Understanding cognitive biases is the act of embracing, nuzzling and keeping enemies close. Because much of what I do, every day, is selling…
One of the biggest reason people lose out financially is they stick with what they know, despite much better options being available. We tend to choose the same things we chose before. And we continue to do this even when better options are available, whether it’s goods or services.
Research on investment decisions shows this bias (e.g. Samuelson & Zeckhauser, 1988). People stick to the same old pension plans, stocks and shares, even though there are better options available.
It’s hard to change because it involves more effort and we want to avoid regretting our decision. But there is better value out there if you’re prepared to look.
After we buy something that’s not right, we convince ourselves it is right.
Most people refuse to accept they’ve made a mistake, especially with a big purchase. Marketers know this, so they try to encourage part-ownership first, using things like money-back guarantees. Once you’ve made a decision, you convince yourself it was the right one (see: cognitive dissonance), and also start to value it more because you own it (e.g. Cohen et al., 1970).
Fight it! If the goods or services aren’t right, return them. Most country’s legal systems incorporate a cooling off period, so don’t rationalise, return it!
We think about prices relatively and businesses know this. That’s why recommended retail prices are set high, then discounted. Some expensive options on restaurant menus are there only to make the regular meals look reasonable in comparison.
The relativity trap is also called the anchoring effect. One price acts like an anchor on our thinking. It’s easy to fall for, but also easy to surmount by making comparisons they don’t want you to make (read more about therelativity trap).
Use price comparison websites. And try comparing across categories of goods. Is an iPad really worth a month’s groceries or three years of cinema trips or a new set of clothes?
We value things more when we own them. So when it comes to selling our stuff, we tend to set the price too high.
It’s why you sometimes see second-hand goods advertised at ridiculous prices. Unlike professionals, amateur sellers develop an emotional attachment to their possessions (read the research on 6 quirks of ownership).
It also works the other way. When bidding on eBay, it’s possible to feel you already partly own something before you actually buy it. So you end up paying above the market value.
When buying or selling you have to try and be dispassionate. Be aware that unless you set limits, your unconscious may take over.
In general humans prefer to get the pleasure right now, and leave the pain for later. Economists call this hyperbolic discounting.
In a study by Read and van Leeuwen (1998), when making food choices for next week, 74% of participants chose fruit. But when deciding for today, 70% chose chocolate. That’s humans for you: chocolate today, fruit next week.
The same is true of money. Marketers know we are suckers for getting discounts right now, so they hide the pain for later on (think mobile phone deals). Unfortunately buy now, pay later offers are often very bad deals.
One way to get around this is to think about your future self when making a purchasing decision. Imagine how ‘future you’ will see the decisions of ‘present you’. If ‘future you’ wouldn’t like it, don’t do it.
People tend to sell things when they go up in price, but hold on to them when they go down. It’s one demonstration of our natural desire to avoid losses. This effect has been seen in a number of studies of stock-market trading (e.g. Weber & Camerer, 1998).
The fact that prices are falling, though, is a big clue. If you can fight the fear of losing, in the end it could leave you better off.
Advertising works partly because we like what we know, even if we only vaguely know it. We even choose familiar things when there are clear signals that it’s not the best option (Richter & Spath, 2006).
Always check if you’re buying something for the right reasons. Mere familiarity means the advertisers are winning. Smaller companies that can’t or won’t afford pricey TV commercials often provide better products and services.
We tend to remember our decisions as better than they really were.
This is a problem when we come to make similar decisions again. We have a bias towards thinking our previous decision was a good one; it could be the holiday, house or car you chose (e.g. Mitchell & Thompson, 1994). That’s partly why we end up making the same financial mistakes again: we forget we made the same mistake before.
Before making an important financial decision, try to dredge up the realoutcomes of previous decisions. Only without the rose-tinted spectacles can we avoid repeating our mistakes.
