It turns out we’re not. This videos shows some shoking experiments done to show that people make irrational decisions when there is a default decision that’s already made, and a problem designer can influence people’s decisions by changing these defaults.
Behavioral economics Dan Ariely the author of Predictably Irrational, uses classic visual illusions and his own counterintuitive (and sometimes shocking) research findings to show how we’re not as rational as we think when we make decisions.
Interestingly, given two different choices A and B each with percentage of preference 50%, adding a third choice A2 that is just like A but not as good (so the preference between A and A2 is 100% vs 0%), A suddenly becomes more attractive, even more so than B. This is a similar to but not quite like the independence of irrelevant alternatives condition in voting systems where a third loosing candidate can steal the win away from the winning candidate by taking his votes. This consequence has a lot of applications in marketing. Simply by offering worse but very similar alternatives to the product that you’re trying to sell, it’s possible to make your product look better than competitor products! Although this would only work if the competitors product quite different, but still a substitute to yours.
Perhaps the most remarkable experiment was one given to doctors. A patient is about to be sent for hip replacement, but one group of doctors was given another decision, they can pull the patient back from the surgery and give them ibuprofen instead. It’s obvious that ibuprofin is a much better alternative than hip replacement, so the doctors would decide to pull the patient back. The other group of doctors was given ibuprofen and piroxicam as alternatives. The doctors chose to let the patient go through with the hip replacement. This is worrying indeed. Piroxicam and ibuprofen are obvious better alternatives, but since the doctors would have to make another choice to choose between Piroxicam or ibuprofen, it makes the decision all of the sudden more complicated, they don’t know what to do and choose to let the patient stay on his default path.
This is similar to the concept of paralysis presented by Barry Schwartz on the paradox of choice. When you have too many choices of similar value, the choice becomes more difficult and you are unhappy as a result even if all choices are good ones. The opportunity cost of choosing one over another seem higher.
Both the books ‘The Paradox of Choice’ and ‘Predicably Irrational’ has been added to my reading list.
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
