen was not exactly like this. What if it was a trip to Rome, all expenses paid, transportation, breakfast. But doesn't include coffee in the morning. If you want coffee you have to pay for it yourself. It's two euros 50. Now in some ways, given that you can have Rome with coffee, why would you possibly want Rome without coffee? It's like having your car stolen. It's an inferior option. But guess what happened. The moment you add Rome without coffee, Rome with coffee becomes more popular. And people choose it. The fact that you have Rome without coffee makes Rome with coffee look superior. And not just to Rome without coffee, even superior to Paris. (Laughter)

Here are two examples of this principle. This was an ad from The Economist a few years ago that gave us three choices. An online subscription for 59 dollars. A print subscription for 125. Or you could get both for 125. (Laughter) Now I looked at this and I called up The Economist. And I tried to figure out what were they thinking. And they passed me from one person to another to another. Until eventually I got to a person who was in charge of the website. And I called them up. And they went to check what was going on. The next thing I know, the ad is gone. And no explanation.

So I decided to do the experiment that I would have loved The Economist to do with me. I took this and I gave it to 100 MIT students. I said, "What would you choose?" These are the market share. Most people wanted the combo deal. Thankfully nobody wanted the dominated option. That means our students can read. (Laughter) But now if you have an option that nobody wants you can take it off. Right? So I printed another version of this. Where I eliminated the middle option. I gave it to another 100 students. Here is what happens. Now the most popular option became the least popular. And the least popular became the most popular.

What was happening was the option that was useless, in the middle, was useless in the sense that nobody wanted it. But it wasn't useless in the sense that it helped people figure out what they wanted. In fact, relative to the option in the middle, which was get only the print for 125, the print and web for 125 looked like a fantastic deal. And as a consequence, people chose it. The general idea here, by the way, is that we actually don't know our preferences that well. And because we don't know our preferences that well we're susceptible to all of these influences from the external forces. The defaults, the particular options that are presented to us. And so on. Told you I already told you what it was about in the OP

[andreas]

This is a very important thrade that will likely change many peoples lives. I think Albert should get some kind of reward for posting this, as this probably took several days of painstaking research and effort to put together. I, for one, am amazed at Albert's intellect and wit.

[Roorseprate]

Moar thrades pleez. Me hope next page be better.

Alby, you're watching TED talks at 4:30am?

[HoniSoniproca]

TED is a good way to waste a ton of time... AS will be busy posting all the videos here now.

[frkksptn]

TED is a good way to waste a ton of time... AS will be busy posting all the videos here now.

+1

[dAy2EWlg]

TED is a good way to waste a ton of time... AS will be busy posting all the videos here now.

You know, I had actually thought to every week post a different and interesting TED video that would be conducive to discussion and make it a regular thing to motivate some intelligent discourse on these boards. I would do the legwork of course to find the topics that could get people talking (a lot of TED talks wouldn't do this), but doesn't look like anyone wants to discuss or disagree with Dan Ariely. Or maybe the video is too long and no one wants to devote 20 minutes to watching these videos (maybe it reminds people of school).



I don't find his examples surprising and I have often stated to certain posters here that worship the golden calf of homo economicus (KH, Kuci, etc.) that they are wrongly discounting the fundamental irrationality of humans. People don't know what they want, they don't know what would maximize their utility, and they're likely not even attempting to maximize their utility, because utility isn't the end-all be-all of human decision-making. Also, as Ariely points out, they're 'predictably irrational', meaning that wiser minds can manipulate people into certain decisions, regardless of economic efficacy.