Have you ever noticed that there is no Nobel Prize for psychology?
Because there is no money to be made in psychology.
So the few times someone has won the prize for something psychology related, they’re
usually earning the Nobel Prize for Economics.
So we’re not going to talk about psychology today, because it’s almost Christmas and
I need shopping money.
Instead, we’re going to talk about Behavioral Economics.
Whoa, whoa wait, don’t click away yet, trust me, this is interesting.
This video is brought to you by Brilliant.
If you’re like many Americans, the day after Thanksgiving you camped outside of your local
big box store in order to partake in some questionable deals.
Hopefully you didn’t hurt anyone in the process.
But the longer you waited in the cold and the more toes you stepped on, the more likely
you are to like whatever it is you bought.
Compared to if you just walked into the store and bought it without any waiting or deals.
This is called Effort Justification, there is a strong correlation between how much you
appreciate something and how much work went into getting it, whether that was time or
money.
The original research for this effect had to do with hazing.
The more physically or emotionally taxing the hazing ritual to get into a group, the
more you like that group, even if the group is extremely dull and boring.
Which is why Black Friday deals always seem better than they really are.
How else is someone going to mentally justify camping out overnight in order to get the
latest phone, or a Tickle Me Elmo, or a Furby… my special effects abilities are on point
today.
I put a lot of effort into this video, you better appreciate it.
There’s also something to be said about scarcity and the Exclusivity Effect.
It feels good to be one of only 200 people to get something.
Which is why companies will sometimes intentionally limit supply in order to manufacture scarcity
and give a false sense of exclusivity.
If something sells out, but you got one, man… that’s special.
I remember when in order to get a gmail account, you had to know someone with a gmail account
who still had one of their limited number of invitations that they could send you.
Or in order to get a Facebook account you still needed an edu address… the point is
they were hard to get, so they were special.
In somewhat of a less depressing effect, if you have to build something yourself you’re
also going to like it more.
This is called the IKEA Effect, but it also carries over to things like LEGO.
In order to justify the effort you put into building a… let’s face it, somewhat inferior
product… you will convince yourself to like it more than if you just bought it preassembled.
Especially if it’s something you didn’t necessarily want to buy in the first place.
This is Post-Purchase Rationalization, when you bought it, maybe it was a little too expensive,
maybe it isn’t all that cool, but you convince yourself that you actually wanted it – after
the fact.
This is in contrast to Buyer’s Remorse, when you hate it even more after you buy it.
Buying stuff for yourself isn’t the point of Christmas anyway – Christmas is about
giving!
… And Jesus, but mostly giving.
If you don’t like someone, but you don’t necessarily want to not like them, give them
a gift.
Did I mention I have a Patreon?
Because I have a Patreon.
It’s called the Ben Franklin Effect and it has to do with the dissonance you experience
when you don’t like someone, but you did them a favor or gave them a gift.
Cognitive Dissonance is an important concept in psychology and is part of every effect
I’ve mentioned so far… it’s actually kind of strange that I haven’t dedicated
an entire video to it yet.
When you have two conflicting ideas in your head or you’ve performed an action that
goes against your beliefs, your brain feels uncomfortable with that and will do some rather
interesting gymnastics to resolve it.
Generally, there are three ways to reduce or resolve dissonance.
You can lower the importance of one of the factors, increase the importance of another,
or by far the most interesting – completely change one of them.
The original study was done by Leon Festinger in 1957.
He had a number of participants do an incredibly boring task – turning pegs on a board for
literally no reason.
When the task was over, he asked each participant to lie to the next participant about how exciting
the task was.
Knowing full well that the task was boring af.
Half of the participants were only paid one dollar to lie…
Oh I don’t think that was the same experiment because this one wasn’t boring at all.
I didn’t think so.
While the other half was paid twenty dollars.
Well I think maybe your friend was wrong, perhaps it was a different experiment, because
this one was a lot of fun.
The twenty dollar group had no dissonance – The task was boring, they lied, but they
were paid twenty dollars to lie.
Easy, resolved.
Well it really wasn’t too enjoyable, in fact it was rather boring.
One dollar didn’t seem to be enough justification though.
The task was boring, they lied about it… so maybe it wasn’t that boring?
Yes I enjoyed it.
Would you like to participate in such an experiment again?
Yes I think I would like to.
These people unconsciously convinced themselves that the boring task was not boring in order
to justify lying about it.
This effect has been replicated over and over throughout the decades, it’s real.
So if you don’t like someone, but you want to like them, give them a present and let
your unconscious mind do the work for you.
The Ben Franklin Effect only works on you though and it can backfire.
When you get a present that you’re excited about, but then you find out that it came
from someone you hate, you will experience Reactive Devaluation.
You will like that thing less, simply because of who it came from.
However, this could trigger the Reciprocity Effect, you gave them a gift, now they feel
obligated to give you a gift.
And now they experience the Ben Franklin Effect.
See, using psychology, er, behavioral economics to influence those around you isn’t just
for mega corporations, you’re making the world a better place.
It would be better if we all got along anyway, yeah that’s what Christmas is about.
Another part of Christmas is telling other people, be it your parents or Santa, what
you want, and when it comes to that, behavioral economics gives you two options.
