pain threshold

pain tolerance
mildly injured veterans
27.02
severely injuired

4.69
10.13

58.98

"the ultimatum game"

proposer responder
responder can accept or reject
accept - get agreed money
if responed rejects, no one gets money

pain - getting better treatmet operations phys

therapy
getting to improve

On average, proposers offer about 40% of their

endowment to responders.
59.6, 40.4

severe injuries think differently

think moving forward
not passive but active meaning of pain
less painful, less threating

And about 16% of the offers are rejected.

16.2,
people reject unfair offers
willing to lose money
-think about rational and irrational tendencies

painful experience -> reframe

think , get over
the effect of past injury on pain
pain how we deal with it how we can improve
coherent arbitrariness
6 products
On average, participants with the lowest 20% of
digits were willing to pay about $11.25 and
participants with the highest 20% of digits were
willing to pay about $33.
Therefore, the difference is almost $22.
anchoring once we make decisions they make
repertoire, we come with history of past decisions
starting point for later decisions
everytime new decision - careful, not just one
decision, bec. may be first decision on many to come

"switching norms"
social norms - care abt others, friendship favors gifts
financial norms - market norms think abt cost-bnefit
analysis, own well being, selfishness think abt money
and how to spend it
aldo
daycare centers
late parents
8 latecomers per week
parents showin up 10 min or more late will now
incure a small fine
hour of babysitting
12 weeks, took the fine away
Once the fine was introduced, about 12 (12.3)parents
were late per week (up from 8 before the fine was
implemented), and eventually increased to about 16
parents being late per week.
16.4 latecomers per week
And after the fine was taken away, almost 19 parents
were late per week.
18.7

"pain of paying"
Paying with cash
paying with credit card

before fines, care for teachers

fines - switch parents' thinking
was worth it?

"what the hell effect"

-temptation

market norms>social norms

the ikea effect

-when we put more effort to our creations, labor
leads to love
distance to cash
-office supplies
"the dictator game"
proposer - responder
p:allocate bwn self and responder
r:passive
anonymously
On average, proposers offer $2.835 to receivers.
28.35%
meta analysis
-impulse to be selfish
keep what is ours
-social utility (care others)
tip, cross street, help
70% selfish 30% generous

still reigned
social norm didn't come back
easy to switch social->market norms and hard the
other way around
"public goods game"
4 rooms doesn't meet
tokens in common pool
x.4 for all
In both groups, participants initially contributed
about half of their tokens.
However, in the control condition, their contributions
degraded to about 3.2 tokens whereas in the
"punishment" condition, the average contribution
increased to 18.2 of the tokens.
During the last round of the "punishment" condition,
82.5% of participants contributed all of their 20

tokens. On the other hand, 53% of those in the

control condition contributed nothing at all.

worry, careful, plan that nature will not act the way
we want to

-shared resources
little bit, contribute less and less
not renewed, all suffer

Paying any attention to the news highlights many

systemic lapses of ethical behavior and to numerous
scandals. In addition, the fast pace of modern life,
the pressure to succeed, the lack of meaningful
oversight, and the all-encompassing influence of
money, are all contributing factors to our dishonest
environment and the erosion of trust.

if everybody puts resources,contributes everybody

benefits/society
punishment - punish freeloaders, cause us to behave
better and to cause people to contribute more to
common good
"the prisoner's dilemma"
rat on partner/stay quiet
both of u rat, 2 yrs both
neither of u rat,each 1 yr
if one rat and one doesn't, quiet 3 yrs, other free
cooperate/defect
lab
small amt of money
both rat 4cents each
quiet 7cents
rat 12 cents, quiet 0
partner condition
randomly match
10 games
200 decisions
10 games 10 rounds each
In the "partner" condition, most participants started
by cooperating, whereas in the "stranger" condition,
most people started by ratting out the other player.
60/40, 38/62
Over time, sadly, both conditions deteriorated.

--Jim Tranium Washington DC Police Department

inferred evidence
same effect than lying about evidence
false confession cases
tunnel vision
u killed joe blow
i killed joe blow dont document evidence contrary to theory
pressured
cut corners for greater good
case about mistaken murderer
pressure, rewards
for the greater good > easier to justify dishonesty
making society better vs. money
rationalise
Joe Papp
former professional cyclist
EPO
-kidney cancer
doping
supporting each other, secret

selfishness vs. altruism

inferences abt other person
need for building reputation initially
no need for reputation (stranger)

slippery slope
luck has been bad for you, getting less than your
share
u deserve it
i'm just restoring myself to rightful position

