Emotions hugely affect decision-making

Posted on Published by Anand Damani

Emotions hugely affect decision-making

We’ve all experienced how we like to shop when we’re feeling down. While that says a lot about our buying behaviour, we never imagined that emotions played a huge role in our selling behaviour as well. This phenomenon is explained by an interesting study below.

Behavioural scientist Jennifer Lerner and her colleagues induced either sadness or no emotion in participants by having them view different film clips. Those assigned to the sadness-inducing condition watched a movie clip from The Champ, which featured the death of a boy’s mentor; following that, they were asked to write a brief paragraph about how they’d feel if they’d been in the situation themselves. Those in the no-emotion condition watched an emotionally neutral film clip featuring fish and then wrote about their day-to-day activities. Afterward, half the participants were asked to set a price to sell some highlighters and the other half were asked to set a price to buy the same highlighters.

Turned out that sad buyers were willing to purchase the item for around 30% more than emotionally neutral buyers. Here’s the interesting part. Sad sellers were willing to part with the item for around 33% less than emotionally neutral sellers! Researchers also found that the participants had no idea that they had been so deeply affected by the residual feelings of sadness.

Behavioural scientists Christopher Hsee and Yuval Rottenstrich argue further that in emotionally charged situations we become less sensitive to the magnitude of numbers – we are more likely to pay attention to the simple presence or absence of an event. We get persuaded by offers when we shouldn’t be. Like when we’re got our eyes set on a new beauty (car) and if the difference between the price of the car and what we’re willing to pay for it is say Rs. 3 lakh – a good salesperson will manage to persuade us by throwing in one or two additional items free like a mirror lock or steering lock, whose value is realistically nowhere near Rs. 3 lakhs.

Lesson for negotiations, buying and selling decisions – examine how you feel and put off the decision until you’re feeling emotionally neutral.

Source: Lerner, A. Small and G. Lowenstein – Heart strings and purse strings: carryover effects of emotions on economic decisions – Psychological Science, 15:337-41 (2004)

We all do as others do (ET)

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We all do as others do

This article of ours appeared in the editorial column of The Economic Times on 29th Dec, 2016

We did an interesting experiment in Mumbai some time back. We got 98 households across a few housing societies in Bandra and Khar to provide us with their electricity bills before the bills reached each member’s house. We then calculated the average bill amount in that particular society.

Let’s say the average was Rs 1,022. For all above-average users, we put a stamp stating that the average in that society is Rs 1,022. Next to their above average amount, we put a frownie indicating that they could do better.

The average number set the social norm and got the above average users to act like their neighbours and reduce their electricity consumption by 1.33 per cent. 1.33 per cent sounds small, but it can power 17,465 villages for one whole year. We called the experiment People Power because it gives people the power to make a difference at no cost.

Human behaviour is contagious. Our actions are often guided by how people around us are behaving. The information provided by the stamp let the above-average users know how much their neighbours were consuming.

That set the social norm and got them to reduce their power consumption. We do as others do. If people see other people littering, they litter too. If people see other people throwing waste in dustbins, they use dustbins too. If people see other people cheating, they cheat too. If people see other people being honest, they behave honestly too.

Behavioural science studies show that people dress in the same styles as their friends, pick dishes preferred by other diners, choose restaurants that are more crowded, are more likely to get fat if people around them become fat, are more likely to quit smoking if their friends quit, pay taxes if others are paying, vote if their spouse votes, and so on. A five-star review on Amazon leads to approximately 20 more books sold than one-star reviews.

This behavioural science principle of ‘social proof ‘ made a popular American infomercial for a home shopping channel change the all-toofamiliar call-to-action line at the end of the infomercial, “Operators are waiting, please call now” to “If operators are busy, please call again”. This simple change led to its sales skyrocketing.

On the face of it, the change seems foolhardy. After all, the message indicates that one may have to waste their time redialing till they reach a sales representative. Yet it worked so brilliantly.

