Again, lots of interesting speakers.
We’re sure what we learn from other speakers and the audience will help us improve our knowledge and also this blog.
Friends, I’m speaking at TEDxGateway on Bleep and Behavioural Design.
There are lots of interesting speakers lined up. So come over to NCPA, Mumbai on 8th Dec 2013 to listen and discuss some stimulating ideas and thinking that could change the way you view the world.
All the information is here – www.tedxgateway.com.
Hope to see some of you there,
Anand & Mayur.
Let us tell you why we think so. Our starting assumption is that most of the shopping online in India in the future will be done via plastic card (credit or debit card) rather than cash, because of convenience. We understand that cash on delivery is convenient too, but you still got to have cash to pay, so it’s not as convenient. And paying by card is a lot different than paying by cash.
Paying by card fundamentally changes the way we spend our money. When we buy something with cash, the purchase involves an actual loss – your wallet feels lighter. Credit cards, however, make the transaction more abstract and we don’t really feel the downside of spending money. As George Loewenstein, neuroscientist at Carnegie Mellon says, “The nature of credit cards ensures that your brain is anesthetized against the pain of payment.” Brain imaging experiments suggest that paying with plastic literally inhibits the insula. Insula is the region of the brain associated with negative feelings. It’s the brain area responsible for making sure you don’t get ripped off. So when the insula is inhibited, it makes a person less sensitive to the cost of an item, making him/her more willing to buy.
Spending money by card doesn’t make you feel so bad, so you spend money easily. And buying stuff over an app is even easier with the pressing of the ‘Buy Now’ icon. Not to forget, the Internet is full of deals that make people end up buying things that they don’t even need.
The debate is always on what’s better: to rely on intuition (feeling) or rely on deliberate thinking while making decisions. Fact is in some cases its better to rely on feeling and in some on deliberate thinking and the trick is to know which to choose when. This post is about learning how not to get fooled by a feeling from an experiment conducted by neuroscientist Read Montague, which demonstrates how our dopamine system leads us to lose money in the stock market.
In the simulated experiment, subjects were given $100 at the start. Players were to invest their money for twenty rounds and got to keep their earnings, if any. Interesting twist of the experiment was that Read Montague had people ‘play’ the Dow of 1929, Nasdaq of 1998, Nikkei of 1986 and S&P 500 of 1987 – what had been once real-life bubbles and crashes.
What the scientists observed from brain mapping, were signals emanating from dopamine rich areas of the brain, like ventral caudate, which was encoding the ability to learn from what-if scenarios. For example, the situation in which a player invested 10% of his total money – relatively small bet. Then he saw the market rise dramatically. What happened was his ungrateful dopamine neurons got fixated on the profits he missed. In such a situation, when the market was booming, like before the Nasdaq bubble of 1998, the players kept increasing their investments. Not to invest was to drown in the feeling of regret. The greedy brains were convinced that they’ve solved the stock market, but just when they are most convinced that it isn’t a bubble, the bubble burst. The Dow sank, the Nasdaq imploded and Nikkei collapsed. All of a sudden, those who regretted not investing more and subsequently invested more were now despairing their plummeting net worth. “When the markets head down,” says Montague, “you get the exact opposite effect. People just can’t wait to get out, because the brain doesn’t want the feeling of regret staying in. Investors dump any stock that’s declining. Panic.”
Jonah Lehrer, author of ‘How we decide’, says, “Our dopamine neurons that release the feel-good chemical, weren’t designed to deal with random oscillations of the stock market. The brain is so eager to maximize rewards that it ends up pushing its owner off a cliff. Casinos have learned to exploit this flaw of the human brain. So don’t try to perceive patterns when they don’t exist. The world is more random than you think it is. Don’t fixate on what might have been or obsess over someone else’s profits. But that’s what our emotions can’t understand.”
Now if you don’t get fooled in such circumstances, tell us how.
Bleep has been featured in TIME, BBC, Fast Company, BMW Guggenheim Lab, USA Today, The Strait Times, Times of India (2), The Economic Times (2), Mint, CNBC Overdrive, Hindustan Times, NDTV, Top Gear, Radio One (2), Mumbai Boss, The Sunday Guardian, DNA and TEDxGateway talk.
Indiscriminate honking is a bad habit and a huge irritant in India, parts of Asia and South America, or even by cab drivers in NY. If you are visiting us from a country where the habit of honking is a problem, share this video on facebook, twitter, linkedin, pinterest and help spread the word.
A big thank you in advance for your support. To get us in touch with a Govt. or NGO representative of your country, write to us at email@example.com
Every share counts. Every little helps.
