Monday, March 29, 2010

Heat of the Moment Decisions affect future behavior too

This is a really important new finding from my favorite behavioral economist. Most of us realize that in the heat of the moment, we often make poor decisions. When we are feeling particularly good, we are more generous, kind, compassionate, etc. When we are feeling bad, we are more snappy, curt, stingy, and mean.

But this new finding shows that the impact of these decisions sticks with us. Even after our emotion chills out, we are still more likely to be generous, kind and compassionate or snappy, curt, and stingy for a longer time period. This particular study is more medium term than long term, but I am going to extrapolate to the even longer term potential impact that it suggests. Because of the really dangerous implications, it's worth thinking about seriously, not just speculatively.

Because we now have a past behavior, the experience becomes part of our long term schema. To avoid cognitive dissonance (which includes the desire to be consistent in our behaviors over time), we look at our past experiences, even when they are out of character, and rationalize them (come on - you know you have all done this!!). So if you act more generous, kind, or compassionate at one time - the memory of this act will make us more generous, kind and compassionate in the future. Same thing for snappy, curt, and stingy. Even when the original act was out of character and we know it was out of character.

So this is even more reason to be careful about your emotional reactions. You may be willing to act out of character once. But are you willing for this to become part of your permanent self-image? It will!!

Sunday, March 21, 2010

new model for apartment living

One of the benefits of apartments is that they can leverage the common areas to save residents (owners, renters, whatever) money, time, and space.

For example, instead of 100 different driveways, you can have a single parking lot/garage. It takes much less space and everyone can chip in for cleaning, maintenance, snow removal, security, etc (usually through association fees).

You can have one big pool instead of lots of individual ones. Again, residents can combine on cleaning, maintenance, capital costs, etc. Each person gets a better pool and it costs less.

You can reduce the size of residents' living rooms by having a really nice social area that could be rented for entertaining more than 5-10 people at a time. Instead of getting your own living room dirty, you could reserve the buildings social room. In case many people want to entertain at the same time, you could have some partitions and a reservation system for different sized parties.

So what else could be combined in this way if we use our imagination? How about the kitchen? How often do you use your oven on average? 60 minutes per week? That seems ripe for sharing. What if we created a shared cooking space on each hallway (say for 10-20 apartments). It would require much less space than 10-20 separate kitchens and still could accommodate a kick ass industrial size and strength oven, range, microwave, convection oven, grill top, pressure cooker, and perhaps more. You would never have to clean the appliances or the cooking area (but you still would your dishes!!) because that could be taken care of centrally. And if you are the type of person who likes to reheat leftovers at 2am in your pajamas, you could still have a microwave or toaster oven in your own pantry in your apartment. Maybe a wet bar too for plumbing. You would still come out ahead. This shouldn't resemble a dorm kitchen because you are sharing with other people like yourself - families, professionals, and so forth. Not 18-year olds who are away from home for the first time.

And even better, we can make use of technology. We could have a log-in on the appliances so if someone abuses their privileges, we would know who and could make them fix it/pay for it.

How about bathroom facilities? Not the master bath. Even though it is still not a college dorm, I think I would prefer my morning shower with more privacy. But how about the second bathroom? That could be out in the hallway and shared - big enough to accommodate the needed demand. It would cut down on the household chore that people hate the most - cleaning the bathroom. You would only have to use it when your house is busy. And it would be your guests that have to use it ;-D.

Would any of these be attractive to you? It could make apartment much cheaper (to buy or rent), reduce your household cleaning chores, give you better equipment and facilities, and more.

Double Blind Vote Counting

There are a lot of design modifications that can improve our voting systems. One example I am a big fan of is instant runoff. In this form, you don't just vote for your first choice, but also your second, and perhaps third and fourth depending on how many people are running. If no one gets 50% of the vote, the bottom candidate is eliminated and his/her supporters' second choices are used. This continues until someone has 50%. What this does it prevent anyone from winning with less than 50% of the vote. It prevents a minor candidate who gets a small minority of votes to swing the election from one major candidate to another (Nader, Perot, etc).

