💎 How a Dutch lottery ingeniously harnesses regret aversion by allocating a lottery number to every household (postcode lottery)

Imagine you’re a student. You’re offered a free lottery ticket with the chance to win a 15 euro book token. You’re shown the ticket, and you notice the number on it. Then you’re given the chance to swap that ticket for a different one. In return for swapping tickets, you’ll get a free gift – a pen embossed with your university’s name. Would you agree to exchange the tickets or not?

When students at Tilburg University in the Netherlands were given this choice only 56 per cent of them went for it, even though their chances of winning the book token were the same and so they might as well have had the free pen.”

Perhaps you’re thinking it was the lousy gift that explained their reaction. Couldn’t the researchers have tempted the students with a slightly more enticing freebie? Maybe, but that’s not the issue. The important detail here is that the students were shown the number on the original lottery ticket. This meant that having swapped their original ticket for another, if the number on the original was drawn out of the hat, they would know they’d made the wrong decision.

That said, if you live in the Netherlands, some lottery organisers are one step ahead. In a fiendish example of the exploitation of regret aversion, they’ve designed a lottery in which everyone’s unique postcode is automatically entered into the draw. Although you can only win if you’ve paid for a ticket, in any given week you can look up to see whether you’d have won, if only you had bothered to enter.

Excerpt from: Mind Over Money: The Psychology of Money and How To Use It Better by Claudia Hammond

💎 Highly emotive imagery is recalled equally as well as neutral imagery in the immediate term (but far better in the longer term)

In a study I conducted with Yonelinas at Davis, we presented volunteers with highly arousing emotional photos (mostly unpleasant photos of mutilated bodies and acts of violence) as well as neutral photos (people reading in a bookstore or employees working in an office). We then tested the volunteers’ memory of half the photos immediately after presenting them; we tested their memories of the rest of the photos twenty-four hours later. At first, it seemed that the volunteers’ memories of the emotional and neutral photos were not different; they remembered them equally well. However, when they came back to the lab a day later, something had changed. Now their recollection of the emotional photos was better than that of the neutral photos. The volunteers’ memories were not always more accurate, but they reported they were more vivid.”

Except from: The Optimism Bias: Why we’re wired to look on the bright side by Tali Sharot

💎 Consumers are far more likely to splurge windfall money than expected (gamblers beware)

Payday is not the only moment when customers spend more. Any time consumers receive a windfall, like birthdays or bonuses, they will increase their spending. Three Ohio University psychologists, Hal Arkes, Cynthia Joyner and Mark Prezzo, ran an experiment in 1994 exploring this phenomenon. When they recruited students for the experiment half were told a week before that they would be paid $3, while the rest expected to be given course credits. However, when the participants arrived at the experiment they were all given the same $3-dollar incentive.

The participants were given the chance to gamble with their cash on a simple dice game. Those who had been given cash in the windfall condition gambled on average $2.16 while those who had been fully expecting the money only frittered away $1.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 Misrepresenting reality (so as to better reflect reality)

Our perceptional apparatus makes mistakes-distortions—in order lead us to more precise actions: ocular deception, it turns out, is a necessary thing. Greek and Roman architects misrepresented the columns of their temples, by tilting them inward, in order to give us the impression that the columns are straight. As Vitruvius explains, the aim is to “counteract the visual reception by a change of proportions.” A distortion is meant to bring about an enhancement for your aesthetic experience. The floor of the Parthenon is curved in reality so we can see it as straight. The columns are in truth unevenly spaced, so we can see them lined up like a marching Russian division in a parade.

Should one go lodge a complaint with the Greek Ministry of tourism claiming that the columns are not vertical and that someone is taking advantage of our visual mechanisms?

