Understand Your Brain: How Rage, Greed And Fear Lead To Unwise Decisions
Making mistakes is an inevitable part of life, but it’s one thing to make a mistake you know about and another to make a mistake without even knowing you were doing it.
Sway: The Irresistible Pull of Irrational Behaviour focuses on the latter and how you can identify these irrational behaviours before they take hold and risk steering you off course.
You’ll learn how to recognize when your brain is making sense-defying decisions, how the environment around you impacts your decision making, and what factors play into leading you astray from your logical decisions.
You’ll also find out why Russians will do anything to keep you from winning on Who Wants to Be a Millionaire, why people keep buying car rental insurance they don’t need, and how having negative thoughts about aging can actually make us older.
With this knowledge, we can start taking steps to prevent ourselves from making mistakes we never knew we were making in the first place.
The Fear Of Loss Is The Hidden Force Behind Irrational Behavior
We humans are averse to losses and an increase in price is particularly more bothersome than a decrease.
The feeling of losing something can be overwhelming, even to seasoned experts like airplane pilots and surgeons who may make grave mistakes.
Daniel Putler, a professor at the US Department of Agriculture conducted research on egg sales to observe people’s response to price decreases and increases.
When prices rose, people cut their consumption of eggs by two and a half times whereas there was only a slight increase in egg purchases when prices dropped.
This illustrates how the fear of loss can overpower us and compel us to do things that may not be rational – such as overspending for the mere assurance that no loss will occur.
Experiences such as these show that if given the choice, most individuals tend to choose options which prevent them from losses even though it might not always be beneficial.
Fear Of Loss Leads To Irrational And Destructive Behavior
The concept of loss aversion illustrates how having more invested in something can lead to an even bigger reaction against it when things don’t go as planned.
When people are more committed to a particular idea, it becomes incredibly difficult for them to let go – even when it’s clear that the idea isn’t working.
This is evident in the football example from Southeastern Conference where the coach Steve Spurrier changed his team’s strategy and led them to winning games; but no other coaches followed suit due to their fear of trying something new.
The notion of fear of losing can also have drastic consequences on decisions made in retail and investment banking; such as illustrated by the client who refused to sell their equity shares when the price dropped from $47 to $38, instead opting to wait until it reached back at $44.
As we know, he ended up losing nearly everything because this stock plummeted all the way down to 12 cents.
Thus what we can take away from this is that when stakes are high, our commitment towards a certain idea can often lead us into extremely irrational behavior; leading us further away from success rather than closer to it.
Value Attribution: How Our First Impressions Shape Our Experiences
It’s human nature to attribute value to people and things based on first impressions.
This phenomenon of value attribution is particularly obvious when considering ideas from different people.
For example, if a good friend comes up with a great idea, we might think it’s genius.
But if the same great idea comes from an enemy or foe we might be less inclined to act on it.
This effect was demonstrated by Nathan Handwerker in 1916 when his hot dog stand on Coney Island struggled to attract customers despite offering cheaper prices than his competitors.
To counteract this, he got doctors – recognizable in their white lab coats – to hang around his stand eating hot dogs and this significantly improved business thanks to customers attributing more value to his products because of the doctors’ presence.
Value attribution also has an influence on how entertained we are by things like theater productions; a study at Ohio State University found that those who had paid full price for their season tickets actually attended more shows than those who had received a discount presuming (incorrectly as it turned out) that discounted shows must have been inferior quality and thus not worth their time.
Our Intuition Can Blind Us To The Reality Of A Situation
It’s no secret that love can be blind.
We often rely on our intuition when judging our partners, without taking into account the more objective data we have in front of us.
This has been proven true time and again by multiple studies.
For instance, a professor at MIT ran an experiment using a substitute teacher.
Half of his students read that the teacher was “warm”, while the other half said he was “cold.” Afterwards when asked for their assessment of the professor, there were huge differences between the two groups – those who read he was “warm” thought him to be “good natured, considerate of others and sociable,” while the other group thought him to be “self-centred, unsociable, irritable and humorless.”
Similarly, a Canadian study of college freshman found that despite correctly identifying potential problems in their relationships, they still had an overly optimistic view about its longevity – which later proved to be wrong.
Interestingly enough, strangers and family members who hadn’t formed such strong ties with these couples often offered far more accurate predictions regarding their future together!
It’s clear then that so often in life we rely on intuition rather than full assessment of all the information we have–which often results us throwing caution and objectivity to the wind when it comes to love!
The Pygmalion And Golem Effects: How Positive And Negative Labels Shape Our Performance
We all want to be seen as winners.
