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we base these decisions on our fundamental values—our likes and dislikes.
With everything you do, in fact, you should train yourself to question your repeated behaviors.
We should also pay particular attention to the first decision we make in what is going to be a long stream of decisions (about clothing, food, etc.).
When we face such a decision, it might seem to us that this is just one decision, without large consequences; but in fact the power of the first decision can have such a long-lasting effect that it will percolate into our future decisions for years to come. Given this effect, the first decision is crucial, and we should give it an appropriate amount of attention.
In other words, the sensitivity we show to price changes might in fact be largely a result of our memory for the prices we have paid in the past and our desire for coherence with our past decisions—not at all a reflection of our true preferences or our level of demand.
But over the long run, and once consumers readjusted to the new price and the new anchors (just as we adjust to the price of Nike sneakers, bottled water, and everything else), our gasoline consumption, at the new price, might in fact get close to the pretax level.
If anchors and memories of these anchors—but not preferences—determine our behavior, why would trading be hailed as the key to maximizing personal happiness (utility)?
This experience taught me that sometimes we want our decisions to have a rational veneer when, in fact, they stem from a gut feeling—what we crave deep down.
In the end, following our gut feelings and rationalizing them after the fact is not always bad. It can sometimes lead us to pick a satisfactory outcome or, at the very least, prevent us from ending up with a car we really don’t want.
“The most expensive sex is free sex.”
There are many examples to show that people will work more for a cause than for cash.
Because once market norms enter our considerations, the social norms depart.
Are gifts methods of exchange that keep us within the social exchange norms?
People are willing to work free, and they are willing to work for a reasonable wage; but offer them just a small payment and they will walk away.
THESE RESULTS SHOW that for market norms to emerge, it is sufficient to mention money (even when no money changes hands).
Indeed, just thinking about money makes us behave as most economists believe we behave—and less like the social animals we are in our daily lives.
This leads me to a final thought: when you’re in a restaurant with a date, for heaven’s sake don’t mention the price of the selections. Yes, they’re printed clearly on the menu. Yes, this might be an opportunity to impress your date with the caliber of the restaurant. But if you rub it in, you’ll be likely to shift your relationship from the social to the market norm.
SO WE LIVE in two worlds: one characterized by social exchanges and the other characterized by market exchanges. And we apply different norms to these two kinds of relationships.
Once you’ve offered to pay for the delightful Thanksgiving dinner, your mother-in-law will remember the incident for years to come. And if you’ve ever offered a potential romantic partner the chance to cut to the chase, split the cost of the courting process, and simply go to bed, the odds are that you will have wrecked the romance forever.
IN TREATING THEIR EMPLOYEES—much as in treating their customers—companies must understand their implied long-term commitment. If employees promise to work harder to achieve an important deadline (even canceling family obligations for it), if they are asked to get on an airplane at a moment’s notice to attend a meeting, then they must get something similar in return—something like support when they are sick, or a chance to hold on to their jobs when the market threatens to take their jobs away.
Sometimes, it turns out, a waste of money can be worth a lot.
Of course this may not be true of everyone, but I think that for many people the workplace is not just a source of money but also a source of motivation and self-definition.
Simply put, the communal plate transforms the food into a shared resource, and once something is part of the social good, it leads us into the realm of social norms, and with that the rules for sharing with others.
These social norms get people to consider the welfare of others and, therefore, limit consumption to a level that does not place too much of a burden on the available resource. In essence, when prices are zero and social norms are a part of the equation, people look at the world as a communal good.
when emotions run high, social norms inevitably get trampled like so many Vera Wang veils.
every one of us, regardless of how “good” we are, underpredicts the effect of passion on our behavior.
Even the most brilliant and rational person, in the heat of passion, seems to be absolutely and completely divorced from the person he thought he was. Moreover, it is not just that people make wrong predictions about themselves—their predictions are wrong by a large margin.
Moreover, the study suggested that our inability to understand ourselves in a different emotional state does not seem to improve with experience; we get it wrong even if we spend as much time in this state
Sexual arousal is familiar, personal, very human, and utterly commonplace. Even so, we all systematically underpredict the degree to which arousal completely negates our superego, and the way emotions can take control of our behavior.
The road to hell, they say, is paved with good intentions.
Giving up on our long-term goals for immediate gratification, my friends, is procrastination.
Because without precommitments, we keep on falling for temptation.
In society, no doubt, we would all be healthier if the health police arrived in a van and took procrastinators to the ministry of cholesterol control for blood tests.
Sometimes we strongly support regulations that restrain our self-destructive behaviors, and at other times we have equally strong feelings about our personal freedom. Either way, it’s always a trade-off.
ONE OF MY colleagues at Duke University, Ralph Keeney, recently noted that America’s top killer isn’t cancer or heart disease, nor is it smoking or obesity. It’s our inability to make smart choices and overcome our own self-destructive behaviors.
I suspect that over the next few decades, real improvements in life expectancy and quality are less likely to be driven by medical technology than by improved decision making.
By pairing something that we love with something that we dislike but that is good for us, we might be able to harness desire with outcome—and thus overcome some of the problems with self-control we face every day.
In many transactions why does the owner believe that his possession is worth more money than the potential owner is willing to pay?
There’s an old saying, “One man’s ceiling is another man’s floor.” Well, when you’re the owner, you’re at the ceiling; and when you’re the buyer, you’re at the floor.
in general the ownership of something increases its value in the owner’s eyes.
The first quirk, as we saw in the case of the basketball tickets, is that we fall in love with what we already have.
The second quirk is that we focus on what we may lose, rather than what we may gain.
As soon as we begin thinking about giving up our valued possessions, we are already mourning the loss.
OWNERSHIP IS NOT limited to material things. It can also apply to points of view. Once we take ownership of an idea—whether it’s about politics or sports—what do we do? We love it perhaps more than we should. We prize it more than it is worth. And most frequently, we have trouble letting go of it because we can’t stand the idea of its loss. What are we left with then? An ideology—rigid and unyielding.
In the same way that we think our own kids are more wonderful and special than our friends’ and neighbors’ children (regardless of whether our children deserve such esteem), we overvalue everything that we own, whether it’s a pair of basketball tickets or our domiciles.
OUR PROPENSITY TO overvalue what we own is a basic human bias, and it reflects a more general tendency to fall in love with, and be overly optimistic about, anything that has to do with ourselves.
choosing between two things that are similarly attractive is one of the most difficult decisions we can make.
people to a movie, you can increase their enjoyment by mentioning that it got great reviews. This is also essential for building the reputation of a brand or product. That’s what marketing is all about—providing information that will heighten someone’s anticipated and real pleasure. But do expectations created by marketing really change our enjoyment?
EXPECTATIONS ALSO SHAPE stereotypes. A stereotype, after all, is a way of categorizing information, in the hope of predicting experiences. The brain cannot start from scratch at every new situation. It must build on what it has seen before.
Research on stereotypes shows not only that we react differently when we have a stereotype of a certain group of people, but also that stereotyped people themselves react differently when they are aware of the label that they are forced to wear (in psychological parlance, they are “primed” with this label).
