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: Is there an objective reality outside of our beliefs?
Dan Ariely: So this is a very general philosophical question. I think that what matters is the world that we perceive, not the world that is out there. So in many experiments we show that our expectations about how the world should function influences the way we actually experience the world.
So if you go ahead and you buy cold medication on discount, you expect it to be worse. As a consequence of physiology it doesn’t kick in as much, and you are not helped as much by this cold medication. Now you can say which one is the reality – that the cold medication is the same regardless of the price? Or the reality that actually changes your physiology? And I actually think it’s the one that changes your physiology.
Maybe the best example is for us to think about placebo. So placebo is real. Many people think of it as just psychology, but there’s nothing “just” about it. It turns out that if a physician comes to you and injects you with whatever – saline water – your body expects pain relief. And your body secretes substances that are very much like morphine. So it doesn’t matter what you get from the injection. You actually get pain relief from your own body as a reaction to that.
Now you can’t just close your eyes and say, “Please can I have some pain killers.” That doesn’t work.
But when a physician injects you with anything – even saline water – you get the pain relief that is actually a substance you can’t buy over the counter. It’s like morphine.
But what is the reality there? Is the reality the physician injecting you with saline water? Or is the reality that the physician actually gave you pain relief? From my perspective, the important reality is the reality people experience. Because that’s what we come in contact with, that’s what we know. And that’s the reality we make decisions based on.
Recorded on: Feb 19 2008
The solution is from time to time to hire people you don’t think would work out.