-build reputation behave better

cooperate

clinical, distance
talk about - normalize

"token lies"
sign earh up to $10 in 10 minutes

corruption - we know that it's illegal but nobody

around it feels it's bad
no shame/guilt
tremendous capacity to follow the herd
social norms
part of group
team, nationality, ideology
slowly

matrix task
12 numbers
2 numbers that add to 10
50 cents for correct answer
3.5 actual
On average, participants claimed to have solved
about 6.2 problems in the "shredder" condition and
about 9.4 problems in the "token" condition.
lots of people cheated a little bit
non monetary objects
society moving away from money
money checks credit card stock stock stock options
derivatives
dealing directly, over great distances
morality decreases
more steps bwn us and objects of dishonesty

ryan holiday
author, trust me im lying
blog
tucker
backlash
lgbt women's rights group
hair trigger
rally protests
feed monster

added up over time

doesn't hold back
game
not only back actor
a little to successful, easy
escalate
see danger

very good
high - month
low - hour of daily wages
medium - day
good
low - half an hour
medium - half a day
high - 2 weeks

honesty-public good
imptnce of trust in society
police politician journalists court system, etc
take advantage when other people think we're
honest
terrible when low level of trust

not een god

nothing

walt pavlo
engineer, mba

maximum possible earnings

actual earnings
= performance

900 business
move around
put bad news to future
didn't tell shareholders
common mistakes
100 million
child do bad, bad things happen vv
do bad good things happen
reward,
jailed
looking from outside we can't see the pressures
indv. acting only in self-interest
walt's - interest of company
we want people to be part of group
well being, motivation for work
the more we care, the more likely we are to cheat for
them
"the ikea effect"
inc investment of time and effort causes us to love it
more
origami

tasks
creativity
concentration-sounds, digit
motor skills-

did high rewards lead to better performance?

motivation doesn't translate to performance
money - motivator and stressor
state of flow - don't think about anything else, focus
on task
-think abt money
did the type of game make a difference?
Participants earned 35.4% of the amount possible n
the low bonus condition, 36.7% in the medium bonus
condition, and 19.5% in the high bonus condition.
And the trend was no different across all of the game
types.
WHEN ExPECTATIONS override our senses

Becker-DeGroot-Marschak procedure

placebo
expensive/cheap, us/china made
chinese-slight increase
expensive - effective cheap not so much
price - quality - expectation- effectiveness

amateur crane to creator

amateur crante to noncreator
perfect to noncreator

beer
balsamic vinegar
taste first = like balsamic vinegar
say first = doesn't like

Creators thought that their origami was worth about

23 cents. However, noncreators thought it was only
worth about 5 cents.

mind anticipates regularly, prepares body according

to expectation
top-down processing

And noncreators valued the expert origami about as

highly as creators valued their own amatur creations

DONT THINK ABOUT THE MARSHMALLOW

trapped in own perspective

think everobody else thinks the same
overvalue things we create with effort
"big bonuss"
low medium high
performance level

On average, children waited about 30 seconds in the

control condition. When they were given a toy to play
with, they waited almost 9 minutes and when they
were asked to think about fun things they could be
doing, they waited slightly more than 12 minutes.
waited the full 15 minutes
no instruction: none
toy: 6
fun things: 4

xbad things, food

turn around
distract
not test limits of willpower
CAKE VS COGNITION
88% resolutions end up failing
high cognitive load
7 digit no.
2 digit no.
63% of people in the 7-digit group chose cake, but
41% of people in the 2-digit group chose cake.
affect>cognition high cognitive load
thinking continuouwly
tired brain
not long term
easier to succumb to temptation
DOWNSIZE THAT MEAL?
caloric info doesn't help
naive
sophisticated self control
An Alternative to Calorie Labels
Feb
08
We just published a new paper:
A top cause of preventable death, obesity is a
growing threat to an able-bodied, functioning society.
Simply put, overeating is one of the biggest
contributions to the obesity epidemic, and despite
widespread efforts to promote health education,
there may be better ways to combat this problem
than by giving people nutritional information and
relying on them to use that information to make wise
choices. After all, we live in a country where chef
Jamie Olivers shocking chicken nugget
demonstration was absolutely no deterrent to the
appeal of a fried blend of gooey chicken carcass.
If even this shocking intervention had no effect, we
may need to do more than post calorie labels, a
movement that (albeit well-intended) has seen
limited success (see 1,2,3). Traditionally, such
interventions are more successful at changing
attitudes than actual behaviors, and when it comes
to health attitudes and behaviors dont always go
hand in hand.
Of course, we know that just thinking about exercise
and eating healthy will not keep us healthy we
cant lose weight by intending to use the treadmill.
We need to put on our gym shorts and start jogging.
With food, we can start by simply eating less.
Janet Schwartz and I, along with Jason Riis and Brian
Elbel, tested out an alternative to calorie labeling
merely asking customers at a fast food restaurant
(with and without a small incentive) if they would like
to downsize their side dishes (by taking a half portion

of an excessively large high-carbohydrate side dish).

We carried out this intervention before and after
calorie labels were put in place, and found that while
calorie labels had no effect on the number of calories
consumed, the offer to downsize did! As much as a
third of the customers who were given the offer
decided to take less food (compared to ~1% who
asked to downsize on their own) and consequently
ate less (yes, we even weighed their leftovers),
showing that a simple offer to downsize can go a
long way toward encouraging a healthier diet.
The conclusion: Offering people a chance to exercise
self control can be effective, but we need to stop
people, slow them down and offer them to take a
better path at the moment when they are placing
their order.

