Quotes:

"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

Insights:

1. Humans face confirmation bias. Once we form negative opinions it is hard to overturn them.
2. Rejecters are difficult to convince as they have a pre-existing judgement.

References:

1. 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.

Examples:

1. Government policies are viewed as more favourable by party supporters that by opposition supporters, regardless of the policy.

Insights:

1. Confirmation bias occurs when we view the world through the lens of existing feelings or opinion.
2. It is difficult to overturn negative opinions.

Principles:

1. Do not focus resources on trying to win over rejecters.

Examples:

1. When we assume businessmen are selfish and just care about money.

References:

1. The Darley & Batson Experiment 1973: Catholic priests stopping to help someone in need was highly influenced by whether they were told they needed to hurry to meet an appointment, not by their character traits.

Insights:

1. We consistently underestimate context.
2. We may underestimate external factors in our behaviour as we tend to try to rationalise or internalise our decision making.
3. Brands should focus on target contexts as much as target audiences since context influences behaviour.

Principles:

1. Research little and often.
2. Target contexts as well as audiences.
3. Don't assume you know the right context.

Definition:

1. How we should behave.

Insights:

1. Injunctive norms, rather than descriptive ones, can be used to promote behaviour change.

References:

1. 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'.

Insights:

1. The admission of weakness can make people or companies more appealing.
2. The pratfall effect works well for companies where the competitors like to brag.
3. 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.

Principles:

1. Lean into your flaws (when it suits your brand).

Definition:

1. High price can increase demand.

Examples:

1. Perfume.

References:

1. 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.

Insights:

1. People tend to have an ingrained belief that expensive products are higher quality.
2. Since price signals quality, brands should invest disproportionately towards higher end goods.
3. 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.