Excerpt from: Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb

💎 Checklist for evaluating creative strategy (11 steps)

Checklist for evaluating creative

1. Come prepared
2. Expect to be surprised maybe even made a little nervous
3. React to the idea as a whole
4. Add what’s important and incremental
5. Make sure it’s on strategy, not on checklist
6. If it doesn’t connect emotionally, it doesn’t connect
7. Remember what the work is trying to accomplish
8. Don’t just talk about what’s not working for you
9. See problems? Don’t offer solutions, explain the problem
10. Remember you don’t have to find something wrong
11. A creative idea needs creative direction not group cons

Excerpt from: Strategy Scrapbook by Alex Morris

💎 Our picture memory is superior to our verbal memory (and our memory of vivid imagery is greater than that of more routine images)

In 1973, Standing conducted a range of experiments exploring human memory. The participants were shown pictures or words and instructed to pay attention to them and try to memorize them for a test on memory. Each picture or word was shown once, for five seconds.

The words had been randomly selected from the Merriam-Webster dictionary and were printed on 35mm slides – words like ‘salad’, ‘cotton’, reduce’, ‘camouflage’ ‘ton’.

The pictures were taken from 1,000 snapshots – most of them from holidays – beaches, palm trees, sunsets – volunteered by the students and faculty at McMaster University in Ontario, Canada, where Standing taught at the time. But some of the pictures were more vivid – a crashed plane, for instance, or a dog holding a pipe. But remember this was the seventies – all dogs smoked pipes back then.

Two days later the participants were shown a series of two snapshots or two words at a time, one from the stack of snapshots they had seen before and one new, and were asked which one looked more familiar.

The experiment showed that our picture memory is superior to our verbal memory. When the learning set is 1,000 words selected from the dictionary above, we remember 62 per cent of them, while 77 per cent of the 1,000 selected snapshots were remembered. The bigger the learning set, the smaller the recognition rate. So, for instance, if the learning set for pictures were increased to 10,000, the recognition rate dropped to 66 per cent. However, we remember snapshots better than we do words. That may be why you might be better at remembering faces than names. So, if you are introduced to Penelope, it might help you remember her name if you picture Penelope Cruz standing next to her.

In addition, if more vivid pictures were presented, rather than the routine snapshots, recognition jumped to 88 per cent for 1,000 pictures.

Excerpt from: The Art of Making Memories: How to Create and Remember Happy Moments by Meik Wiking

💎 Inhibiting desire can backfire (why breaking habits is hard)

Psychologist Daniel Wegner and his colleagues devised an experiment to demonstrate the ironic effect of inhibiting our desires. Participants were instructed in a simple task-not thinking of a white bear. Who spends much time thinking of white bears, anyway? Participants sat alone in a lab room for five minutes and rang a bell every time they failed to suppress this thought. On average, they rang the bell about five times, almost once per minute. No surprise that our thoughts wander, even to forbidden topics, when we are alone and bored. What is interesting is what happened when the same participants later sat for five minutes trying to think of a white bear. After the suppression task, they rang the bell almost eight times. In contrast, participants instructed to try to think of a white bear for five minutes, but without the initial task of not doing so, rang the bell fewer than five times. It was as if the act of trying to suppress a thought gave it a special energy to emerge later. After the participants tried not to think about white bears, thoughts of them returned again and again. When rating their experience, participants who had initially suppressed thoughts of white bears reported feeling preoccupied with them.

Excerpt from: Good Habits, Bad Habits: The Science of Making Positive Changes That Stick by Wendy Wood

💎 After an event has occurred, people become overconfident about their ability to have predicted it (“I knew-it-all-along”)

…termed the hindsight bias, or the “I knew-it-all-along” effect. As you may recall from our discussion in Chapter 1, once we know the outcome of an event, we have a strong tendency to believe that we could have predicted it in advance. In the Fischhoff experiments, subjects were given a test assessing their knowledge of historical events. The subject’s task was to indicate the likelihood that four possible outcomes of the event could have actually occurred. Some of the subjects were told that one of the four possibilities had actually happened but were asked to make the estimates that they would have made had they not first been told the “right” answers. The results showed that subjects could not ignore this information; they substantially overestimated their prior knowledge of correct answers. In other words, even though subjects really didn’t know the answers to the test, once they were told an answer, they believed that they knew it all along and that their memories had not changed.