IMG_2514
IMG_0879
IMG_0907
IMG_0883

(1) Downs JS, Loewenstein G, & Wisdom J. (2009).

The psychology of food consumption: strategies for
promoting healthier food choices, American
Economic Review, 99(2), 1-10.
(2) Elbel B, Kersh R, Brescoll V, & Dixon LB. (2009).
Calorie labeling and food choices: A first look at the
effects on low-income people in New York City,
Health Affairs, 28(6), 1110-21.
(3) Bollinger B., Leslie P. & Sorensen AT.
(forthcoming). Calorie Posting in Chain Restaurants.
AEJ: Economic Policy.
-Restraining Order: the art of self-control
attach something u're resisting with what you're
desiring
''
punishment
ulysess contract - give some part of yourself to gain
more of yourself
Zen - give advice from future self
-progress reports, consistently and slowly instead of
rushing
social responsibility,
"Of mice and morals"
good side and bad side
labor and pollution in production
neg. side = neg. externality
produce something that affects public good

mouse or money
individual
bilateral market
multilateral market
In the individual market, 46% of people agreed to kill
the mouse.
However, in the bilateral market 72% of people
agreed and in the multilateral market 76% of people
agreed to kill the mouse
morals/market?
coupon
individual - think abt morality
market - morality matters less
market interactions make people care about morals
less
markets divide responsibility
see what others do
markets change our framing focus less on morals and
more on financial earnings
markets not socially efficient
"choice blindness"
On average, 13% of the "wrong" cards were detected
by participants.
face
always have story
jams
pension plans
-explanation
political polls
what a great choice i made
romance financial regulation
post rationalize
"the labor illusion"
operational transparency
travelfinder
instantaneous
blind condition
transparent
Perceptions of value with operational transparency
were higher at every time point than perceptions of
value without transparency (the "blind" condition).

The Ultimatum Game

Switching Norms
Week 3 on Dishonesty
Public Goods
Prisoners Dilemma
Token Lies
Week 4 on Labor and Motivation
The IKEA Effect
Big Bonuses
Week 5 on Self-Control
Dont think about a white marshmallow
Cake vs. Cognition
Week 6 on Emotion
Of Mice and Morals

Choice Blindness
Labor Illusion
--Week 1 IRRATIONALITY
Part 1: Visual and Decision Illusions
story - parents divorce
don't do anything until we discuss
father said: honey, the kids will be here this year and
they'll pay for their own flight ticket
What is Irrationality? the forces that drive our
behavior
some economic some social
all kinds of behavior
choice architecture how initial decisions affect long term
how we can overcome
Part 1: Visual and Decision Illusions
irrational behavior - personal work life policy
burned 70% of body 3yrs in hospital
many opportunities to examine irrational behaviors
bandage removal
everyday
Which strategy would you pick for bandage removal?
-short bursts of extreme pain
-long periods of less intense pain
Most peopel think they would prefer shorter periods
of intense pain
nurses-wax

longer but see what they're doing you'll value it more

1 they knew they were right

2 patient means to be passive

Week 1 on Irrationality
Pain Threshold and Tolerance
Coherent Arbitrariness

Studied in university
power of experimental method

Week 2 on The Psychology of Money

The Dictator Game

Hedonic Calculus: how people agregate info over

time

Experience
intesnity
time
how exeprience aggregate over time
movies etc
dan: pain
carpenter's vise
put 2 fingers
all kinds of pain
how would you rate your pain
choices repeat
how people combine experiences
Combining Experiences Over Time: The Effects of
Duration, Intensity Changes and On-Line
Measurement on Retrospective Pain Evaluations
journal
money
Infernal Noise Machine
electrical shocks
pain suits
1. duration vs. intensity
an experienc twice as long is not twice as painful
-short intense pain is worse than longer, milder pain
2. progression over time:
It is better to start with higher pen and end with
lower pain.
3. recuperation:
allow breaks for recovery
pain pain perception aggregation of pain
how could nurses get it wrong
kind people
They followed their intuitions at the cost of their
patients' comfort
Are nurses the only ones?
The Foundation of Irrationality: we think we know the
answer, but we are wrong
know how it works, right thing to do
visual illusions
2 towrs of pisa
cube identical colors
knowing same doesn't change
brain uses relativity
comparing top patch to bottom patch,
visual system
-Perceptions of color are relative to their immediate
environment
-We rely on contextual information to make all sorts
of judgments and decisions
pricing, etc
background info