Consider the kind of mental image that’s likely to get generated when you hear, ‘Operators are waiting, please call now’ — scores of bored phone representatives while they wait by their silent telephones — an image indicative of low demand and poor sales.

Consider how your perception of the popularity of the product would change when you hear, ‘If operators are busy, please call again’ — operators going from phone call to phone call without a break, right? That made people think: ‘If the phone lines are busy, then other people like me who are also watching this infomercial must be calling too.

Most people think they are different. But in reality most of us behave the way others do. So powerful is the effect of others on us that television executives love to fill comedy shows with canned laughter.

Experiments by lots of behavioural scientists have found that the use of canned laughter causes an audience to laugh longer and more often when humorous material is presented. People rate the material as funnier. In addition, evidence indicates that canned laughter is most effective for poor jokes.

In another experiment conducted by behavioural scientists Noah Goldstein, Robert Cialdini and Vladas Griskevicius (‘A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels’, goo.gl/OJT1pb), different kinds of signs were placed in hotel rooms. One of the signs asked guests to help save the environment by reusing their towels.

The second one informed them that the majority of guests at the hotel recycled their towels to help save the environment. The second sign had a success rate of 26 per cent more than the first sign.

A third sign informed guests that majority of people who had previously stayed in their particular room recycled their towels to help save the environment. The third sign had a success rate of 33 per cent more than the first sign.

Now only if hotels could apply the same principle to reducing theft of towels, shampoos, bedsheets, stationary and, yes, appliances too.

Sources: 1. Schultz, P. Wesley, Jessica M. Nolan, Robert B. Cialdini, Noah J. Goldstein and Vladas Griskevicius, “The Constructive, Destructive, and Reconstructive Power of Social Norms”, Psychological Science 18:429-34 (2007) 2. Kelman, H. C. (1 March 1958). “Compliance, identification, and internalization three processes of attitude change”. Journal of Conflict Resolution 2 (1): 51–60.) 3. Cai, Hongbi, Yuyu Chen and Hanming Fang – Observational Learning: Evidence from a randomised natural field experiment – American Economic Review 99, no.3: 864-82 (2009) 4. Noah J. Goldstein, Robert B. Cialdini and Vladas Griskevicius – A room with a viewpoint: Using social norms to motivate environmental conservation in hotels – Journal of Consumer Research 35:472-82 (2008) 5. David W. Nickerson – Is voting contagious? Evidence from two field experiments – American Political Science Review 102: 49-57 (2008) 6. Nicholas A. Christakis and James Fowler – Connected: The surprising power of our social networks and How they shape our lives (2009) 7. Behavioural Insights Team – erstwhile cabinet office of British Government 8. Gary S. Becker – A note on restaurant pricing and other examples of social influence on price – Journal of Political Economy 99, no. 3: 1109-16 (1991) 9. Chevalier, Judith and Dina Mayzlin – The effect of word of mouth on sales: Online book reviews – Journal of Marketing Research 43, no.3: 345-54 (2006) 10. Gregory S. Berns et al – Neurobiological correlates of social conformity and independence during mental rotation – Biological Psychiatry 58: 245-53 (2005) 11. M. M. Smith and R. G. C. Fuller – Effects of group laughter on responses to humorous materials – Psychological Reports 30:132-34 (1972) 12. R. G. C. Fuller and A. Sheehy-Skeffinton – Effects of group laughter on responses to humorous materials: A replication and extension – Psychological Reports 35:531-34 (1974) 13. T. A. Nosanchuk and J. Lightstone – Canned laughter and public and private conformity – Journal of Personality and Social Psychology 29:153-56 (1974)

Designing effective public policy (Mint)

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Designing effective public policy

This article first appeared in Mint’s editorial column ‘Their View’ on 21st Dec, 2016

Behavioural science should be used to design effective evidence-based public policy

For the most part, designing policy has meant passing a law, a sanction or penalty that imposes a fine or imprisonment to effect desired behavioural change or action. It assumes that the connection between law and actual behavioural is linear. It assumes that people are aware of the law, realize it applies to them, that people weigh the costs of breaking the law with the risk of being caught, overcome the temptations of the moment, in favour of willpower and self-discipline, and comply.