Excerpt from: The Social Animal by Elliot Aronson and Joshua Aronson

💎 Why people often think they’re the hero (moral superiority)

Everyone who’s psychologically normal thinks they’re the hero. Moral superiority is thought to be a ʻuniquely strong and prevalent form of positive illusion’. Maintaining a positive moral self-image’ doesn’t only offer psychological and social benefits, it’s actually been found to improve our physical health. Even murderers and domestic abusers tend to consider themselves morally justified, often the victims of intolerable provocation. When researchers tested prisoners on their hero-maker biases, they found them to be largely intact. The inmates considered themselves above average on a range of pro-social characteristics, including kindness and morality. The exception was law-abidingness. There, sitting in prison, serving sentences precisely because they’d made serious contraventions of the law, they were only willing to concede that, on law-abidingness, they scored about average.

Excerpt from: The Science of Storytelling by Will Storr

💎 Our tendency to set different burdens of proof according to whether evidence agrees with our existing viewpoint or not (Must I believe this?)

As psychologist Thomas Gilovich noted, “When examining evidence relevant to a given belief, people are inclined to see what they expect to see, and conclude what they expect to conclude… For desired conclusions … we ask ourselves, ‘Can I believe this?, but for unpalatable conclusions we ask, “Must I believe this?””

Excerpt from: Catalyst by Jonah Berger

💎 We often selectively interpret evidence to fit with our prior beliefs (and is used to further cement beliefs)

In 1979 – when capital punishment was a top issue in the United States – American researchers brought together equal numbers of supporters and opponents of the death penalty. The strength of their views was tested. Then they were asked to read a carefully balanced essay that presented evidence that capital punishment deters crime and evidence that it does not. The researchers then retested people’s opinions and discovered that they had only gotten stronger. They had absorbed the evidence that confirmed their views, ignored the rest, and left the experiment even more convinced that they were right and those who disagreed were wrong.

Excerpt from: Risk: The Science and Politics of Fear by Dan Gardner

💎 The negative impact of multitasking on productivity (benefits of having a clear schedule)

One nice recent study involved 218 Dutch students being asked to solve a Sudoku puzzle and complete a word search in a fixed time of twenty-four minutes. Participants in the experiment were randomly as signed to one of three treatments: one where they were forced to multitask; one where they could organize their work by freely switching between the Sudoku puzzle and the word search; and one where they performed the tasks sequentially. They were awarded points for each correctly filled Sudoku cell and each word found. The total points scored were lowest in the first group and highest in the third. 35 These results suggest that having a clear schedule of work is better for productivity So multitasking might sound cool, but it actually makes you a fool.

Excerpt from: Happiness by Design: Change What You Do, Not How You Think by Paul Dolan

💎 A wonderfully simple opportunity, that would cost nothing, but allow the government to reduce irritation (and therefore boost compliance)

As Shakespeare wrote, “there is nothing either good or bad, but thinking makes it so’.

A few hours before I sat down to write this chapter, I received a parking ticket. It was only for £25 and I was completely to blame, but it nevertheless annoyed me to an extraordinary degree – and it is still annoying me now. Perhaps a parking ticket is made even more annoying because we can see no way of reframing it in a positive light.

Could the local authority that issued me with the ticket give me a chance to play the same mental trick on myself as the easyJet pilot – a reason, however tenuous, to feel slightly upbeat about the fine? For instance, how different would I feel if I was told that the money from my fine would be invested into improving local roads or donated to a homeless shelter? The fine would have the same deterrent effect, but my level of anger and resentment would be significantly reduced. How would that be a bad thing?