ipads
how many times they change to red
people who do well do well in love life
people who do well live longer
bee suit
we don't see with our eyes, we see with our brains
brain expected to see pattern and that's what we end
up seeing
we think we observe with all our sense but we don't
The brain interprets information by incorporating our
expectations into our perceptions
fill in info
Visual illusions are a useful metaphor for human
thinking
huge part at the back
If we fail so easily with vision, we probably make
perceptual mistakes in other areas asw
healthcare
money
In these areas, we may make even more mistakes
(not evolutionary prepared)
Part 2: Defaults
Organ Donation Rates
Johnson and Goldstein
culture
Most students think organ donation relates to cultural
differences, personal beliefs, and altruism
caring abt others
closer u are to country makes u think they're
different
netherlands 28 belgium 98
holland - reality show
netherlands - ad
Extensive campaigning in the Netherlands resulted in
only a 28% rate of organ donation
Belgium spent nothing
enrollment form
check box if you want to participate in organ donor
program
left
opt in
check box if you don' want to participate in the organ
donor program
right
opt out
The forms provide a default optoin, which can push
us toward that choice
sense of agency; we feel we make decisions
yes we make decisions but people who design forms
has a lot to say about final deciasions
environment

CHoice Architecture We have the illusion of agency

but our decisions are often influenced by:
-environment
-defaults (path of least resistance, what we don't pay
attention to)
-compexity (more difficult)
We take the path of least resistance
We don't realize how much defaults matter.
Why did you make that decision?
the form told me to do so X
We create stories to justify and explain our actions.
not necessarly reflection of true reason
-why they're doing what they're doing
focus groups
We need to uestion the method of self-report
looking at behavior more clearly than explanations
story
company send medications every 90 days
patient go to doctor, doctor writes prescription branded/generic
pressure to write branded

-The path of least resistance is especially liekly when

deviating from the default is more complex.
-Even for highly trained, experienced physicians!
Grocery Store
Jams study
few 6 vs many 24
approach 40%
60%
try
1.4
1.5
buy
30%
3%
cuopon
some shopping list
none - not part of default
With so many choices, the complexity of the decision
overwhelmed the desire to buy jam.
Ways to make you less likely to save for retirement:
-require opt-in complex form, long, other building
-provide lots of complex, difficult choices
-stress the importance of the decision
fade
opt out -

doctor convince generic

attempt to market generics have little effect

lifestyle fund
stocks and bonds balance

poss. people hate doing anything

Defaults are neither good nor bad.

They are just everywhere, recognize and know
whether they work for us or not.
Make better decisions

This procedure didn't separate preferences from the

tendency to stick to the status quo.
Forced choice: requires a decision
T intersection
cannot not returning letter now is not an option
stop medications
if u return, choose branded or generic
82% generic

Defaults can be more influential as complexity

increases.
Part 3: Do we know our preferences?
Defaults
we don't really know what to do

people hate sending letters back

People generally avoid changes, even if they are
minor and even when another path is clearly better.
eliminate small bumps
study on Physicians
67 yo patient suffering from right hip pain
medications nothing seems to be working
refer to hip replacement specialist
hip replacement = default option
group of physician divide into 2
Group 1: you forgot to try ibuprofen
do you do nothing and let him continue
or cancel meeting try ibuprofen
majority try ibuprofen
group 2: you forgot to try two medications: ibuprofen
and pyroxicam
72% chose to do nothing
-Be aware of defaults

always buy jam, always maximize retirment savings,

donate organs
when we don't know what we want, we are guided by
the environment
think about extent
3 reasons why you love significant other
10 reasons why you love significant other
rate 1-10
what you'll buy for anniversary
together for 5 10 years
ask to reflect
no new info
very difficult to come up with 10 reasons
stuck
how much possibly could i love this person
because thinking of ten reasons is so difficult, people
infer that they must not love their partner as much

for this reason, people asked for 3 reasosn declared

greater love than those asked for 10
when they fall short
standers make them think something is wrong with
rltshp
buy a bmw
-maybe they don't need one
15 ways in which this class could be improved
just at the end
Part 4: choice sets and relativity
thinking about question change mindset
how often do you floss your teeth
0-9 or more a day
a month
left/right
infer something about own hygiene habit
Answering on the left side of the scale implies you
are below the norm, and answering on the right
implies you are above the norm.

when you add option that is not desirable, it will

change the other optoins
The contrast makes the desirable option more
attractive
Assymetric Dominance (or the "decoy effect")
Economist.com
16%web subscription
print
84%both

$59
$125
$125

top and bottom

web subscription 68
print and web
32
The midle option defined the framework for
evaluating the other options.
The relative comparison between the two versions
makes the print & web subcription look much better.
1. It is hard for us to make evaluations
2. Decisions are influenced by choice sets.
The Darwin Economy Robert H. Frank
not adam smith but darwin

Your temporary change in mindset may affect

imminent decisions

lion seal mating season - want to be biggest one

virtually all females

dentist?
bottom scale call now!
top scale no need

want to be slightly bigger

relative terms
they become incredibly large
heart problems
crash females

financial adviser
retirement
financial crisis, days you lost money
imagine how it's like to go to bahamas
how much risk do you want to take
Your temporary mindset could determine the starting
point of your portfolio.
-safe
or
-risky
and those initial decisions could affect your portfolio
for years to come

race to the top,

destructive for whole ecosystem
father economist taxes for countries
inflation musical concert, in the front row stand up,
second row..everyone has to stand
The constant race for a relatively better position can
threaten the whole ecosystem.
good school, good neighborhood
push urself to best neighborhood
domestic violence, divorce, bankruptcy

A change in momentary mindset can have a

significant, long-term effect.

