Dan Ariely is the James B Duke Professor of Psychology and Behavioral Economics at Duke University. He is the founder of The Center for Advanced Hindsight and co-founder of BEworks, which helps business leaders apply scientific thinking to their marketing and operational challenges. His books include Predictably Irrational and The Upside of Irrationality, both of which became New York Times best-sellers. as well as The Honest Truth about Dishonesty and his latest, Irrationally Yours.
Ariely publishes widely in the leading scholarly journals in economics, psychology, and business. His work has been featured in a variety of media including The New York Times, Wall Street Journal, Washington Post, Boston Globe, Business 2.0, Scientific American, Science and CNN.
Question: If people are irrational, how can we agree on anything?
Dan Ariely: Yeah. So it’s actually . . . From the perspective of irrationality, it’s actually very hard for people to reach agreement. If you accept the idea that my reality is different than your reality, how do we fight about the facts? The facts are not something out there. The facts are what we are experiencing. So I think about it from an Israeli’s perspective is will I ever be able to watch an event – a bomb, a terrorist activity, an assassination, anything – and will I truly be able to view it from the same perspective as a Palestinian? And my conclusion is that we wouldn’t. Let me give you a very trivial experiment that can illustrate this. So we give people two glasses of beers to try. One is a regular beer, and one is beer with balsamic vinegar, which we call the MIT brew. And people taste both of those, and we say which one do you like more? Which one do you want the full glass of? It turns out that in this condition, the beer with the balsamic vinegar tastes better to most people so most people go for it. That’s just the objective reality. Now what would happen if we introduced preconception? What would happen if we tell people, “This is regular beer. This is beer with balsamic vinegar. Drink it. Drink as much as you want and then tell us which one you want.” What will happen? Will the preconceptions overwhelm the experience? The answer is yes. Under those conditions, it doesn’t matter how much drink . . . beer people drink. They hate the one with the balsamic vinegar. What’s happening here is when you expect something to be terrible, your mouth is actually tasting it as terrible. Again our expectation changes our physiology. We see something different. You know it’s something that every sports fan always sees, right? It’s always that the referee is against your sports team. And if somebody else is sitting in the room and they are a fan of a different sports team, they are saying the referee is doing the opposite. Now if you take this seriously, what does it mean for two parties – Israeli-Palestinian, whatever it is – sitting together on a table and trying to negotiate? It means that the reality they’re going to negotiate about is going to be colored very differently for each of them. In fact so much that it is going to be impossible to bridge that. So what’s my solution? My solution is that we can’t overcome that. We can’t overcome the power of expectations or an experience. But if we recognize and we admit it, we might be willing to accept that a third party should make more decisions. And in fact instead of arguing about who is right and who is wrong, saying we understand we’re biased. Therefore we’re going to give it to a third party to make a decision for us.
Question: Is it possible to divorce emotion from decision?
Dan Ariely: So the moment they take hold, there’s no . . . there’s no way back. So if you think about emotions, if I sit now here and I think about the future, I create a situation where I would not be tempted. For example I usually try not to eat dessert at restaurants. But when the waiter comes with the dessert tray, I always fall into temptation. Now if I right now go to a restaurant and I say to the waiter, “Don’t show me the dessert tray”, I can overcome emotion. But it’s a trick around emotion. If he comes anyway with the desert tray, it’s going to be very, very hard to overcome it.
Recorded on Feb 19 2008
The solution is from time to time to hire people you don’t think would work out.