Excerpt from: Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland

💎 Describing loss aversion in 1759 (Adam Smith)

Pain […] is, in almost all cases, a more pungent sensation than the opposite and corresponding pleasure. The one almost always depresses us much more below the ordinary, or what may be called the natural state of our happiness, than the other ever raises us above it.
(Smith, 1759)

Excerpt from: Behavioral Economics (The Basics) by Philip Corr and Anke Plagnol

💎 A review of life satisfaction found 9 groups consistently scored higher (for happiness)

a. are wealthier (especially when compared to people who are like them)
b. are young or old (being in your forties and fifties is a bad time for life satisfaction)
c. are healthier
d. have lots of social contact
e. are married (or at least cohabiting)
f. are a little more educated (having a degree is good but you probably shouldn’t get a PhD if you want to maximize your life satisfaction)
g. are religious (it doesn’t matter which religion)
h. have a job
i. commute a short distance to work

Excerpt from: Happiness by Design: Change What You Do, Not How You Think by Paul Dolan

💎 On how we evaluate ourselves by comparing to known references (cognitive dissonance)

Leon Festinger and Merrill Carlsmith of Stanford University once asked their students to carry out an hour of excruciatingly boring tasks. They then divided the subjects into two groups. Each student in group A received a dollar (it was 1959) and instructions to wax lyrical about the work to another student waiting outside – in other words, to lie. The same was asked of the students in group B, with one difference: they were given $20 for the task. Later, the students had to divulge how they had really found the monotonous work. Interestingly, those who received only a dollar rated it as significantly more enjoyable and interesting. Why? One measly dollar was not enough for them to lie outright; instead they convinced themselves that the work was not that bad. Just as Aesop’s fox reinterpreted the situation, so did they. The students who received more didn’t have to justify anything. They had lied and netted $20 for it – a fair deal. They experienced no cognitive dissonance.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On our desire for variety being greater at purchase not consumption (think All-Bran in cereal variety packs)

We also seem to crave more variety at the point of decision than we will actually desire down the road. When I was young, for example, I was obsessed by the Kellogg’s variety packs of cereal. Wooed by the sight of the Apple Jacks and Frosted Flakes jostling up against each other, I would clamor for my parents to buy the largest package on offer, a towering block of shrink-wrapped goodness. Having raced through my favorites, however, I would find my liking gradually diminishing, from dizzy Applejacks heights to the sad denouement of a few sparse clusters of Special K and All-Bran, which often went unconsumed, dying a slow death in a shroud of plastic. My parents would, of course have been better off simply buying a few boxes of my favorites, which I would reliably eat every day.

Excerpt from: You May Also Like: Taste in an Age of Endless Choice by Tom Vanderbilt

💎 On the tendency to interpret information to fit with our own behaviour (smoking and lung cancer)

My personal favourite from Festinger’s many brilliant examples of cognitive dissonance deals with people’s beliefs about the link between smoking and lung cancer. He was writing at the very birth of research on the causes of cancer. It was a unique window of time during which it was possible to test whether groups of smokers and non-smokers would accept or reject new information that had been uncovered about a link. Festinger saw the effects you’d expect from anyone suffering cognitive dissonance: heavy smokers – those who had the most to lose from the new research being right – were the most resistant to believing that a link had been proven; only 7 per cent accepted the validity of the new research. Twice as many moderate smokers accepted the link, at 16 per cent. Non-smokers were much more willing than smokers to believe the link had been proven, but as a mark of just how far social norms have swung since then, only 29 per cent of them believed the link had been proven, despite having nothing to lose.