The word ‘free’ has a magical hold on us and marketers know it. Behavioural economics research shows we sometimes take a worse deal overall just to get something for free. Watch out if you are offered something for ‘free’ as sometimes the deal is not that good.
Many mistakes with money result from a lack of self-control. We think we’ll control ourselves, but, when faced with temptation, we can’t. Studies likeNordgren et al., (2009) show people are woefully optimistic in predicting their self-control.
So, don’t put yourself in the situation of being tempted. This is why cutting up credit cards is often recommended. We’re mostly weaker than we think, so we shouldn’t give ourselves the opportunity.
One day at IMG I am interviewing Sasha. She is 22. Grew up in Moscow. One gets the sense that, more than others’, her life has been utterly transformed by modeling. She is so nervous about being interviewed-partly, I think, because her English is not so good- that she has printed out a list of questions that I sent her agent so that she could be prepared.
She wrote her answers out on the paper, and now she is reading them aloud to me, her hands trembling. I have to fight the urge to hug her. But all of the nerves disappear in an instant when I throw her a question that isn’t on the printout. Do you want to be a supermodel? I ask. She looks at me with that face and stares out from those Prada ads and says in her thick accent, “In Rrrussia, vee have proverb: Only bad soldiers don’t vant to be general.”
The software industry is poised to embrace its craft heritage. By 2020 software will return to a cottage industry, with bespoke applications made by many, rather than today’s industrialized, Microsoft-esque mass-production and distribution model. It will be part of a larger world movement to make things by hand, infused with emotion and integrity. This phenomenon is already becoming visible in the rise of the “apps” market for mobile phones. With few dominant players and close-to-zero distribution costs, practically anyone can “ship” an app on the iPhone, Android or BlackBerry. These apps are often built with care and attention to the design that big companies’ offerings lack. Look at the exquisite quality made by game companies like Iconfactory; or the many iPhone apps like ToonPaint that focus on letting users make “hand-crafted” creative content on their phones.
Rather than be content to accept corporate anonymity, we will rediscover the value of authorship. In 2020 technology will continue to enable individual makers to operate in the same way that once only large corporations could do. Witness the growth of individuals as “brands-of-one” in the social media space, broadcasting their news in the same fashion as major media outlets, or in software apps marketplaces, where “Bob Schula” can hawk his wares right next to “Adobe Systems,” and it’s just as easy to buy hand-stenciled napkins from a seller on Etsy as it is to buy them from Crate & Barrel. You might say it is a return to learning to trust individuals again, instead of relying on an indirect connection to a product through trust in its brand. Certainly our trust in those brands is already being tested right now.
Digital metaphors will reconnect to their original physical sources as a way to recapture what has been lost in translation. A creative director friend of mine recently commented how he noticed that younger designers were absolutely captivated when he used tracing paper in layers to develop a concept over an existing printed photograph. They commented to him, “Wow! That’s so fast. I could never make those layers in Photoshop so quickly.” Today we fill folders on our computer desktop to the brim with absolutely no sense of scale, no notion of what is a “full” or “less full” folder. They may be more easily searched, but there’s a reason why paper-based systems comfort us so well with their tacit communication of what is more vs. what is less. Unable to let this go, we will see many new designs that best leverage what is good in virtual with what is good in the physical world. The subtleties and grayness that we can so easily grasp off the screen will make their way on to it.
The last 20 years have been so full of technological change that technology and the digital world has become the dominant narrative in our consumer culture. Educators, legislators, futurists and social scientists can’t help but fixate on it. As we become more accustomed to it, happily, some breathing room will open up for a different conversation about what we want back in our lives.
So, what will take technology’s place? It begins with art, design and you: Products and culture that are made by many individuals, made by hand, made well, made by people we trust, and made to capture some of the nuances and imperfections that we treasure in the physical world. It may just feel like we’ve regained some of what we’ve lost in 2010.
“Everything can be taken from a man but one thing,” Frankl wrote in Man’s Search for Meaning, “the last of the human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.”
