|Photo by GDJ / Pixabay|
Human behavior and the decisions we make are an endless befuddlement. We are complex creatures and our decisions have several determining factors both conscious and unconscious.
Research studies of these factors reveal some interesting and even predictable results about how we humans behave irrationally. Every one of us can gain some positive knowledge from this research. This is done by delving into the general principles of homo sapiens’ thought process.
Daniel Kahneman and Amos Tversky explored the problem of relativity with a simple study: Suppose that you have two errands to run today. You need to purchase a pen and a suit. You go to an office supply store and find the pen that you were looking for. The pen costs $25. You decide to purchase it but then you remember that the same pen is on sale for $18 at another store about 15 minutes away. Would you take the 15-minute trip to save $7? Most people reasoned that they would take the trip.
Now, suppose that you move on to your second task. You find the perfect suit for $455 and you decide to purchase it. Then, a customer whispers in your ear that the same suit is on sale for only $448 at another store just 15-minutes away. Would you take the 15-minute trip to save $7? Most people reasoned that they would not take the trip.
This should seem odd. $7 is $7, no question. However, the experiment elucidates that the value of a dollar amount can be perceived differently relative to the comparative reference point.
The principle here offers us a glimpse into why upsells of products can be rational at times, for instance, It is easy to understand why someone would be willing to add an extra $200 to a $5,000 catering bill when the same person would clip coupons to save 25 cents on a $1 can of evaporated milk.
What this is trying to tell us is that we should be objective when dealing with this problem instead of relatively, however that is not the norm in these circumstances, which ends up costing us money in the long-term.
|Human Behavior Matrix by Integrator321 / Wikimedia Commons|
The Best Things in Life Are Free
Free is the best price, right? Of course it is.
The very utterance of the word free makes people’s ears perk up in no time, even without the person knowing what exactly is coming to them for “free”.
Studies show that people irrationally opt for the free one, even if it means greater expenses in the long-term.
Here is one way to understand it: Two choices for a checking account, One is free and no monthly fees and the other one is $5 per month but has many perks like online banking, cash rewards and others. Most people end up choosing the free account.
What happens is free or the number zero becomes a powerful tool for corporations and businesses. Humans and or consumers’ unconscious mind overtakes rationality generally. What it does is draw a person in for a fast discount while typically leading to long-term revenue for a business.
Loyalty is a great motivator and has a great impact on one’s behavior and decision making. So it would behoove companies to start thinking more about this when dealing with their employees. The productivity of employees depends much on their talents and their willingness to do the work. More and more these days, willingness and happiness are key considerations for employment. Salary alone does not motivate people to risk their lives, for example.
Think about a public servant who may need to put their life on the line. The payday is not the motivation in 99% of cases.
We are full of emotions as human beings thus we are often not rational. The fact is most of life’s important and fire decisions are made with emotion and not reason.
Recognizing this tendency can help someone in their decision making and possibly make things turn out more positively in the end.
Expectations and Honesty
Our thinking is influenced by our beliefs and our perception is formed by our expectations. We do not need proof a lot of times to believe something is true or not, pending our thoughts or feeling on the matter.
Think of when you meet or see someone for the first time, you probably decide what their attitude is like straight away, what they sound like, what type of words they use etc. That’s the placebo effect (expectation infiltrating reality). There is no way around this actually and the longer you live and more you experience the more expecting outcomes in every circumstance becomes a stronger unconscious reaction.
There was a now famous experiment conducted where students were asked to predict if people would cheat more for tokens that could later be converted for money than with cash. The students predicted that the rate of cheating would be the same, knowing that both the cash and the tokens represented money.
The students were completely wrong as the people who dealt in solely tokens were more prone to cheat than those dealing in cash.
|Photo by Charles Gillingham / Wikimedia Commons|
Master of Your Domain
Two things to take away from all of this are:
The mind is almost toying with our own selves constantly in many ways. Our emotions, for instance, run our minds more than our rational thinking and this is something of a cruel joke when you think about it.
The good thing about this is that we are not powerless. Recognition and acknowledgment of our particular weaknesses can, in the end, make us better decision makers and therefore make life go more smoothly and prosperously.