Excerpt from: The Perils of Perception Why We’re Wrong About Nearly Everything by Bobby Duffy

💎 On how quickly in groups form (even when the connection is obscure)

With sports affiliations, random birthplace suffices, and in business it is where you work. To test this, the British psychologist Henri Tajfel split strangers into groups, tossing a coin to choose who went to which group. He told the members of one group it was because they all liked a particular type of art. The results were impressive: although A) they were strangers, B) they were allocated a group at random and C) they were far from art connoisseurs, the group members found each other more agreeable than members of other groups.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On taste freeze in music (somewhere around age thirty-three)

When Spotify looked at its music-streaming data, it found that teens listen to contemporary and popular music almost exclusively. As listeners age, their tastes expand. They spend more time listening to obscure bands and album tracks that were not hits. As the years go by, some take up jazz or world music or classical. But somewhere around age thirty-three, most stop listening to contemporary hits at all. The phenomenon even has a name—taste freeze. Men are more susceptible to it than women. Another fun fact: become a parent, and your “music relevance” takes a hit equivalent to ageing four years.

Excerpt from: Head in the Cloud by William Poundstone

💎 On the power of expectations (of students)

A quick digression on expectations (we’ll return – almost as a recurring theme — to the importance of teaching and teachers later). In 1968 Robert Rosenthal conducted an experiment in America where teachers were told that randomly selected pupils had actually performed in the top 20 per cent of a test that identified ‘potential’. This was, of course, untrue. But here’s the thing: when those pupils’ IQs were tested at the end of the year, they had increased relative to everybody else. Expectations improved performance.

Excerpt from: How Britain Really Works: Understanding the Ideas and Institutions of a Nation by Stig Abell

💎 On the biggest long term change in society being the growth in choice (not the internet)

In a few hundred years, when the history of our time will be written from a longterm perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition. For the first time -literally – substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves. And society is totally unprepared for it.

Excerpt from: Managing Oneself by Peter Drucker

💎 On our memory of product experience being distorted under questioning (remember your last meal)

Trying to look backward, to the last remembered experience of a meal—if only to make a new choice—invites its own distortions. In one experiment, psychologists were able to change how much people liked something (in this case, a “microwavable Heinz Weight Watchers Tomato & Basil Chicken ready meal”) after they had eaten it—not, as has been done with rats, by physically manipulating their brains. Instead, researchers simply had subjects “rehearse” the “enjoyable aspects” of the meal. This, the idea goes, made those best moments more “accessible” in the memory, and thus they popped out more easily when people were later thinking about the meal. Voila! The food not only suddenly seemed better, the subject wanted to eat more of it.

Excerpt from: You May Also Like: Taste in an Age of Endless Choice by Tom Vanderbilt

💎 On the counter-intuitive benefits of a lack of experience (fear those who have never had a sword in their hand before)

The best swordsman in the world doesn’t need to fear the second-best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the sane thing he ought to do, and so the expert isn’t prepared for him.

Excerpt from: Digital Darwinism: Survival of the Fittest in the Age of Business Disruption by Tom Goodwin

💎 On selling something surprising (make it familiar). On selling something familiar (make it surprising)

But by using familiar form, TiVo mad people more comfortable adopting radical innovation, By hiding the technology in something that looked visually familiar, TiVo used similarity to make difference feel more palatable.

Many digital actions today visually evoke their analog ancestors. We click on the icon of a floppy disk to save documents and drag digital files to be thrown away in what looks like a waste bin. Visual similarity also shows up offline. High-end care often use fake wood grain on the dashboard and veggie burgers often have grill marks. All make the different seem more similar.

The opposite also holds. Design can be used to make incremental innovations feel more novel. When Apple introduced the iMac in 1998, it featured only minor technological improvements. But from a visual standpoint it was radically different. Rather than the same old black or grey box, the iMac was shaped like a gum drop and came in colors like tangerine or strawberry. The device was hugely successful, and design, rather than technology, created the needed sense of difference that encouraged people to purchase.