However, in spite of alcohol being prohibited in Gujarat, Nagaland, and Bihar, it is still readily available in these states, and has helped create a network of bootleggers, liquor mafia, spurious liquor, and a complicit police. There are fines for not adhering to traffic laws like honking unnecessarily or not stopping the car before a zebra crossing, but they are far from being effective in getting people to take the desired action. There is a fine for littering, but our roads are strewn with litter. Even when retailers charge for plastic bags, its consumption continues to grow. Fines and sanctions curb people’s fundamental right to choose and, therefore, are met with resistance and are often counterproductive.

A nudge, on the other hand, is a way of encouraging or guiding behaviour without mandating, instructing, sanctioning or monetarily incentivizing. It leaves people with the freedom of choice and yet guides them to act positively. Instead of shutting down choices, a nudge changes behaviour with a lighter touch, a more empirical and behaviourally-focused approach to policymaking.

A pioneer in designing effective public policy by using behavioural design nudges is the Behavioural Insights Team (BIT) or the “Nudge Unit” of the UK. It was started in 2010, headed by David Halpern and advised by Richard Thaler, with the backing of then Prime Minister David Cameron. Like any new idea, it had its sceptics in government. But over the first two years itself, it demonstrated the value behavioural science could bring in designing policy, based on empirical methods, that led to better outcomes, easier services for the public and most importantly saved government money.

BIT conducts dozens of experiments in the form of randomized controlled trials or rapid low-cost trials in areas such as healthcare, tax, energy conservation, crime reduction, employment and economic growth. Among some of its popular work is how it helped the tax department collect more taxes. BIT worked with the tax department to send out different versions of letters to people who owed tax to test systematically if changing the wording based on behavioural science literature would make a difference. They tested whether adding a single sentence such as “most people pay their tax on time” would boost repayment rates. And it did. By several percentage points, bringing in tens of millions of pounds. It’s because social norms are powerful in getting people to take action. Wording can make a big difference in behaviour change—imagine 3G, 4G and Wi-Fi being reworded as “radiation”.

Another experiment was about motoring fines. It showed that adding an image of the owner’s car to the ticket, captured by the camera, made the owner significantly more likely to pay unpaid car tax. In a third experiment, they encouraged people to insulate their lofts or attics. Insulation reduces heat loss, reduces energy bills and costs much less compared to the overall monetary benefits, yet people weren’t insulating their lofts. They tested two offers—an attic-clearance service and extra discounts. The attic-clearance scheme was more than three times more popular than extra discounts because the biggest issue was attic clearance rather than cost.

In the area of employment, getting the unemployed to think about what they could do in the next two weeks, instead of asking what they had done in the previous two weeks, significantly increased the number of unemployed who got work faster, trimming millions of days off benefits. In behavioural science, such a nudge is termed “implementation intention”.

In the area of pensions, employees now automatically joined the company-sponsored pension scheme by default but still had the option of opting out. So now the default was automatic enrolment rather than actively choosing to do so, making good behaviour easy. That led to more than five million new pensioners. Behavioural science studies by David Laibson, Shlomo Benartzi and other behavioural scientists show that changing the default beats financial education hands down.

Other BIT experiments have showed how simple behavioural design nudges can reduce carbon emissions, increase organ donations, increase quit-rates of smoking, reduce missed medical appointments, help students finish their courses, reduce discrimination and boost recruitment. And like the examples mentioned above, they are low cost, simple and scalable.

