Predictably Irrational (33 page)

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As a convention in this book, every time I mention that conditions are different from each other, it is always a statistically significant difference. I refer the interested reader to the end of this book for a list of the original academic papers and additional readings.

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Now that you know this fact, and assuming that you are not married, take this into account when you search for a soul mate. Look for someone whose sibling is married to a productivity-challenged individual.

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Of course, physicians have other problems as well, including insurance forms, bureaucracy, and threats of lawsuits for malpractice.

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The price the highest bidder paid for an item was based not on his own bid, but on that of the second highest bidder. This is called a second price auction. William Vickrey received the Nobel prize in economics for demonstrating that this type of auction creates the conditions where it is in people's best interest to bid the maximum amount they are willing to pay for each item (this is also the general logic behind the auction system on eBay).

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When I've tried this kind of experiment on executives and managers (at the MIT Executive Education Program), I've had similar success making their social security numbers influence the prices they were willing to pay for chocolates, books, and other products.

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The result was not due to wealth, taxes, or other financial reasons.

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To ensure that the bids we got were indeed the lowest prices for which the participants would listen to the annoying sounds, we used the “Becker-DeGroot-Marschak procedure.” This is an auction-like procedure, in which each of the participants bids against a price randomly drawn by a computer.

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We will return to this astute observation in the chapter on social and market norms (Chapter 4).

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I am not claiming that spending money on a wonderful cup of coffee every day, or even a few times a day, is necessarily a bad decision—I am saying only that we should question our decisions.

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We posted the prices so that they were visible only when people got close to the table. We did this because we wanted to make sure that we did not attract different types of people in the different conditions—avoiding what is called self-selection.

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For a more detailed account of how a rational consumer should make decisions in these cases, see the appendix to this chapter.

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Similar to the other experiments, when we increased the cost of both certificates by $1, making the $10 certificate cost $1 and the $20 certificate cost $8, the majority jumped for the $20 certificate.

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When it comes to credit cards, the appeal of free! is further enhanced because most of us are overoptimistic about our financial future, and overconfident about our ability to always pay our bills on time.

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This general procedure is called priming, and the unscrambling task is used to get participants to think about a particular topic—without direct instructions to do so.

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For a complete lists of the questions we asked, see the appendix to this chapter.

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These results apply most directly to sexual arousal and its influence on who we are; but we can also assume that other emotional states (anger, hunger, excitement, jealousy, and so on) work in similar ways, making us strangers to ourselves.

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*I teach about 200 graduate students each year, and in early 2009 I asked for a show of hands to the question of how many students had ever used e-mail or text messaging while driving. All but three raised their hands (and one of the three who did not was visually impaired!).

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*I did experience such a negative association with eggs. Soon after I was injured, the doctors fed me thirty raw eggs daily through a feeding tube. To this day, even the smell of eggs turns me off.

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*The architecture department at MIT is in fact very good.

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I'm often surprised by how much people confide in me. I think it's partly due to my scars, and to the obvious fact that I've been through substantial trauma. On the other hand, what I would like to believe is that people simply recognize my unique insight into the human psyche, and thus seek my advice. Either way, I learn a lot from the stories people share with me.

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Matrimony is a social device that would seem to force individuals to shut down their alternative options, but, as we know, it too doesn't always work.

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The French logician and philosopher Jean Buridan's commentaries on Aristotle's theory of action were the impetus of this story, known as “Buridan's ass.”

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We were also hoping to measure the amount of vinegar students added to the beer. But everyone who added vinegar added the exact amount specified in the recipe.

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There is a nice T-shirt on sale at the MIT bookstore that reads “Harvard: Because not everyone can get into MIT.”

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*In fact, goose liver pâté is basically equal parts goose liver and butter, with some wine and spices.

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The music included Bach's “Chaconne,” Franz Schubert's “Ave Maria,” Manuel Ponce's “Estrellita,” a piece by Jules Massenet, a Bach gavotte, and a reprise of “Chaconne.”

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We do understand quite precisely how a placebo works in the domain of pain, and this is why we selected the painkiller as our object of investigation. But other placebo effects are not as well understood.

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*I suspect that Airborne incorporates many elements to maximize the placebo effect (bubbles, foaming, medicinal color, exaggerated claims, and so on) and, as a consequence, had a real beneficial impact on my immune system and my ability to fight off illnesses. Placebos are all about self-fulfilling prophecies, and Airborne is one of the best.

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As claimed by the Harvard Business School.

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We often conduct our experiments at Harvard, not because we think its students are different from MIT's students, but because it has wonderful facilities and the faculty members are very generous in letting us use them.

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The distribution of the number of correctly solved questions remained the same across all four conditions, but with a mean shift when the participants could cheat.

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Do you know the Ten Commandments? If you'd like to test yourself, write them down and compare your list with the list at the end of this chapter. To be sure you have them right, don't just say them to yourself; write them down.

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Can the Ten Commandments raise one's math scores? We used the same two memory tasks with the control condition to test that premise. The performance in the control condition was the same regardless of the type of memory task. So the Commandments do not raise math scores.

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Theoretically, it is possible that some people solved all the problems. But since no one in the control conditions solved more than 10 problems, the likelihood that four of our participants truly solved 20 is very, very low. For this reason we assumed that they cheated.

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Independent of your opinion about the effect (or lack thereof) of carbon emissions, for the sake of this illustration, let's assume that we want to limit it.

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The Boston Common, today a public park in downtown Boston, was created in 1634 as a designated common pasture for grazing animals.

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The two political parties engendered the same level of mistrust, even in the eyes of their own voters. This means that Democrats and Republicans did not believe that their own party was more trustworthy than the opposing party—a sad picture indeed.

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The tragedy of the commons refers to a situation in which individuals, acting to promote their own self-interest, ultimately deplete a shared limited resource—even when it hurts everyone, including themselves, in the long term.

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As the Commandments vary by religion, correct answers could be from any version. For your interest, here are three versions.