This competition can cause a complete collapse

influence how we value

Physical Attractiveness

1 week vacation in Rome

1 week vacation in Paris

(Jerry) Ugly Jerry Tom

Jerry Ugly Tom
(Tom)

or

Get someone similar to u but slightly uglier

if someone asks u to come with them

Having your car stolen

"Rome minus"
breakfast no coffee

letter
don't tell person
Part 5: the long lasting effect of decisions
environment -> decision

waves
OR
once decision made, sticks with us

Because our pre-existing preferences are often

undefined, value can be constructed through
arbitrary influences.

How does an initial decision affect future decisions in

that category?

Even going to jail can look like a vacation.

farm

How should people set a value on the price of coffee?

poetry

Rational Model of Valuation

value is equated with price:
more pleasure=more money
less pleasure=less money

Poetry Recital Valuation

how much willing to pay

Starbucks has worked to differentiate its brand.

self-herding model
herding-we follow other people
restaurant
exits fire, 2 exits

We make comparisons within (not across) categories.

Self-herding-our tendency to follow the same

decisions we have made in the past (future decisions
are influenced by previous decisions).
Dunkin Donuts
starbucks coffee
We remember our actions far better than our
transient emotional states.
-stop thinking if it was right decision
avg. bid
products
low ID# high ID# increase
Trackball mouse $79 (all) 10.38
21.52
107%
keyboard
21.81
42.03
93%
cheap wine
11.62
19.55
68%
expensive wine
17.42
27.76
59%
design book
14.15
23.00
62%
chocolate
10.04
16.24
62%
social ID
People do not think that their valuations are
influenced by the arbitrary number but they are!
Once a particular number is introduced, it becomes
the reference point from which prices are judged (the
anchor).
relative comparisons of products in the same
category remain fixed
the first decision becomes an anchor that influences
future decisions.
Tom Sawyer - whitewashing fence
Mark Twain showed how he exact same experience
can be regarded as good or bad, depending on how it
is presented, or framed.

Pay to listen
Accept payment for listening

Conrad Lawrence
ducklings - follow the first thing and follow
Coherent Arbitrariness
iphones
$600x $400
even phantom products
the iPad is priced relative to the iPhone
all other tablets follow iPad pricing
theory
internet
0.0
give everything for free
they'll get used to it then pay
when we experience we value but not nec. willing to
pay for it.
once a product is introduced in a certain way, that
becomes a permanent point of reference.
Part 6: learning from our mistakes
What do our mistakes tell us?
"What a piece of work is man. How noble in reason..."
shakespeare
behavior economics
myopic vindictive easily confused don't know what
they want
Three main lessons form behavioral economics:
1. We have many decision biases.
2. Our intuitions are often wrong, and we don't
recognize our faults.
3. We need to rely on empirical evidence from
experiments to accurately analyze our behavior.
table illusion
cube illusion
The FDA requires rigurous experimentation before a
drug can be put on the market.
cough medication for children was a bad idea
many back surgeries were useless

We should test government and business policies

before implementing them.
memento mori
limted, irrational, problems, test and don't trust
intuitions
when in doubt,
computer hackers break procedures down into
discrete, exact steps.
They figure out which points are best to intervene.
Critically examine the details to determine where
improvements can be made.
nurses
not good for her, me, no one else does it
intersection
path taken before, path everyone takes, path
intuition tells us to take
you might have bad intuitions
might be useful to try other path
Doubt your intuitions.
Experiment!
is it really better or I just think so
-useful, humility, better decisions
Special Guest: Gavan Fitzsimons Duke Univeristy
"The Unconscious Consumer"
2 liter diet coke
Psychological Reactance - when something's
restricting the freedom of choice, fight hard to get it
back
psychological process overpowering speaker
not nearly obvious
resistance to restrictions on automatic basis
significant others's name
do opposite
optical and brain can, conscious not
as u repeatedly get exposed to message
some of us build resistance and do opposite
indirect priming/persuasion
by not triggering backlash
eat healthy-subliminal priming with exercise
more effective than direct in your face
situational, environmental cues
brief brand exposure
5-10k brands a day
apple and ibm
subliminal
apple - creativity

more creative
brief exposure - psychological process and behavior
backlash
backlash outside conscious awareness, harmful beh
brief brand exposure - positive effects
when will be terrified
easy to become paranoid
the world is trying to change your behavior
exposure to ad
ability to defend non conscious influence in
environment is limited
be strategic with brand options you surround yourself
with
swimmer
michael phelps
1,2 day silly
3 no more
association
activated at some level subliminally
creativity, intelligence, any desirable aspirational
goal
surround consumer goods associated with that
successful strategic user of brands products rather
than brands products etc change who you are and
what you behave randomly
Special Guest: Eli Finkel Northwestern University
Paul W. Eastwick University of Texas
the Delusion of Romantic Self-Insight
online dating
theory: we can determine whether we have accurate
insight to romantic preferences
are there sex differences - yes
men - looks
women - assets
does it hold up when it matters
to what degree do we have accurate insight into
what it is that tends to inspire romantic attraction
warm, kind partners
physical attractiveness
earning prospects
ask people about hypothetical partners
men advertise
women
differentially influenced
What about after men and women have met a
potential partner face-to-face
Speed-Dating
(1 week before)
Stated Mate Preferences