India has hundreds of problems to solve that require effective public-behaviour change—waste segregation, energy conservation, reducing road accidents, fuel conservation, cleanliness, adherence to medication, tobacco addiction, open defecation, reducing crime, hand-washing, tax evasion, alcoholism, etc. Instead of relying on law, fines, threats and monetary incentives, why not apply behavioural science and test simple, low-cost behavioural design nudges to see what works? Test, learn and adapt. After all, evidence-based policy is the best policy.

The science of how radio stations introduce new songs

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The science of how radio stations introduce new songs

From Left to Right – Miley Cyrus, Beyonce, Grimes (Canadian Electronic Artist) Rihanna and Adele

As the major contributor of content on radio is music, the station ought to be playing hit numbers so that listeners keep tuned in. But how can radio stations afford to play only hit songs, if they are more costly? And what about the promotions of new songs? How do new songs get played on radio stations? And how do they become a hit? That got us digging. Here’s what we found.

There’s a company named Polyphonic HMI – a bunch of artificial intelligence experts and statisticians based in Spain – who has created a program called Hit Song Science. Don’t kill us for this. Hit Song Science analyses mathematical characteristics of a tune by comparing the tempo, pitch, melody, chord progression, and other factors against thousands of hit songs stored in Polyphonic HMI’s database. They predicted the success Norah Jones’s Come Away with me that won 8 Grammys, Santana’s Why don’t you and I that reached number three on Billboard charts. (We don’t know what song they predicted incorrectly.)

The program also predicted the success of a song called Hey ya by hip-hop group OutKast in 2003. When industry folks heard Hey ya, they liked it and thought it would become a huge hit. But when the data came in about listeners across radio stations, a huge number of listeners tuned out within the first thirty seconds itself. What went wrong?

One of the pioneers in studying why and how songs become sticky, Rich Meyers, says, “Sometimes radio stations do research by calling up listeners and playing a snippet of a song, and listeners will say, I’ve heard that a million times and I’m totally tired of it. But when it comes on radio, your sub-conscious says I know this song, I can sing along. Your brain secretly wants that song, because it’s so familiar to everything else you’ve already heard and liked.”

Areas of our brain that process music – auditory cortex, thalamus and superior parietal cortex – are designed to seek out patterns and look for familiarity. Music after all is complicated with numerous tones, pitches, overlapping melodies, etc. Our brains crave familiarity in music, because familiarity is how we manage to hear without becoming distracted by all the sound. That’s why songs that sound ‘familiar’ – even if we’ve never heard them before – get sticky.

The problem wasn’t that Hey ya was bad. The problem was that it wasn’t familiar. So radio stations used the trick of sandwiching Hey ya between familiar hit songs to mitigate risk. If stations don’t take risks with new songs people will stop listening. On the other hand, listeners want songs they already like. So by sandwiching them between already hit songs, stations make new songs familiar as fast as possible. Jiten, partner at Boing recording studio, says, “radio stations mitigate risk by playing new songs that are well promoted on audio-visual media like the TV as well.” Makes sense.

Be careful when offering your brand for free

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Be careful when offering your brand for free

When you give something free, people don’t value it. Even if your brand is being given free as a gift with the purchase of another brand, whether highly priced or not, it could backfire.

Behavioural scientist Priya Raghubir had participants view a duty-free catalog that featured liquor as the target product and a pearl bracelet as the bonus gift. One group was asked to evaluate the desirability and value of the pearl bracelet in the context of it being the gift, and another group was asked to evaluate the pearl bracelet by itself. She found that people were willing to pay around 35% less for the pearl bracelet when they saw it bundled with the target product as a gift, than when they saw it as a standalone product.

This happens because consumers might infer that the product’s manufacturer wouldn’t give away a valuable product for free. People may wonder what might be wrong with the gift or may assume that the gift is obsolete or out of style or isn’t selling or it may be plain junk.

One way of preventing such damage would be to inform consumers about the true value of the gift. So instead of a ‘Free backpack with the suitcase’, it should read ‘Free backpack worth Rs. 1990 with the suitcase’.