But today, I want to share the idea of double blind voting. In many countries, voting is mostly counted by hand and it is impossible to recruit people who are unbiased as to the result. So how do you prevent them from skewing the results? Well, what you do is have two rounds of counting, both of which are blind (hence "double blind"). Each district is designated by a number that the counter can not associate with the actual location. The order of the candidates is changed for each district and designated by a number so the counter doesn't know for any district which candidate is which number.

In the first round, the counter who types in the district has no way to cheat because he/she doesn't know if the person voted for candidate X or Y. Changing the district number could just as easily be switching his favored candidate for the other one.

In the second round, the same thing happens. The counter doesn't know what district the ballot comes from, so he doesn't know if his favored candidate is A or B. So switching the vote could again just as easily be going in the opposite direction of his bias.

This is a great example of using process design to deal with a vexing challenge with significant implications.

Semantics and Customer Experience

Semantics are often a very important part of how customers view a company's product or service. Sometimes, the label is meaningful because it indicates something real about the product. Calling a health insurance evaluation committee a "death panel" is important because it suggests that these individuals can be making life or death decisions about your access to care.

But more often, the semantics don't change anything tangible, but still have a huge impact on the customer experience nonetheless. One example is something I have been aggravated about for quite some time. Business Week magazine has a habit of publishing "double issues" once in a while. These issues aren't any longer or more substantial in content than the regular issues. They do give BW an excuse to take a week off following these publications, so I am sure it is a money saving exercise. I feel cheated because I am losing an issue without getting anything in return (so I guess this one is tangible to some extent). If they would just be honest and say that they are going broke because of a weak advertising market and have to do this to cut costs, then fine. I would still feel like I am losing an issue, but at least it would be honest. I think I am more annoyed by the dishonesty than I am by the loss of the issue.

An example that I think is purely about the semantics and has no real tangible loss is the terminology for alcoholic drinks that are served in martini glasses, but have no relation with the classic martini. I am talking about Appletinis, Chocotinis, Razztinis, etc. The original martini is a sophisticated and pure drink. It is supposed to be ordered because you like the taste of the alcohol going down. There is a reason it was the drink of choice of the Sean Connery James Bond. Can you imagine him ordering a Chocotini? Perish the thought!!!! I have nothing against people ordering a drink with Godiva liquor, vodka, and chocolate shavings around the side. In fact, they taste pretty good. But it ruins my experience of ordering a real martini when it shares the name with this concoction. Now, the word martini more often refers to a drink ordered by barely legal girls trying to get drunk in a dance club without tasting any alcohol. These are all the opposites of the experience I am trying to have. At home, I can think whatever I want and what other people call other drinks is irrelevant. But if I order a martini in a bar and the bartender gives me a list of these foofy fruitinis (term I got from an NPR commentary this morning), it ruins it for me. Instead, I just order a gin, served neat. Different glass, but better experience.

Tuesday, March 16, 2010

The science behind the research

My last post about this paper summarized the results. I want to talk briefly about the science behind it. I am not going into serious detail, but just to present an idea. So forgive any oversimplifications for those of you who know a lot about neuroscience.

When we make something up - not just lies or exaggerations but also daydreams and that kind of stuff - we use mirror neurons. Mirror neurons are a place where we can create simulations that do not become part of our long term memories. But they are of course connected because we need to use our basic cell assemblies to construct the simulations. It is in this connection that we get into trouble.

Over time, our brain is not able to differentiate which of these connections was part of a simulation and which ones were real. The simulations are weaker, so they have less of an effect on long term memory construction than real memories. But they still have the effect and over time can build up if you exaggerate (or lie, or daydream) a lot.

And knowing that this is happening doesn't help. We can't access the specific neuronal connections and delete them. Unfortunately, we can't control our brains to this level of detail. So our long term memories are stuck with the bad data.