This uniqueness and singleness which distinguishes each individual and gives a meaning to his existence has a bearing on creative work as much as it does on human love. When the impossibility of replacing a person is realized, it allows the responsibility which a man has for his existence and its continuance to appear in all its magnitude. A man who becomes conscious of the responsibility he bears toward a human being who affectionately waits for him, or to an unfinished work, will never be able to throw away his life. He knows the “why” for his existence, and will be able to bear almost any “how.”
How do the happy life and the meaningful life differ? Happiness, they found, is about feeling good. Specifically, the researchers found that people who are happy tend to think that life is easy, they are in good physical health, and they are able to buy the things that they need and want. While not having enough money decreases how happy and meaningful you consider your life to be, it has a much greater impact on happiness. The happy life is also defined by a lack of stress or worry.
“Happy people get a lot of joy from receiving benefits from others while people leading meaningful lives get a lot of joy from giving to others
What sets human beings apart from animals is not the pursuit of happiness, which occurs all across the natural world, but the pursuit of meaning, which is unique to humans,
Meaning is not only about transcending the self, but also about transcending the present moment — which is perhaps the most important finding of the study, according to the researchers. While happiness is an emotion felt in the here and now, it ultimately fades away, just as all emotions do; positive affect and feelings of pleasure are fleeting. The amount of time people report feeling good or bad correlates with happiness but not at all with meaning.
Meaning, on the other hand, is enduring. It connects the past to the present to the future. “Thinking beyond the present moment, into the past or future, was a sign of the relatively meaningful but unhappy life,” the researchers write. “Happiness is not generally found in contemplating the past or future.” That is, people who thought more about the present were happier, but people who spent more time thinking about the future or about past struggles and sufferings felt more meaning in their lives, though they were less happy.
#DailyDriver San Francisco Edition
Ang Lee: A Never-Ending Dream
BY IRENE SHIH
Following Ang Lee’s second Best Directing win at the Academy Awards last night, this beautiful essay resurfaced. Here is my translation of Ang Lee’s words, written in 2006 (post-Oscar win). Please credit the translation to Irene Shih (and to this blog), thank you!
In 1978, as I applied to study film at the University of Illinois, my father vehemently objected. He quoted me a statistic: ‘Every year, 50,000 performers compete for 200 available roles on Broadway.’ Against his advice, I boarded a flight to the U.S. This strained our relationship. In the two decades following, we exchanged less than a hundred phrases in conversation.
Some years later, when I graduated film school, I came to comprehend my father’s concern. It was nearly unheard of for a Chinese newcomer to make it in the American film industry. Beginning in 1983, I struggled through six years of agonizing, hopeless uncertainty. Much of the time, I was helping film crews with their equipment or working as editor’s assistant, among other miscellaneous duties. My most painful experience involved shopping a screenplay at more than thirty different production companies, and being met with harsh rejection each time.
That year, I turned 30. There’s an old Chinese saying: ‘At 30, one stands firm.’ Yet, I couldn’t even support myself. What could I do? Keep waiting, or give up my movie-making dream? My wife gave me invaluable support.
My wife was my college classmate. She was a biology major, and after graduation, went to work for a small pharmaceutical research lab. Her income was terribly modest. At the time, we already had our elder son, Haan, to raise. To appease my own feelings of guilt, I took on all housework – cooking, cleaning, taking care of our son – in addition to reading, reviewing films and writing scripts. Every evening after preparing dinner, I would sit on the front steps with Haan, telling him stories as we waited for his mother – the heroic huntress – to come home with our sustenance (income).
This kind of life felt rather undignified for a man. At one point, my in-laws gave their daughter (my wife) a sum of money, intended as start-up capital for me to open a Chinese restaurant – hoping that a business would help support my family. But my wife refused the money. When I found out about this exchange, I stayed up several nights and finally decided: This dream of mine is not meant to be. I must face reality.