This has application for anyone looking to influence others. Says Robert Cialdini, Professor of Psychology and Marketing at Arizona State University, “by pointing out to a colleague that you were happy to work for two extra hours to help finish this important project, because you know how much it means to his/her prospects, you are valuing your time in your colleague’s eyes. Or you could use it to convince people that, in order to avoid having their opinion devalued, they should stop giving you free advice.”

Source: Free gift with purchase: Promoting free gifts with purchase: Promoting or discounting the brand? – Priya Raghubir – Journal of Consumer Psychology, 14(1&2), 181–185 (2004)

Why Behavioural Design is more effective than Advertising at changing behaviour

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Why Behavioural Design is more effective than Advertising at changing behaviour

Advertising is useful for creating awareness of the the brand and making the brand likable through a story. However its too much to expect that viewers would choose that same brand or product when they are actually in ‘buy’ mode. Because today consumers are subjected to thousands of associations everyday and the human brain cannot be expected to revive the desired brand connection at point of purchase or consumption. Behavioural Design, on the other hand, works at this moment of truth and is far more effective at making people act in the desired way. Let us give you an example.

Suppose we wanted to encourage students to drink alcohol in limits and not go overboard. And say we chose advertising as a way to influence them to reduce their drinking. And say we even use the proven persuasive technique of using social norms – people are motivated to behave in line with perceived social norms. So we advertise that 85% of students drink 2 or lesser than 2 drinks when they party. The thinking is that when students know that their peers don’t drink much, it will reduce the amount that they’ll want to drink when they party. And we advertise via posters in colleges in prominent places so that the students would surely notice them.

Though the technique of social norm is persuasive, by the time the students get to the pubs, clubs, parties, wherever drinking occurs, they forget about that piece of persuasive messaging. The disparity between where the students see the persuasive message and where they are when they drink means that the distant voice of the message is likely to be drowned by the here-and-now sounds of cheers, fast music, laughter and an ambience created to shed inhibitions.

It’s unlikely that the same message would work if placed inside the pubs or clubs, especially if students see other students drinking more than 2 drinks. But what if the pubs put playful ‘light cubes’ in students’ drinks. Light cubes that are LED lights enclosed in plastic, emitting flashes of blue and white light, making the drink look like it were flashing the police car lights (blue, white and red in US). That could subliminally remind the students of the presence of cops around and restrict them from going overboard and getting into trouble. That’s why Behavioural Design is more powerful at changing behaviour.

Moving towards Swachh Bharat (Mint)

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Moving towards Swachh Bharat (Mint)

This article written by us appeared in the editorial section of Mint on 30th September 2016

A couple of weeks back, a video made by a private organization promoting the Swachh Bharat Abhiyan, featuring Kangana Ranaut and other Bollywood actors, went viral. The video depicted the picture of goddess Lakshmi disappearing from photo frames when people indulged in littering. The narrator on the video was Amitabh Bachchan, who said that the goddess of wealth lives only where there’s cleanliness. It ended with a plea by Bachchan and Ranaut to keep the country clean by not littering. Though the government didn’t issue this particular video, it has issued other, similar ad campaigns in public interest that promote the use of a public toilet instead of open defecation.

It is largely believed that ad campaigns change public behaviour by creating a change in people’s mindsets, which in turn leads people to take the desired action. But changing behaviour is not so easy. There are too many assumptions for this model of awareness leading to action.

The first assumption is that people can recall the message all the time. The second assumption is that the message is successful in motivating people to such an extent that it prompts them to act. The third assumption is that at the moment of actual behaviour, people would have the right amount of motivation, and also the ability to act in the desired way. That is a tough ask.

This is not the first time that the government has used ad campaigns to try and change public behaviour. In the recent past, campaigns like Save Fuel, Save Money have been aimed at changing driver behaviour by asking them to switch off car engines at traffic junctions to save fuel. Do you remember the campaign? If you don’t, crores of rupees in the form of advertising have been wasted. But let’s assume you are one of the few who do recall this message. Has it changed your behaviour? Do you now switch off your car’s engine at traffic signals?