Anand and Mayur
For most us, the word ‘stocks’ or ‘shares’ is associated with feelings of it being risky, a gamble, incomprehensible, scary, involving the luck factor and so on. Understandably so, betting on the future value of a stock, is no easy task. Even the experts get it wrong a lot of the times. But I would like to drive your attention to a particular behaviour related to stocks, which shows how we make mistakes when selling stocks from our portfolio.
Consider this situation. You need money for an important event in your life and need to sell some stock. Amongst the stocks you own, say, Mata Power according to you is a winner, because if you sell it today you will have achieved a gain of Rs. 3,00,000. You hold an equal investment in Mata Airways, which you consider a loser, is currently worth Rs. 3,00,000 less than you paid for it. The value of both stocks has been stable in recent weeks. Which are you more likely to sell?
What happens is that our minds see the choice like this: I could close the Mata Power account and score a success for my record as an investor. Alternatively, I could close the Mata Airways account and add a failure to my record. Which would I rather do?
Daniel Kahneman, psychologist and nobel laureate in Economics, says if the problem is framed by us, as a choice between giving yourself pleasure and causing yourself pain, you will certainly sell Mata Power and enjoy your investment prowess. He calls this the disposition effect.
He says, investors set up a mental account for each share that they have bought, and want to close every account as a gain. It is only the very savvy expert, who would take a comprehensive view of the portfolio and sell the stock that is least likely to do well in the future, without considering it a winner or loser.
The disposition effect is a costly bias. If you care about your wealth rather than your immediate emotions, you will sell the loser Mata Airways and hang on to the winning Mata Power. But closing a mental account with a gain is a pleasure, but it is a pleasure we pay for.
Companies fall into a similar trap of continuing to fund a project even though the returns are now less favourable, simply because they have already put considerable amount of money. When faced with a choice of investing money in a new project that is considered likely to bring higher returns, it most often leads to favouring the option of continuing to fund the existing project.
Honking is so embedded in Indian driving etiquette that Audi India has confirmed, in media, having designed extra loud, ultradurable horns for vehicles sold in India. Meanwhile people face a rapidly growing problem with many side effects of noise pollution. Some of them being increased hyper-tension, blood pressure, hearing loss, increased risk of heart attacks and disturbed sleep patterns. Reports in Indian cities show that noise levels are way beyond the permissible limits. Truly we are all horny.
Honking like other behaviour, over time, becomes a habit. And habits are essentially automatic behaviour where one does not consciously think about the action, but rather, the decision-making happens automatically. So we thought that it was important to shift the driver from an automatic mode of honking as a habit, to make him deliberate on whether the situation really demanded that he honk. We needed to make the driver conscious of the habit of honking by giving him immediate feedback while the driver was still driving the car, so that the next time the driver honked only when he thought it was necessary, rather than honk indiscriminately.
This approach led us to create a ‘Horn Reduction System’ we’ve called Bleep that has proved to reduce honking amongst each and every one of participants by an average of 61%.
Bleep – A horn reduction system
Bleep is a device with a simple red button fitted in an easily accessible place on the dashboard of a car. The red button has a frown sketched on it and when the driver presses the horn, the red button begins to beep and flash. In order to switch the device off, the driver needs to press the red button.
The 6-month long experiment
Bleep has been tested on manual and automatic geared cars amongst 30 people including men, women and chauffeurs of private vehicles, over 6 months and over 3800 kms. The participants were given either of two cars – manually geared Swift or automatic Honda City, with Bleep fitted, to be driven for 4 days during the working weekdays. Two days with Bleep off and the next two days with Bleep on, so that we could compare the number of honks per kilometer in the control situation (pre-Bleep) with the experimental situation (post-Bleep). Bleep has been tested as triggering off every time the horn is pressed, which is a stricter version in the manually geared Swift car, as well as triggering off every third time the horn is pressed, which is more lenient, in the automatic Honda City. In the first phase of the experiment the drivers were not given any information about the experiment. In the second phase they were simply shown how the system works.
We have found a reduction in honking in each and every one of the participants wherein honks per km reduced between 19% to 96% (on an average by 62.5%) when Bleep was triggered every time the horn was pressed (stricter version). A reduction in honks per km was found between 16% to 91% (on an average by 60.3%) when Bleep was triggered every third time the horn was pressed (lenient version). These numbers prove that the reduction in honking relates to indiscriminate honking that drivers can do without.