Afterward (and with a heavy heart), I enrolled in a computer course at a nearby community college. At a time when employment trumped all other considerations, it seemed that only a knowledge of computers could quickly make me employable. For the days that followed, I descended into malaise. My wife, noticing my unusual demeanor, discovered a schedule of classes tucked in my bag. She made no comment that night.
The next morning, right before she got in her car to head off to work, my wife turned back and – standing there on our front steps – said, ‘Ang, don’t forget your dream.’
And that dream of mine – drowned by demands of reality – came back to life. As my wife drove off, I took the class schedule out of my bag and slowly, deliberately tore it to pieces. And tossed it in the trash.
Sometime after, I obtained funding for my screenplay, and began to shoot my own films. And after that, a few of my films started to win international awards. Recalling earlier times, my wife confessed, ‘I’ve always believed that you only need one gift. Your gift is making films. There are so many people studying computers already, they don’t need an Ang Lee to do that. If you want that golden statue, you have to commit to the dream.’
And today, I’ve finally won that golden statue. I think my own perseverance and my wife’s immeasurable sacrifice have finally met their reward. And I am now more assured than ever before: I must continue making films.
You see, I have this never-ending dream.
Irene’s Note: If you liked Ang’s essay, you might also enjoy this older essay I wrote: A Dream Deferred (Link).
Original text (in Chinese):
文 / 李安
The Los Angeles Review of Books presents Lynch’s commentary, in the video above, on 99 pictures taken by others. Listen to him describe his viewing approach—that of a voyeuristic, all-feeling detective—and you’ll never look the same way at curtains, women’s shoes, stone Buddhas, and festering sores again. Can you imagine walking around with David in both Gotham-sized and tiny one-stoplight towns?
Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from this excellent book by Carlota Perez via Fred Wilson) showing the four previous technological revolutions and the first part of the current one:
Each revolution begins with a financial bubble that propels the (irrationally) rapid “installation” of the new technology. Then there’s a crash, followed by a recovery and then a long period of productive growth as the new technology is “deployed” throughout other industries as well as society more broadly. Eventually the revolution runs its course and a new technological revolution begins.
In the transition from installation to deployment, the bulk of the entrepreneurial activity moves “up the stack”. For example, in the installation phase of the automobile revolution, the action was in building cars. In the deployment phase, the action shifted to the app layer: the highway system, shipping, suburbanization, big box retail, etc.
This pattern is repeating itself in the computing/internet revolution. Most of the successful startups in the 90s built core infrastructure (e.g. optical switching) whereas most of the successful startups since then built applications on top of that infrastructure (e.g. search). The next phase should see startups higher in the stack. According to historical patterns, these would be ones that require deeper cultural change or deeper integration into existing industries.
Some questions to consider:
- What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure” – what the industry would look like if rebuilt from scratch using the new technology.
- How long will this deployment period last? Most people – at least in the tech industry – think it’s just getting started. From the inside, it looks like one big revolution with lots of smaller, internal revolutions (PC, internet, mobile, etc). Each smaller revolution extends the duration and impact of the core revolution.
- Where will this innovation take place? The historical pattern suggests it will become more geographically diffuse over time. Detroit was the main beneficiary of the first part of the automobile revolution. Lots of other places benefited from the second part. This is the main reason to be bullish on ”application layer” cities like New York and LA. It is also suggests that entrepreneurs will increasingly have multi-disciplinary expertise.
- Chris Dixon http://bit.ly/XTjW6Z
The world is so big, so complicated, so replete with marvels and surprises that it takes years for most people to begin to notice that it is, also, irretrievably broken. We call this period of research “childhood.”
There follows a program of renewed inquiry, often involuntary, into the nature and effects of mortality, entropy, heartbreak, violence, failure, cowardice, duplicity, cruelty, and grief; the researcher learns their histories, and their bitter lessons, by heart. Along the way, he or she discovers that the world has been broken for as long as anyone can remember, and struggles to reconcile this fact with the ache of cosmic nostalgia that arises, from time to time, in the researcher’s heart: an intimation of vanished glory, of lost wholeness, a memory of the world unbroken. We call the moment at which this ache first arises “adolescence.” The feeling haunts people all their lives.