The first is known as the Foot-in-Door effect and it’s pretty common among door-to-door
salesmen.
Ask them for something extremely small, and if they say yes, they’re more inclined to
also go for something a bit bigger.
In marketing, they call that up-selling.
You sure that’s all you want?
You don’t want anything else?
Or you could go with the opposite, but be warned, you can’t use these together, you’ll
have to pick one or the other.
The Door-in-Face Effect is when you ask for something big and unreasonable, they slam
the door in your face… they feel bad and they’re willing to go for something smaller.
That’s a bit out of my price range, I’m not made of money… how about something a
bit smaller?
If you’re going to be a cheapskate when it comes to giving, but you’re looking to
get the biggest bang for your buck, you’ll need to take the Serial Position Effect into
account.
Let me tell you how my family did Christmas.
My entire extended family, my cousins and aunts and uncles, would come together at my
grandparents’ house and we’d all open presents one at a time, in order, by age.
Which was extremely boring as a child, I don’t care about anybody else’s presents.
But thanks to the Next-in-Line Effect, I especially didn’t care about whoever was opening a
present right before me, because all I could think about was my present.
This also happens when you’re introducing yourself to a group, like on the first day
of school – you rarely remember the person right before you?
In fact, you’re most likely to remember the first present you opened, which is the
Primacy Effect, and the last present you opened, which is the Recency Effect.
There’s a reason why the first and last commercials during the Super Bowl are more
expensive.
You don’t want to get lost in the middle, so try to make sure that your gifts are either
the first or la- JIMINY CHRISTMAS!
Why would anyone buy you?!
Attribution is when you attempt to figure out why someone performed an particular action.
You are attributing a motivation to a behavior and there are generally two types.
Dispositional Attribution is when you assume the motivation came within the person, it
was internally motivated.
They’re just weird or genetically predisposed to liking Furbies.
Then there’s Situational Attribution, which comes from the environment or a set of circumstances
outside of the person, so it was externally motivated.
Like if it was the cool thing to have that year or they needed it for a video.
The Fundamental Attribution Error is a cognitive bias where you tend to attribute the opposite
motivation to someone else that you would to yourself for the same action.
You bought a Tickle Me Elmo for your kid because it was the must-have toy that year, it was
situational.
But that guy?
He just wants it to resell at a markup on ebay, I bet he doesn’t even have a kid.
Or he’s just a weird collector.
It’s the same action, but we tend to give it an internal, dispositional attribution.
Defensive Attribution is when you again attribute the opposite, but for failures.
In western culture, we typically attribute our own failures to some external cause.
Except when it comes to other people, they failed because they’re lazy or unmotivated.
They gave you a bad gift because they don’t care enough about you or don’t pay attention.
You gave them a bad gift because your budget was tight, or there wasn’t enough time,
or they didn’t give you any good suggestions.
All external, it’s anything but you personally failing.
And thanks to the Negativity Bias, people tend to remember bad presents more than mediocre
or even good ones.
This goes for YouTube comments as well…
Which is where our good friend Cognitive Dissonance comes back into play – if you’re worried
that your gift might not be good enough, you have a few choices.
You can punt responsibility and give them a gift card I guess.
Or, you can change the rules and make it a White Elephant gift exchange, where all of
the gifts are bad and everyone hates what they got.
It’s basically a Secret Santa where the goal is to give terrible gifts.
And since they’re anonymous you don’t need to worry about any attribution.
If you’re going to do that, you should at least kind of try, and there are two psychological
effects to help you with that.
The best White Elephant gifts are the funny ones, which plays into the Humor Bias, people
are going to remember the experience of opening the weird sex toy gift more than they are
the actual gift itself.
Which is also thanks to the Von Restorf or Bizarreness Effect on memory.
Nobody is going to remember opening the t-shirt with the wolf on it or… yay a fidget spinner…
So the goal is to get really bizarre – so why not start by heading over to Brilliant.org/knowingbetter.
Brilliant is a problem-solving website where you can learn about Math and Science by breaking
them down into smaller effects so you can overcome your cognitive biases.
Take this course in Statistics so you can stop focusing on just the first and last gifts
in your dataset.
Or you could just introduce someone to the Joy of Problem Solving, we all have that on
person in our family who would love for you to gift them math homework.
Quite frankly, life doesn’t have enough math homework.
So get started by going to brilliant.org/knowingbetter and save 20% off of their premium subscription,
you’ll also be supporting the channel when you do.
I’m not exactly sure how you could gift that to someone else.
But you’re smart you’ll figure it out… and if you’re not, there’s a problem-solving
website you should go to.
Or you could just gift it to yourself, let’s be honest, Christmas is just about you.
And now you have a few more psych- behavioral economics tools to help you get the most out
of the holiday, because now, you know better.
I’d like to give a shout out to my newest legendary patrons, Austyn, Andrew, Nick, and
Grant.
I’d also like to apologize to Davis, whose name I’ve continuously misspelled.
If you’d like to join this, quite frankly unwieldy list, head over to patreon.com/knowingbetter.
In the meantime, don’t forget to attribute that subscribe button, follow me on Twitter
and Facebook, and join us on the subreddit.