We want to feel like we succeeded and received recognition for our accomplishments.
That’s why it’s no surprise that when someone tells us that we are a high performer, we tend to take it and really perform better because of it.
This is known as the Pygmalion Effect – when expectations of us are higher, our performance is positively impacted.
This is evidenced in an example from Israeli soldiers who took part in a commander training program.
Those who were told they were part of the high command potential group actually acted more accordingly, unknowingly raising their own standards due to being told they were “high performers.” However, if we’re on the opposite end of the spectrum and labeled as “losers” or with some kind of negative trait, we may assume those characteristics ourselves, only to suffer the effects – this is known as the Golem Effect.
Yale researchers observed how this happens during a study at a retirement home, where seniors were given a hearing test followed by being asked what five words they thought best described old people (ranging from compassionate and experienced to feeble and white-haired).
After three years later conducting another hearing test, those participants who previously described old age with external and negative characteristics had far lower scores than average – simply because their perception of age was making them age more quickly.
The lesson here? We perform better when we’re told we’re winners; however when we’re told that we’re losers, the emotional toll can make us fail even more drastically than expected.
Why We Sometimes Behave Unfairly In Pursuit Of Fairness
Fairness and what is considered “fair play” is a deeply rooted value system that is often culturally determined.
We can see this from the behavior of audience members in international TV shows like Who Wants To Be A Millionaire.
In one episode, when the French contestant asked for help on an surprisingly easy trivia question, the audience responded with answers that were incorrect.
Though it seemed irrational at the time, their logic was rooted in fairness – if the contestant didn’t know something so basic, then he doesn’t deserve to win.
This example shows how what is fair play and what is not can vary greatly between cultures and even between individuals within a culture.
American audiences typically offer correct answers regardless of how well the contestant appears to be doing; Russian audiences usually give wrong answers no matter how proficiently the contestant has been playing.
Clearly, cultural values dictate our idea of what’s fair, and those values can be extremely varied and sometimes irrational.
Being Able To Voice Our Opinions Is An Important Factor For Feeling Fairly Treated
We all want to feel like our opinion matters and it’s been proven that we are more likely to accept a negative outcome as long as we think the process was fair.
This has been demonstrated in multiple studies.
In one study conducted in Berlin, researchers isolated two people in separate rooms where one person received €10 and was allowed to decide how much the other person would get.
The second person had the option of either accepting what was offered or rejecting it and no money would be distributed.
When the second person felt like the offer was unfair, she rejected it even though it would have meant receiving some money instead of none at all.
Another study showed this effect when hundreds of felons were surveyed about their opinions on the fairness of their trials.
Generally those sentenced with shorter terms thought it was fair while those sentenced with longer terms did not.
However, an important factor for nearly everyone surveyed had to do with being able to consult with a lawyer – doing so helped them gain a sense of having a voice which made them feel like they weren’t completely powerless and could influence their outcomes no matter what sentence they received in the end.
Thus, if we feel like we can voice our opinion and be taken seriously, we will be more likely to accept any outcome – positive or negative – knowing that our thoughts were heard and considered making us feel that much better about the situation overall.
It’S Important To Put Aside Past Mistakes And Focus On The Bigger Picture
Irrational behavior can have serious consequences in our lives, especially when it comes to business decisions.
But by understanding and being willing to put aside past mishaps and instead focusing on the bigger picture, we are more likely to make the best possible decision that will help us succeed.
Take for example Intel when it faced a competitive threat from Japanese memory chips in 1985.
It was a difficult situation for CEO Andy Grove and co-founder Gordon Moore, but they understood the importance of curbing irrational behavior and focused on what would be best for their company today – getting out of Memory Chips.
This shift in mindset resulted in one of the biggest success stories in global technology, as Intel today is a global leader.
This shows how powerful it can be to always think of the big picture first, no matter your prior mistakes and experiences.
By looking at each new challenge with clarity and an open mind, you’re more likely to make the best decisions for your success.
“Sway: The Irresistible Pull of Irrational Behavior” has a simple message to take away – our irrational behavior can lead us astray.
We fear losses, we allow our first impressions to play a bigger role than they should, and subconscious influences can dictate our decisions more than we might expect.
So, to ward off irrational behaviors, the actionable advice from Sway is to view problems with fresh eyes.
Look at them as if you just arrived on the job or into the relationship for the first time; what would you think? This might help us break out of bad habits that influence emotional reactions and lead to inaction.
It’s easy for us to methodically consider facts and evidence only to succumb to our emotions in making a decision.
Keeping this book’s key points in mind is one way of arming yourself against being influenced by such irrationality!