The Choice Factory

"The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can’t get in. The human mind has a big tendency of the same sort."

- Charlie Munger

Insight: Humans face confirmation bias. Once we form negative opinions it is hard to overturn them.

Insight: Rejecters are difficult to convince as they have a pre-existing judgement.

• Reference: Albert Hastorf and Hadley Cantril, psychologists - experiment with American football, supporters viewed the game completely differently based on pre-existing loyalties to their own team - students believed that the opposition was twice as likely to commit a foul as their own team.
• Example: Government policies are viewed as more favourable by party supporters that by opposition supporters, regardless of the policy.
• Insight: Confirmation bias occurs when we view the world through the lens of existing feelings or opinion.
• Insight: It is difficult to overturn negative opinions.
• Principle: Do not focus resources on trying to win over rejecters.

• Definition: .
• Example: When we assume businessmen are selfish are just care about money.
• Insight: We consistently underestimate context.
• Insight: We may underestimate external factors in our behaviour as we tend to try to rationalise or internalise our decision making.
• Insight: Brands should focus on target contexts as much as target audiences since context influences behaviour.
• Reference: The Darley & Batson Experiment 1973: catholic priests stopping to help someone in need was highly influenced by whether they we told they needed to hurry to meet an appointment, not by their character traits.
• Principles: For business: (1) Research little and often, (2)Target contexts as well as audiences, (3) Don't assume you know the right context.

• Definition: How we should behave.
• Insight: Injunctive norms, rather than descriptive ones, can be used to promote behaviour change

• Reference: Elliot Aronson, Harvard University in 1966 - discovered the pratfall effect with Ben Willerman and Joanne Floyd. Experiments with high performing students and likeability. One spills coffee over a new suit, which enhanced their likeability when committing this 'pratfall'.
• Insight: The admission of weakness can make people or companies more appealing.
• Insight: The pratfall effect works well for companies where the competitors like to brag.
• Insight: The pratfall effect only works when you are seen to be an expert, or strong brand - it makes strong brands stronger, and weak brands weaker.
• Principle: Lean into your flaws (when it suits your brand).

• Definition: High price can increase demand.
• Example: Perfume.
• Reference: Dan Ariely: 2008 experiment with 'painkillers'. Half of the participants were told that the painkillers cost $2.50 a dose, half were told they cost 10 cents. All received placebos. 85% of the participants taking the expensive pill said they experienced less pain, compared to 61% taking the cheaper version.
• Insight: People tend to have an ingrained belief that expensive products are higher quality.
• Insight: Since price signals quality, brands should invest disproportionately towards higher end goods.
• Insight: Low prices damage our expectation of product quality. Dropping the price to improve market share might work in the short term, but will likely damage long term demand.