Most people don’t. It’s a lot of effort. You need to turn the ignition off every time you wait at a traffic signal. And when the signal turns green, you have to turn the ignition on, listen to frantic honking because you haven’t moved immediately, change the gear from neutral to first if you are driving a manual-gear car, get frantically honked at again, put the hand-brake down, and finally get moving. Even for people who are highly cost-conscious or environmentally conscious, it’s too much effort.

That’s why campaigns are a money-draining and time-consuming way of attempting to change behaviour. In the UK, for example, in the 1970s and 1980s, the government spent millions on TV, radio and billboard ads educating people to wear seat belts. Researchers F.M. Streff and E.S. Geller estimated that by the end of the 1980s, 80-90% of British people had seen these ads eight-nine times each.

One would assume that showing people being launched head-first through their windscreens would make people respond. But it turned out that most people weren’t wearing seat belts. It was when the law changed in 1983, along with strict policing, that most people started wearing them.

Behavioural science suggests that a lot of the messaging on educating people to change behaviour seems powerful and emotional in the spur of the moment, but eventually doesn’t change behaviour because mere awareness rarely leads to action.

Changing behaviour is tough. People don’t always behave in the desired way. People should be exercising regularly, but many don’t. People shouldn’t be overeating, yet many do. The traditional way to change behaviour is to make people aware of the pros and cons of a particular act. But this method is ineffective, because most behaviour is instinctive i.e. subconscious. We aren’t always aware of the reasons for our actions. It takes a lot of time, effort and money to make someone aware of their behaviour, convince them that change is necessary and motivate them to change.

Behavioural science, on the other hand, uses subtle on-time nudges to enable the desired action. It focuses more on the ability to perform the desired action in the last mile than on motivating people. These nudges are based on a combination of behavioural economics, cognitive neuroscience and psychology. The nudges are designed to automate the desired action and for it to take place right at the moment of action.

For example, to reduce honking, we conducted an experiment in which a red button called Bleep was fitted on to the dashboard of the car. When the driver pressed the horn, the red button would begin to beep and flash. In order to switch it off, the driver needed to press the button.

The button made the driver conscious of the habit of honking by giving him immediate feedback in order to reduce indiscriminate honking. In a six-month experiment, Bleep reduced honking by 61% on average.

Similarly, a nudge was used in Copenhagen, with green footprints painted on the ground, pointing the way to the nearest garbage bin, that reduced littering by 46% by painting.

Meanwhile, to keep India clean, we first need dustbins that are easily accessible and cannot be stolen. They could be designed to include that extra bit of motivation for use—for instance, by having two sections and a question such as: “Who’s your favourite actress: Kangana or Deepika?”.

How to turn your weakness into your strength

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How to turn your weakness into your strength

There have been many well-known cases of brands touting their weaknesses and being liked for it. Avis car rental’s memorable slogan ‘We’re No.2. We try harder’ that meant when you’re not no.1, you have to try harder. Or 1950’s Volkswagen Beetle’s campaign that Beetle wouldn’t win any beauty contests, but its strengths were durability, fuel economy and price. Or Stella Artois’ ‘Reassuringly expensive’. In fact the third largest auto insurance company in the US, Progressive Auto Insurance is known for letting its customers know about its competitors rates too. Although Progressive clearly has better rates in many instances, it’s not always the case. Inspite of this Progressive has grown successfully.

Social scientists Valerie Trifts and Gerald Haubl also support Progressive’s practice. In their study participants looking to buy books online were more likely to shop from a moderately priced bookseller when that bookseller also provided its competitors prices, which were sometimes lower.

Why does this strategy work? “Arguing against your self-interest,” says Robert Cialdini, “creates the perception of honesty and trustworthiness. This puts you in a position to be more persuasive when promoting your genuine strengths.”

