Duke University professor Dan Ariely has built a career mapping the
peculiarities of our innermost decision-making foibles, and offers
insight in guarding against them.
[But] now the world has changed on us. We don’t have many tigers, sadly actually, anymore. And now we deal with all kinds of other things, we deal with something like money. Very long term, we have to think, we have to plan. We have to deal with things like traffic. I mean, just think about the range of things that we deal with. They are very different from the things we evolved to deal with, and now we use our brain mechanism to deal with those things, but it’s very far from perfect. So, we make mistakes. We are basically trying to use the machinery that is not used to solving problems about healthcare and money and long-term relationships and mortgages. And we try to use them and we make mistakes.
But, cultures do matter, because cultures can take up a domain and say, “In this domain, we care about X, Y or Z.” So, some cultures can say, “You know what? We care a lot about how you portray yourself to other people.” Or some cultures can come and say, “We care a lot about how you stand in line” or something. Or some culture could come along and say, “We care a lot about the value of friendship.” Whatever it is, cultures don’t change the backbone of humanity, but they do change the way we view particular types of activities, kind of silos.
Read an unabridged version of the interview on www.foundingfuel.com, published in an exclusive partnership with knowledge.ckgsb.edu.cn/
source: livemint.com
http://www.livemint.com/Companies/c1T7AJoV3h5OgO5soV0nIJ/Dan-Arielys-decisionmaking-tip-Understanding-our-minds.html
Each of
us makes hundreds of decisions every day. Most of them are small:
Should I buy that shirt? Do I have five more minutes to spend playing my
favourite app? Others demand more thought: How should I plan my
retirement savings? Is marriage right for me? The common thread running
between a lot of them is that we are, in some sense, unequipped to make
sense of any of it. The world in which the human race came of age—one of
ferocious predators and unforgiving nature—is no longer the world we
live in. For the risks we face now, we are out of date.
Dan Ariely, James B. Duke Professor of Psychology and Behavioral
Economics at Duke University, has built a career mapping the
peculiarities of our innermost decision-making foibles, and offers
insight in guarding against them. Edited excerpts from an interview:
Why are human beings hardwired to be predictably irrational?
There’s
a few potential answers for this, but here is one general idea. If you
think about it, we were designed with a computation machine, a brain, to
deal with all kinds of things… to deal with jungles and different types
of risks. And the machinery that we got did not have to be perfect, but
it had to be very accurate. For example, if you see a tiger, you want
to run away very, very quickly. You don’t want to stop and think about
it. And if it’s not a real tiger, you still want to run away; why take
the risk?[But] now the world has changed on us. We don’t have many tigers, sadly actually, anymore. And now we deal with all kinds of other things, we deal with something like money. Very long term, we have to think, we have to plan. We have to deal with things like traffic. I mean, just think about the range of things that we deal with. They are very different from the things we evolved to deal with, and now we use our brain mechanism to deal with those things, but it’s very far from perfect. So, we make mistakes. We are basically trying to use the machinery that is not used to solving problems about healthcare and money and long-term relationships and mortgages. And we try to use them and we make mistakes.
How does decision-making vary across different places and different cultures?
Think
about visual illusions. Visual illusions are basically the same the
world over. If you can see, you have a visual illusion. It’s something
very basic in terms of how our brains work. Now, when we come to
decision-making, there is some very basic decision-making. For example,
what happens when we are stressed, or what happens when we have too many
options, or what happens when we have the default, and in those cases
people don’t seem to be too different from each other.But, cultures do matter, because cultures can take up a domain and say, “In this domain, we care about X, Y or Z.” So, some cultures can say, “You know what? We care a lot about how you portray yourself to other people.” Or some cultures can come and say, “We care a lot about how you stand in line” or something. Or some culture could come along and say, “We care a lot about the value of friendship.” Whatever it is, cultures don’t change the backbone of humanity, but they do change the way we view particular types of activities, kind of silos.
How
might insights into our hardwired flaws and the way to guard against
them apply to business decisions? Can a CEO make use of it?
Of
course, [we can apply it here]. There are lots of ways in which we are
rational. You can think about what motivates employees. Is it just
salary? Is it gifts? Is it kind words? Lots of things motivate us. If
you understand what things actually motivate people, rational,
irrational, you can motivate people to a higher degree. If you
understand what kinds of products people will be excited about, you can
create those. So, lots of things in the business domain as well.
The
world seems to be moving faster and faster. Does that translate to a
greater urgency to pay attention to the way we make decisions?
Yes,
absolutely. So, partially it is these days we have more temptations,
right? So, that’s very important to realize. There’s more things around
us to tempt us. Partially we make more decisions without thinking. We
are on the mobile device, thinking, making decisions on the go. We are
also more stressed and have less time to consider all options. So, I
think, irrationality is on the rise. Temptation is on the rise, and the
consequences and the opportunities for us to make mistakes are higher.
Your book The Honest Truth about Dishonesty
described an experiment in which a fake student was planted among
students taking a real exam. The plant, openly cheating on the exam,
induced other students to cheat. Can this sort of thing happen on a
larger scale? Say, if a CEO, or a top political leader is perceived to
be dishonest?
Yes. What we find is that dishonesty is
socially infectious. And if somebody in high power, let’s say, a CEO, or
an executive, or a movie star or somebody like this, cheats in an
egregious way, people would look at it and change what they view as
acceptable and not acceptable.
Seeing as that is true, how do you go about fixing this problem once it has taken root in a large organization?
I
actually think that this is something that is very interesting about
China. So, in China, there have been attempts with the new government to
reset things. So, they say, “No more waste… we are not going to waste,
we are not going to pile things on our plate and eat too much,” and “no
more corruption”. It’s not that corruption stops, or that waste stops,
but you basically… to stop this slippery slope in that direction, you
need to say, “Here is how we are going to act from now on” and basically
make sure that everybody acts in that new way, and announce: “From now
on, we are going to do things differently,” and that’s a very important
direction.Read an unabridged version of the interview on www.foundingfuel.com, published in an exclusive partnership with knowledge.ckgsb.edu.cn/
source: livemint.com
http://www.livemint.com/Companies/c1T7AJoV3h5OgO5soV0nIJ/Dan-Arielys-decisionmaking-tip-Understanding-our-minds.html
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