10

Physically Attractive
Earning Prospects5.9
Personable

m
7.8
6.5
7.6

w
7.2
7.7

Actual Mate Preferences

Correlation with attraction
PA
M 0.35 F 0.39
EP
M 0.19 F 0.18
P
M 0.37 F 0.39
no sex difference

.a specific person you've met face-to-face

.DV: Romantic evaluation
-romantic liking, attraction, satisfaction,
commitment, trust, intimacy, love, passion
.IV: Measure of physical attractiveness, earning
prospects, or both
-participant-report
-partner-report
-obective assessment
Physical Attractiveness
73 articles
~28,000 participants
44 articles
46,000
0.41
0.1

DVs
Romantic interest
Marriage intentions
Marital status
Warmth
/
parallel
x21 graphs

Meta-Analysis

PA
EP

Intake: romantically unattached Ps reported their

mate preferences
2.5 years later: reported on a current or a desired
romantic partner

0.40
0.14

No sex differences when meet a flesh and blood

person
Do people really know what they want in first place
Self-Insight?
Ignoring sex differences, do people who believe they
value a certain characteristic actually prize it more
than others do?
Stated/Actual Correspondence
//
PA
low slant parallel
EP
P
Mates vary, also must like you back
cereals
when they people say they value sugar, then the
more they like it
Mating - not enough insight
/_
correspondence bwn stated and actual
Follow up study: 502 Ps, average age=41
Procedures

1. yes we have theories

but once we met somebody there are no longer sex
differences
2. no evidence that we do
browsing profiles is not going to give you different
insight
20 sec 20 minutes etc
you might not know your preferences
use speed dating but get offline
WEEK 3: Dishonesty
confession
72 yrs old
I'm telling everybody
not only cost and benefits
Part 1 The Simple Model of Rational Crime
cheated?
we lie and cheat lots of times
we don't think of ourselves as immoral as we do
them
not only crime
we can all be part of
ENRON
What caused Enron's collapse?
bad apples
lots of people were turning a blind eye -wishful
blindness
John Perry Barlow - Grateful Dead
consultant
created an ideology that protected him from seeing
the truth
-active blindness
Is dishonesty the result pf a few bad apples
Or is it due to many people cheating just a little bit?
govt
fabric structure how they govern how environment
influences

11

What do we know about cheating and how do we

measure it?
opinions and what they will do
the Matrix Test
shredder 6 problems
fake shredder - 4 problems
Lots of people cheat just a little bit
economic rational theory of cheating
Gary Becker prof, Univ of Chicago
Nobel Prize for Economic Sciences, 1992
parking illegally, meeting on time
cost/benefit analysis: weighing the benefit of being
on time against the possible costs of getting caught
dishonesty and moral issues
how much money to gain
probability of getting caught
time in jail
Payment per correct answer
grp1 .10
.25
.50
1
2
5
10
describe
expected trend
mag of dishonesty / amount of reward
Actual Result
_
independent
10 dollars slightly lower
Group one shred half the sheet
Group 2
whole page, paid themselves

probability of getting caught

expected
/
1/2 whole paying yourself (decreasing)
Actual
_
The average person solves 4 problems
8
no difference
solved 4 but reported 6
We need a new economic model of dishonesty that
doesn't solely rely on cost-benefit analyses:

1. reward
2. probability of getting caught
3. time in prison
Part 2: shrinking and expanding the fudge factor
wonderful honest person
economic incentive
flexible cognitive ability
we can rationalize quickly
The Fudge Factor Range
negative self image /fudge factor
positive self image
How do we shrink the fudge factor?
Rabbi stolen bicycle
adultery
UCLA -please write down the 10 commandments
How much would people cheat after tyring to recall
the 10 commandments?
Not at all
And it didn't matter how many they could recall.
atheist swear on the bible
not cost/benefit, heaven'
Honor Code
mit yale
We saw no cheating at all, despite the fact that
neither school had an honor code
Princeton-honor code
Even though Princeton has a very strong honor code,
students from Princeton cheated just as much as
those from MIT and Yale - even just 2 weeks after
their crash course on morality.
Bad news:
morality training has no measurable long-term effect
Good news:
reminding people of morality just before being
tempted to cheat does make a difference
Honor code at the beginning: cheat
honor code at end: cheat
IRS
signature
front?
-verification, not priming morality
front and back? confusing
25 donation to task force to fight corruption

