Vsauce!
Kevin here.
And you are lying to yourself… basically all day long.
You don’t even know it!
And sometimes other people are conspiring to steer your mind where it shouldn’t go.
You get patterns wrong.
You get numbers wrong.
You get prices and values wrong.
And it’s totally not your fault.
Right?
Wrong!
It’s why 40,320 is actually greater than 40,320.
Wait, huh?
Ok, I’ve got two very simple math problems here under these papers, A and B. Choose the
one you want to solve.
Choose right now.
Do you wanna solve A or do you wanna solve B?
Go ahead.
Okay now that you’ve chosen, when I remove the papers to expose the problems, you’ll
have exactly 5 seconds to solve the one you chose.
And if you don’t have enough time to solve it, you can just estimate the answer.
Ready?
GO.
TIME’S UP.
Alright, let’s be honest -- virtually no one was able to multiply those numbers fast
enough, at least not accurately.
But what about your estimates?
We know that 1x2x3x4x5x6x7x8 and 8x7x6x5x4x3x2x1 are the exact same problem.
Because of the commutative property, which is like a times b equals b times a, it doesn’t
matter what order we multiply the terms.
Start small, get bigger?
Start big, get smaller?
It makes no difference, same result.
But in a 1974 article called Judgment Under Uncertainty: Heuristics and Biases, Amos Tversky
and Daniel Kahneman revealed that the group who tried to solve Problem A -- multiplying
with the small numbers first -- had a median estimate of 512.
Group B, who started by multiplying larger descending numbers?
Their median estimate was 2,250 -- over 4x higher than A.
Just because the order of the numbers was different?
That seems weird!
No, that’s normal.
We do this all the time and just don’t know it!
Oh, also, the actual answer to this problem is, as you may have guessed, 40,320.
So both groups were way off each other and way, way off the truth.
The fact is: whether you started with big numbers or small numbers, you were anchored
into a mode of thought that depended on your initial information.
Anchoring is a cognitive bias that basically sets the tone for how you think about something…
and it can be really tough to break out of it or consider other relevant factors.
Like video game prices.
I recently got into a teeny tiny Twitter argument about how $70 games now are actually cheaper
than the prices of video games 20 years ago.
Paying $60 bucks in the year 2000 was actually $90.69 in real dollars.
But we’ve all been anchored into video game pricing -- even ignoring inflation, we didn’t
talk about how games also now take longer to develop, with way more staff, and the technology
itself is a lot better with 4K graphics and smooth framerates, wireless controllers, full
games you can buy, download and play basically right away from your couch without having
to beg your mom to drive you to KBToys at the Southside Mall in Oneonta an hour round
trip in a sudden snowstorm to get a game you know next to nothing about aside from having
drooled over the same 10 screenshots in GamePro magazine for the last six months.
But that game was Xenogears and it was totally worth it!
And anchoring happens with stuff like movies.
How a movie opens and ends -- bookend anchoring -- has a stronger influence on what you think
of it.
Have you ever heard someone say, “Yeah, the beginning and end of that movie were terrible,
but the middle was really good!”
No.
COIN FLIPPING.
Massimo Piatelli-Palmarini flipped a coin 7 times.
And the outcome was one of these three sequences:
Heads Heads Heads Heads Tails Tails Tails Tails Heads Heads Tails Heads Tails Tails
Tails Tails Tails Tails Tails Tails Tails
The question is.
which one was most likely to be the real outcome?
Let’s say you had to bet on it -- it cost you $10 if you were wrong and you were right
you won $30.
When a group was polled, the top choice was sequence 2, followed by 1, and then 3 -- for
all the wrong reasons.
The probabilities of all three sequences are exactly the same, because each coin flip is
an independent event with 50/50 odds of heads or tails.
7 tails in a row is just as likely to occur as the mix of T’s and H’s in the 2nd series
-- but since we’re anchored into thinking there’s typically an alternating mix of
heads and tails in a sequence of 7 coin tosses, we wrongly believe it’s actually more likely.
EHHHHH.
DICE.
I’ve painted 4 sides of this die green and the other two sides red.
Same betting terms as the coin flip game..
Lose $10 if you’re wrong, win $30 if you’re right.
Which outcome is more likely?
Red Green Red Red Red Green Red Green Red Red Red
Green Red Red Red Red Red
When people were polled, choice preferences also went 2, 1, and 3… and that is weird.
None of the 3 sequences are that common because they’re so red-heavy, and red is only 2
of the 6 sides of the die.
But our cognitive bias tells us to choose the 2nd sequence because it’s got a nice
little mix…I don’t know why..
I don’t know why I did that… it’s got a nice little mix of red and green… even
though the first sequence is actually contained in the second one.
Look at this!
Red green red red red.
Why would it be easier to add an additional throw to make the sequence more likely?
It isn’t!
The more throws you make, the less likely you are to hit that exact sequence.
HERE’S THE MATH.
We’re just multiplying the odds of 1/3 for red and 2/3 for green -- but check out the
relative probabilities.
Just one swap from red to green in sequence #2 DOUBLES the probability of sequence #3…
and not requiring that extra green throw in #1 makes it about 60% more likely to happen
compared to sequence #2.
ANCHORING COSTS YOU REAL MONEY.
The next time you’re shopping and you see something that’s $19.99?
Yeah, $20 sounds a lot more expensive even though it’s just a penny difference -- but
that $0.99 also anchors you into thinking about the price in an interval of PENNIES,
so sales of WHOLE DOLLARS off seem more appealing.
Look.
If a car’s sticker price is $18,000 even?
You might counter with $15,000 even.
But a car at $17,800 anchors you into countering in hundreds, not thousands.
I began this video with that multiplication example because it's the clearest illustration
of how anchoring bias can lead two groups, with the same information just presented differently,
to reach totally different conclusions, BOTH of which were dramatically wrong.
Anchoring is a good thing.
It’s a first impression.
We have to start somewhere if we’re ever going to process any information in a meaningful
or efficient way.
But it can definitely lead you down the wrong path.
And without recognizing what it is and isn’t -- you just have no hope of overcoming its
effects.
But.
By acknowledging anchoring bias you’re armed with the ability to choose how much weight
to give it.
You can stick with the good, accurate anchors that lead you down the right roads and you
can transcend those that otherwise would have caused you to get it really wrong.
The truth is… that depending on the question, the real right answer might still be floating
around waiting for someone, someone like you, to finally anchor it.
And as always - thanks for watching.