The science of Bleep
The science behind the effectiveness of Bleep is that it assists the driver in reducing honking by using a visual-cum-sound reminder. The driver gets instant feedback when the red light with the frown beeps and flashes when he honks, making the driver conscious about his inappropriate behaviour of honking and making him deliberate about when he really required to honk. The driver having to physically switch off the reminder further helps in persuading him to honk lesser. The frown on the device is designed to indicate that honking is socially inappropriate behaviour. A study called ‘Overcoming Intuition’ done by Alter, Oppenheimer, Epley and Eyre has shown that frowning helps the brain reduce the reliance on intuition and activates analytical reasoning. Another research at the Stanford University School of Medicine has shown that peak brain activity (arresting attention) occurred during a short period of silence between musical movements, which is evidence that sounds that have a pause in between make you more alert. That’s why a seatbelt reminder like sound was used in the beep.
Bleep comes with many other unique features like recording, displaying and transmission of vehicle data like number of honks, speed at time of honk, location, time, etc., inside the vehicle or at a remote location and many other customised features. Patent pending.
Just glancing at a photo of a rich and gooey chocolate cake can set your brain circuits sparking, switching on cravings and revving up your appetite.
The proof is in the brain scans. Researchers found that when people stare at sugary treats, regions of the brain known to be involved in appetite control and pleasure and reward light up, according to the study presented at the annual meeting of the Endocrine Society.
The new study parallels earlier research in cocaine addicts. When addicts were shown anti-drug commercials that included crossed-out needles, the brain regions associated with pleasure fired up and the addicts reported increased craving. Contrary to public health officials’ plans, only the needles registered in the addicts’ brains, not the big red Xs crossing them out.
Dr. Kathleen Page, a professor of medicine at the University of Southern California says “We see parallels between substances of abuse, like cocaine, and highly palatable foods. Some of the same brain regions light up.”
Page and her colleagues scanned brains of obese Hispanic women looking at images of alluring foods such as cupcakes, chocolate cake and chocolate chip cookies. “What we saw was that the regions of the brain that are involved in reward and hunger lit up,” Page said. The women, who were also asked to rate their appetite at the beginning and end of the experiment, reported greater hunger and desire for food after looking at the photos.
And in an intriguing second experiment, the researchers asked the women to each consume a sugary drink of approximately 200 calories. Then the researchers repeated the scans as before with the women looking at photos of tasty treats.
“Surprisingly, consumption of the sugar drink actually increased the ratings of hunger and desire,” Page said. “We didn’t predict a hunger increase with the sugar drink. Apparently the brain saw it as an appetizer.”
It’s not clear how average people can protect themselves from photos of tempting treats, Page said. And it’s funny, but when I conducted the studies and looked at the pictures myself, I was thinking, I could eat a piece of chocolate cake right now.
Feel like having one?
Illustration by Mayur Tekchandaney
Warning: If you are a consultant you may not like this post, but if you are a client you are likely to love it.
That’s because solution providers don’t particularly like to hear the words ‘Let’s sleep over it’, but this phenomenon is proven to be good for complex cognitive skills like decision-making.
In one of the first studies of its kind, Dr. Rebecca Spencer and postdoctoral fellow Edward Pace-Schott investigated the effects of sleep on affect-guided decision-making, which is decisions on meaningful topics where subjects care about the outcome, in a group of 54 young adults. They were taught to play a card game called the Iowa Gambling Task, for rewards of play money in which wins and losses for various card decks mimic casino gambling.
The researchers gave two groups of 18- to 23-year-old college undergraduates a brief preview of the gambling task, so brief that it was not possible for them to learn its underlying rule. Subjects were then asked to come back in 12 hours. The 28 subjects who got the preview in the afternoon went home to a normal evening and their usual night of sleep, while the 26 who received the game preview in the morning came back after a day of normal activities with no naps. On the second visit, subjects played the full gambling task. (You can read the detailed study in the online issue of the Journal of Sleep Research)
Subjects who had a normal night’s sleep as part of the study drew from decks that gave them the greatest winnings four times more often than those who spent the 12-hour break awake, and they better understood the underlying rules of the game.
“There is something to be gained from taking a night to sleep over it when you’re facing an important decision. We found that the fact that you slept makes your decisions better.”, says Dr. Rebecca Spencer.
She believes this sleep benefit in making decisions may be due to changes in underlying emotional or cognitive processes. “Our guess is that this enhanced effect on decision-making is something that depends on rapid-eye-movement or REM sleep, which is the creative period of our sleep cycle.”
Not convinced? May be it’s a good idea for you to sleep over it.
Illustration by Mayur Tekchandaney
Despite how common the belief is, it’s not true.
Neurologist Barry Gordon describes the myth as laughably false, adding, “we use virtually every part of the brain, and that most of the brain is active almost all the time”.Neuroscientist Barry Beyerstein sets out evidence refuting the 10% myth:
I was just in the mood for some myth-busting. This ain’t meant to say that we don’t have the potential to do more than we currently do. If you think you can do it, you can.
Illustration by M____ T____________