12

insurance company
very few people invent
lots of people exagerrate 10=15%
cost about 24$billion a year
religious music, eyes, sign first, declaration religion
good ideas and lawyers, nothing done
form -how many miles you drove last year
up - premium up
move signature line to top
half up half bottom
Cheating was reduced when people signed first. 2400
miles more cheating reduced
how to shrink the fudge factor
how do we expand the fudge factor?
little Johny stole pencil
grounded
father, bring pencils from work
multiple steps away from money
the workplace wants us to take these pencils
other people take them
giving them to my kids would allow me more time to
work
-rationalize but feel better

Why?
1. cost/benefit analysis
2. social proof
not moral but social agreement perspective
Can't I ust say I solved everythng and take all the
money and go home.
you can-it's up to you.
1. cost/benefit analysis: no penalty for cheating, but
no example of anyone cheating
cheating decreased
-reminder of honesty
Carnegie Mellon University
Pittsburgh
Excuse me, I solved everything!
same cost/benefit analysis
2. social proof:
cheater is from a rival university
cheating decreased
-cheating by outgroup
1. increase distance from money
2. social acceptance
Do certain personality traits foster cheating
behavior?

6 pack of cokes
in common ref
gone
dollar none

Are creative people better at rationalizing?

Removing the direct link to money allows us to

rationalize our dishonesty.

Cratve people cheat more

creative professions

abstract

Cheating is about how much we can rationalizing

We can rationalize to a greater extent when there is:
1. greater distance from money
2. social proof
3. creativity

matrix
look in the eyes, problems give _ dollars
give me x tokens
Using tokens (which removed the direct link to
money) doubled the cheating.
cashless economy - digital wallets, financial tools
How do we expand the fudge factor?
1. increase distance from money
2. provide examples of others cheating

more creative people cheat more

increase creativity, increase cheating

What have we learned?

Becker model
doesn't explain much of behavior
not bad apples
-lots of people cheating a little bit

1st change:
Participants were given $20 before the test, and
asked to pay back money they didn't deserve

Thinking about morality

...shrinks the fudge factor
multiple steps from money allow us to rationalize
cheating
other people are cheating
creative to rationalize and make stories

acting student - sat in front of the room

Ecuse me, I have solved everything, what do I do
now?

not direct much attention to cost/benefit analysis

X how do we expose people/punish them/surveillance
- driven to cost/benefit

You solved everything? You are free to go.

what people can be comfortable with

comfortable with less cheating
how do we make people become aware of traps
rules don't allow flexibility in rationalization

People cheat much more when they see someone

else cheating.

13

cheated a lot
12 - $150
cheated a little bit 18,000 $36,000

feel indebted to something some goal own pocket

change how brain operates, how we view information

pay more attention to those who cheat a little bit

financial crisis

Part 3: conflicts of interest

$5 million a yar to view mortage securities as better

product
want to lie
complex

Fundamental issue: conflicts of interest

judge -

"steps removed" allow us to rationalize our cheating

mechanics lawyers accountants gov't financial

Shouldn't we eliminate them? bec. blinded by c of i
sunshine policies and disclosure
2 people
adviser and advisee
jar with money

shading opinion
money
steps removed
others agree
creativity
coi
biased payments

1. no conflict
2. conflict of interest
sunshine policy
i get paid more money if you exaggerate the amount

study
create systems without coi
look ourselves carefully and eliminate
Part 4: cheating over time and across cultures

The adviser exaggerated more, and the advisee did

not discount enough.

What happens when we give people multiple chances

to cheat over time?

Stories About My Own C O I

Dots
are there mrore dots on the right of left?
10x if you're right

tatoo
guilt trip
grant

doctor treatment a/b 10x if a

Our own interests can blind us from seing the

interests of others.
Harvard
Performance
group 1 high mean
one low participant
drunk - kick out

group 2 low

other group?
would you notice? no
We should try to prevent ourselves from rationalizing
dishonest behavior
conflicts of interest operate within the "fudge factor"
biases in decision making - don't notice, inc. coi
work on us, changes our views
don't notice bec. somebody else is paying
lab
art
Lone Wolf Gallery $100
Blue Moon gallery
People like artwork from their sponsored galleries
more than from another gallery.
reaction of brain in pleasure centers
MRI
more money, grew pleasure

People started by cheating just a little bit.

At some point, many people switched and started
cheating all of the time.
Why do people suddenly switch from cheating a little
to cheating a lot?
What the hell effect
can't feel good about yourself anymore so just enjoy
Forget about it I'll start on Monday
What would it take to reset the fudge factor and get
people to stop cheating?
religion
catholic confession
What is the logic behind the Catholic confession?
economic:
sin absolved - cheat more
sin just before you confess
Confession adds cost to the crime
-not much evidence
moment you get out of confession - good and pure
confession provides an opportunity to reset
Write about something bad you have done recently.
shred

14

Would you like to ask for forgiveness?

shred

leukemia
chemotherapy

When people wrote down their transgressions and

asked for forgiveness, cheating decreased at least
temporarily

Critical Decisions book

religion evolved to help men to deal with challenges,

weak points

odds that leukemia would respond to chemotherapy

genetic tests
5%

confession-like mechanism

oncologist - 20%

reconciliation act in South Africa

apartheid
saying you're sorry and starting a new page
impt in religion and civic society

1. unlike any decision, imagine the unimaginable,

predict the impredictable

What about cultural differences?