And in order to be convincing in our exaggeration, we create supporting arguments. Even though we know these to be exaggerations too (otherwise, the exaggeration wouldn't be an exaggeration), we have multiplied the strength of the mirror neuron structure many times over. So whatever impact it has on long term memory is multiplied.

Another factor that makes this work is called cognitive dissonance. This is when two thoughts that we have are in conflict. For example, when we exaggerate we know that it is dishonest. And we don't like to think of ourselves as dishonest. So unconsciously, our brains try to convince ourselves that the exaggeration is really true. We feel better as a result. But then, the mirror neuron schema is treated more like a real one and has an even stronger impact on long term memory. The problem just gets worse.

Financial regulations can't work if we don't even know we are biased.

There is a lot you can learn about bias and lying from reading this. I will stick to just one point today. I found the most striking result to be that when you exaggerate, that exaggeration sticks with you and pulls at what you know to be the truth. And you don't know how powerful this is, so you can't stop it.

Basically, what they did was ask subjects to give advice on financial transactions. In some cases, there were financial incentives to make the advised price as high (for the seller) or low (for the buyer) as possible. Then they offered these same individuals a financial reward for giving their true estimate of the value. This last part was done in private so they wouldn't feel obligated to continue their exaggerations to avoid looking like liars. What they found was:
  • after exaggerating to the low side, their "true" opinions were still too low (although not quite as much as their exaggerations). They couldn't ignore what they had said previously, even though they knew they were exaggerating and were being paid extra for being accurate this time.
  • after exaggerating to the high side, their "true" opinions were still too high. Same thing.
  • they admitted that they were probably influenced by their previous advise, but significantly underestimated the actual impact.
Then they replicated the study for business pressure (trying to make a client happy by exaggerating something's value, rather than trying to make more money). The same thing happened. Even stronger!!

The authors discuss the implications here for financial regulations. Create big fines or strong regulations can't work if the auditor or broker doesn't even realize they are giving bad advice because of these unconscious influences. The only way would be to prevent the original conflicts. Auditing would have to be completely separate from advising. Brokers would not be allowed to work on any kind of volume commissions.

There are also implications in many other industries - legal, education, etc.

Sunday, March 14, 2010

Questionable research

I just read the abstract of a paper that critiques an older paper because it reported a strong effect from its research, but "there are serious methodological concerns, which make the overall findings questionable." The original study should never have been published. Reporters just quote these results without understanding that methodology is everything. You can find any relationship if you bias your methods accordingly, and then get that relationship into the public domain.

Drug companies do this with new drugs. The anti-climate change lobby does this with warming studies. Food companies do this with junk food studies. Health food companies do it with health food or supplements. And again, and again.

The study in question here linked childhood consumption of candy with adult violence.

Friday, March 12, 2010

Mature Thinking

I was reading a great paper (academic, so I won't bore you with the details) that discussed how we mature in our thinking through three stages.

We start out as an absolutist. Thinks are black and white, right or wrong, good or bad, true or false.

Then we become multiplist, which is more nuanced. We realize that it is OK for different people to have different opinions. I can like Coke and you can like Pepsi. We can both be right.

Finally, we become evaluationist, which is even more nuanced. I can have one opinion and you can have another opinion. And while they are both valid, one is normatively better than the other. I support one political party and you can support another political party. Both positions are valid, but one party really might have better policies than the other.

The paper goes on to describe the epistemology of the theory and use an example from jury deliberations to describe the impact. People at the absolutist stage come to opinions about innocence or guilt and then are either/or. The more mature thinkers are able to look at variations (i.e. manslaughter) and intervening circumstances. They are more likely to use specifics of the verdict definitions and specific pieces of evidence in their arguments.

The more mature thinkers are also more likely to take charge of the deliberation, use more meta-arguments (describing why they think what they do), and are more likely to convince the others.