Insight: When people hear the same story everywhere, they often assume it must be true, then they are more likely to repeat it, and then hear it again from others, reinforcing the belief that it is true.
Insight: Innaccurate information can turn quickly into consensus through the bandwagon effect.
Example: Buying a new car - when judging the 'optional extras' people tend to feel the loss when not adding these extras more than the price of the extra.
Insight: Parting with things we own makes us feel a loss, and we tend to feel losses more strongly than gains.
Insight: The endowment effect helps explain why companies can afford to give money back guarantees - once people own an item it usually is worth more to them than the cash value of the item.
Definition: When we get used to things, or change our reference point: we adapt to new circumstances.
Examples: Lottery winners or accident victims become used to their new situation.
Insight: We adapt to pleasure, or good and bad experiences.
Insight: We get used to good or bad luck.
Reference: "When Choice is Demotivating": series of studies that provides evidence to the paradox of choice, including the famous 24 varieties of jam vs 6. Less varieties caused people to purchase more, suggesting that it was more difficult to make a decision when presented with more options.
Example: People are shopping more but enjoying it less.
Insight: Rationality tells us that more choice is always better, but empirically this isn't true.
Insight: Routine means we are on auto pilot which is a good thing: we don't have to face the burden of a choice with every action.
Insight: Satisficers face less burden when presented with many choices compared to maximisers who are at risk of second-guessing, regret and anxiety.
Principle: 1. "Choose When To Choose" - be clear about which decisions are important to make, develop rules of thumb so decisions are already made, or when another person may be the best decision maker.
Principle: 2. "Be a Chooser, Not a Picker" - where possible do not be in a position that forces decision-making, build habits, customs, and rules.
Principle: 3. "Satisfice More and Maximise Less" - avoid overanalysing options by choosing the first option that is good enough.
Principle: 4. "Think About the Opportunity Costs of Opportunity Costs" - limit the time thinking about alternatives.
Principle: 5. "Make Your Decisions Nonreversible" - own your decisions and focus.
Principle: 6. "Practice an Attitude of Gratitude" - keep a notepad and write daily what you are grateful for [this will help you feel better about decisions and face less regret].
Principle: 7. "Regret Less" - Satisfice; reduce options; practice gratitude for decisions made.
Principle: 8. "Anticipate Adaptation" - Be aware of the hedonic treadmill, and the satisfaction treadmill.
Principle: 9. "Control Expectations".
Principle: 10. "Curtail Social Comparison".
Principle: 11. "Learn to Love Constraints".
Reference: Herbert Simon, nobel prize winning economist - introduced satisficing in the 1950s - and suggested that when all the costs of decison making are accounted for (time, money, emotions) then satisicing is the maximising strategy.
Insight: The decision to maximise or satisfice as an individual often depends on the situation.
Insight: We all have the capacity to satisfice.
Insight: Maximisers have relative standards, satisficers have absolute ones - "the best" is often prone to comparison with others. Satisficing involves judging against one's own standards, rather than comparing with others.
Insight: Marketing and social media is always trying to convince you that "good enough" isn't good enough - there is always "better" out there.
Principle: Satisfice more - let go of trying to achieve "the best".