Everyone, sooner or later, gets a thorough schooling in brokenness. The question becomes: What to do with the pieces? Some people hunker down atop the local pile of ruins and make do, Bedouin tending their goats in the shade of shattered giants. Others set about breaking what remains of the world into bits ever smaller and more jagged, kicking through the rubble like kids running through piles of leaves. And some people, passing among the scattered pieces of that great overturned jigsaw puzzle, start to pick up a piece here, a piece there, with a vague yet irresistible notion that perhaps something might be done about putting the thing back together again.
Two difficulties with this latter scheme at once present themselves. First of all, we have only ever glimpsed, as if through half-closed lids, the picture on the lid of the jigsaw puzzle box. Second, no matter how diligent we have been about picking up pieces along the way, we will never have anywhere near enough of them to finish the job. The most we can hope to accomplish with our handful of salvaged bits—the bittersweet harvest of observation and experience—is to build a little world of our own. A scale model of that mysterious original, unbroken, half—remembered. Of course the worlds we build out of our store of fragments can be only approximations, partial and inaccurate. As representations of the vanished whole that haunts us, they must be accounted failures. And yet in that very failure, in their gaps and inaccuracies, they may yet be faithful maps, accurate scale models, of this beautiful and broken world. We call these scale models “works of art.”
- Michael Chabon on Wes Anderson’s Worlds
“In juxtaposition to couture fashion Margiela’s concept of luxury appropriates only the element of workmanship, not the preciousness of the raw materials. The labels of such creations indicate only the number of hours of labour invested in the production of a garment, as the new criterion of luxury. Such a designation celebrates the standard of the craft at the same time as it critiques the value of excess of such labour-intensive investment. By the same token the exhibition, and the collections, are making a stand with regards to idealized standards of perfection, which, together with luxury, make up the fantasy of glamour. The Martin Margiela team is not celebrating the new or the perfect (all the core values of the fashion industry). Instead the collection references the aging process as a creative ingredient (not as a problem to eliminate). Second-hand materials are worked into the designs, dark clothes are painted with silver paints that do not quite cover completely, and crack with use, revealing the origin and creating an old patina- even with new clothes.”—Efrat Tseëlon, “Outlining a fashion studies project”
(Source: norwayspruce, via mylifeasilive-a)
“My design process never starts or finishes. I am always hoping to find something through the mere act of living my daily life. I do not work from a desk, and do not have an exact starting point for any collection. There is never a mood board, I do not go through fabric swatches, I do not sketch, there is no eureka moment, there is no end to the search for something new. As I live my normal life, I hope to find something that click starts a thought, and then something totally unrelated would arise, and then maybe a third unconnected element would come from nowhere. Often in each collection, there are three or so seeds of things that come together accidentally to form what appears to everyone else as a final product, but for me it is never ending. There is never a moment when I think, ‘this is working, this is clear.’ If for one second I think something is finished, the next thing would be impossible to do.
“Often the elements are completely disassociated in time and dimension. One might be an emotion, the next thing a pattern image, the third thing an object or a picture I have seen somewhere. I can never remember when and from where the elements come together in my head. I trust synergy and change. For fall 2012, I was thinking about no design being design, about very ordinary fabric (wool felt) being strong. Somehow, the two-dimension level of thinking became apparent.
“I do not feel happy when a collection is understood too well. For me, White Drama was too easily understood, the concept too clear. I feel better about fall 2012, because it wasn’t too clear, and some people assumed things it had nothing to do with, like the Internet age.
“The struggle to find something new gets more and more difficult with time and experience, so this time, for fall 2012, my feeling was to try to make a collection by doing very little.”
- Rei Kawakubo