Excerpt from: Invisible Influence: The Hidden Forces That Shape Behavior by Jonah Berger

💎 On turning a dry statistic into something genuinely moving (to win people over)

Beyond War would arrange “house parties,” in which a host family invited a group of friends and neighbors over, along with a Beyond War representative to speak to them. Ainscow recounts a simple demonstration that the group used in its presentations. He always carried a metal bucket to the gatherings. At the appropriate point in the presentation, he’d take a BB out of his pocked and drip it into the empty bucket. The BB made a loud clatter as it ricocheted and settled. Ainscow would say, “This is the Hiroshima bomb.” He then spent a few minutes describing the devastation of the Hiroshima bomb — the miles of flattened buildings, the tens of thousands killed immediately, the larger number of people with burns or other long-term health problems.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On the power of the centre (even when you’re a gameshow contestant)

In the UK, there was a popular game show called The Weakest Link broadcast on television that aired between 2000 and 2012. The show was presented by Anne Robinson who was known for her sharp and forthright style, to put it mildly.

If you’re not familiar with the game, each contestant answered a question in sequence determined by their position in a line up. Each correct answer earned an ever-increasing sum of money until the pot was “banked” or kept, at which point the value of the pot was reset, but the round continued. At the end of each round, the contestants voted who they’d like to eliminate until one person, the winner, remained.

If players were acting rationally, they would vote out the “weakest link”, the worst player, at the end of each round in order to “bank” the most money in preceding rounds. However, the number of incorrect answers given was not the only determining factor used by the players when deciding who to vote off.

In many cases, players overlooked errors that those in the centre of the line-up made to a greater extent than errors made by those in extreme positions. This gave centre position holders more favourable assessments and, as such, they were often ignored when it came to voting. During the twelve years that the show aired, significantly more winners came from the centre of the stage.

This phenomenon is known as the centre-stage effect, and we are influenced by it every single day. Positioning is vitally important and has drastic implications on consumer behaviour, and your own success.

Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood

💎 On the danger of (Microsoft’s) “petty” financial rewards

A promotion was launched that gave Xbox users 20 Microsoft points, a digital currency issued by Microsoft that could be used purchase a range of digital goods. There were a number of criticisms of this since discontinued digital currency, not least because points were deceptive in terms of actual real-world cost. 79 Microsoft Points was, at one point, worth about $0.99 USD.

Some back-of-the-napkin math shows Microsoft’s birthday present of 20 Microsoft points was worth just $0.25! “Don’t spend it all at once”, “100 more years and I can buy a game” and “thanks Microsoft!” are just a few of the sarcastic comments posted in the very public Xbox forums.

Microsoft got it wrong. In this instance no reward, the status quo, or simply saying “thank you” would have been better than all the negative press garnered from offering such a relatively small sum to reward users.

We reject “petty” financial rewards that do not meet our expectations. When we do accept them, it can have a negative impact on our satisfaction.

Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood

💎 On how a German village dealt with the problem of neo-Nazis (by reframing the problem)

So the local community has formed a group called EXIT, to help educate and de-radicalise young people, to encourage them to leave the group and help them find better lives.

But EXIT needs funding.

So the townspeople have decided, since they can’t stop the neo-Nazis marching, to use the march for their own ends.

Instead of resisting the march they are now encouraging the march.

Because they are using the march to raise money.

For every metre the neo-Nazis march, local businesses are donating ten euros to EXIT.

So the neo-Nazis will now be marching to fund EXIT.

The further they march, the more money EXIT gets.

If the neo-Nazis don’t like it they can stop marching.

Whichever way they decide, it’s a result for the local community.

Whether the neo-Nazis march or not, the little village wins.

The inhabitants now treat the march as something to enjoy and have fun with.

Every 100 metres there are signs stencilled on the ground, thanking the marchers for the money they’re raising:

YOU HAVE RAISED 1,000 EUROS FOR EXIT.

YOU HAVE RAISED 2,000 EUROS FOR EXIT.

YOU HAVE RAISED 3,000 EUROS FOR EXIT.

And so on.

By the time the neo-Nazis reach the cemetery they’ve marched a kilometre, which means they’ve raised 10,000 euros for EXIT.

So there is a huge rainbow sign thanking them, and the locals throw rainbow confetti over them.

Excerpt from: Creative Blindness (And How To Cure It): Real-life stories of remarkable creative vision by Dave Trott