This persuasion technique could even be applied when selling your car. Volunteering negative information about the car, especially information that the prospect would be unlikely to discover by himself/herself should do some good for his or her trust in you and your vehicle.

However, it’s important to keep in mind that this strategy can be effectively used only if your weakness is genuinely a minor one in comparison to your strengths. Like Francois, the 17th Century French writer and moralist, wrote, “We only confess our little faults to persuade people that we have no big ones.”

Source: Valerie Trifts and Gerald Haubl – Information Availability and Consumer Preference: Can Online Retailers Benefit from Providing Access to Competitor Price Information? – EBusiness Research Center Working Paper 06-2002

How to show off without being labeled as a show-off

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How to show off without being labeled as a show-off

Here’s an interesting story we chanced upon that overcomes the dilemma of being seen as a show-off when you may be trying to establish your credentials.

There is a certain real estate agency in the US, which has a sales and a rental division. Customers who would call the agency would typically first speak with a receptionist who, having identified which division they needed to speak with, would say, “Oh, rentals, you need to speak to Penny.” or “You need the sales division, you need to speak to Sheldon.”

Upon the recommendation of a group of behavioural scientists – Robert Cialdini and colleagues – the receptionist started using a slightly tweaked approach. The receptionist would now say, “Oh, rentals, you need to speak to Penny, who has over fifteen years of experience renting properties in this neighborhood. Let me put you through now” or “I’m going to put you through to Sheldon, our head of sales. Sheldon has twenty years of experience in selling properties like yours.”

Everything that the receptionist spoke was true. But for Penny or Sheldon to say the same thing would have been have been at the risk of being liked less and seen as boastful and self-promoting and as a result, not as persuasive. The customers ignored the fact that this introduction came from someone who was connected to Penny and Sheldon and would benefit from this kind of introduction. Penny and Sheldon reported a significant rise in the number of appointments post this Behavioural Design nudge. Lastly, but most importantly, the intervention was costless to the company.

No wonder, inspite of written recommendations being a prominent feature of Linkedin, it has further introduced recommendation of skills, to enhance the user’s credibility as well as LinkedIn’s usability.

How reframing choices, changes our decision

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How reframing choices changes our decision

(In the illustration did you first see a rabbit or a duck?)

Consider the following situation. Imagine that India is preparing for the outbreak of a disease, which is expected to kill 600 people. Two alternative treatments to combat the disease have been proposed.

If Treatment A is adopted, 200 people will be saved.

If Treatment B is adopted, there is a 1/3rd probability that 600 people will be saved and a 2/3rd probability that no people will be saved.

Which one do you prefer?

Most likely you prefer the certain option – Treatment A over the gamble – Treatment B.

Now lets consider a second version of the situation:

If Treatment A’ is adopted, 400 people will die.

If Treatment B’ is adopted, there is a 1/3rd probability that nobody will die and a 2/3rd probability that 600 people will die.

Which one do you prefer?

Most likely you prefer the gamble – Treatment B over the certain option – Treatment A.

Now look closely and compare the two versions: the consequences of Treatment A and A’ are identical and so are the consequences of Treatment B and B’. However, your options most probably differed. Did you choose to save 200 lives for sure in the first version and chose to gamble rather than accept 400 deaths in the other?

Embarrassed? So were we. Even when this test was shared with public health professionals in the US, they were swayed by this framing effect!

Daniel Kahneman, nobel-winning behavioural economist, explains the rationale behind our decisions. In his book ‘Thinking Fast and Slow’, he says “Decision makers tend to prefer the sure thing over the gamble, when the outcomes are good. They tend to reject the sure thing and accept the gamble, when both the outcomes are bad. Risk-averse and risk-seeking preferences are not reality-bound.”

This shows how a small manipulation can have drastic impact on decision-making. And if you still believe that we humans behave rationally, think again.

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