How does cheating vary in different cultures?
people in their own countries cheat more than
americans
Do Israelis cheat more or less than Americans?
They cheat at the same amount
Italy same result
Turkey, England, Canada
No cultural differences have been found
how do we balance this finding with a strong
conviction in cultural differences?
OUr experiments have no cultural context- they test
a basic human capacity for moral flexibility
Culture influences specific domains, but doesn't
change the core of morality
plagiarism, cheating on exams, etc
infidelity
cheating taxes
illegal dl
buying counterfeit fashion products
basic fudge factor we all share
weights placed in different domains
Culture can shrink or expand the fudge factor
this is not a moral factor
bribing policeman
both basic fudge factor and cultural effect
bars
four correct answers equals one glass of beer
bar in washington, congressional staffers
bar in new york, bankers
Which group cheated more? Bankers or politicians?
bankers cheated twice as much
-junior politicians
room for growth in dishonesty
Special Guest: Peter Ubel Duke University
"Medical Decision Making Gone Wild?"
Andrews

bone marrow biopsy

doesn't mean you'll understand it
others overestimate
moods
people ability to emotionally adapt to chronic illness
and disability beyond what they imagined
they don't recognize how much they'll adapt - bad
decisions
how can you help pt if a b c happens
2. high stakes
have to do something regardless if its in their best
interest
scenario
5% dying of cancer
10% surgery
majority - surgery and get it out
strong emotions - compell to action
stand back and do the less aggressive care
3. we rely on doctors often to inform your choices
drs dont know how to speak language that pt
understand
ex. pressure physicians prone also
oncologist - so hard to give someone dismal news
rationalize
lying to herself
overestimate how long pts have to live - see hope in
situation
calculation
think
say longer
we rely on good info but psychology can get in the
way
1 unfamiliar sit
2 high stakes
3 dependence on doctor (can be bias)
4 doctor for advice
different sets for doctor and pt
yourself and others (recommend trtment for friend)

15

weigh things differntly for self and others

won't threaten the view they have of themselves

medical context - irrationality whole new level

those who were just exposed - no licensing effect

sharing significantly more money than those
purchased in conventional store

Special Guest: Nina Mazar

"Do Green Products Make Us Better People? How
Good Deeds can Create a License to Misbehave and
Be More Selfish"
university of Toronto
moral pendulum moral and social actions that we
engage here and now doesn't happen in vaccuum
but happens in subsequent actions
go against moral beliefs
did that change your subsequent behaviors?
raising money for food bank
-use change to buy cup of tea
feel bad
self-image
didn't feel right
donate
compensating for previous behavior
to reestablish positive moral view
we are in general motivated to do good things
sometimes we transgress bec. of temptations
pendulum
least likely to scrutinize moral implications of axns
right after moral self experienced a boost
credentials that license ourself to be more selfish
when we can benefit
consumption
social and ethical conservations
green consumption, moralize
how altruistic, ethical that purchases conventional
products
organic and environmental products - higher moral
and pro-social values

priming effect
subtle cues in environment activate associated
norms that led to corresponding behavior
apple logo - creativity
upscale restaurant - improves eating manners
2nd experiment
2 stores
purchase either
'ostensibly'unrelated task
visual task
box 1 diagonal life 20 dots scattered in box,
disappear
where there more dots on left or right
90 trials
good at task - visual is good
everytime you say there are more dots on left you
earn half a cent
right - 10x 5 cents
computer pays you regardless if you're right or not
green store - cheating more
conventional - completely honest
see on final screen
pay themselves on envelope
steal
got more
lying and stealing 83 cents more
if people were completely honest and accurate in
visual perception they would make 2 dollars
not green people vs not
randomly assign
if you engage in actions that make you feel superior/
moral glow
more likely to subsequently transgress
license

2 online stores
conventional
green products

if we do not moralize
we couldn't expect to find licensing effect

both no products type prices

randomly half to one store

be cautious when we engage in behaviors that we

don't feel morally superior or done enough

just saw this one store

in each store
half - design, informative (exposed)
other half - 'purchase' up to 25 dollars in value (made
purchasing decisions)
one get for free
'the dictator game'
paid
you are dictator $6 how much you want to keep for
yourself or in another room
anonymous
you can keep, but you can share if you believe in
altruism
those who just purchased from green store shared
less

16

imagine u had fixed amt of money in envelope to

spend each week
cab sandwich beer shirt
trade-offs clearer to high degree
whole year
current economy -credit card, student loans,
mortages, car payments
horizon
easy to see cost and benefit
without clear horizon
tradeoffs are obscured in our current economy
supposed to think of money in tradeoff analysis,
shadow value of price/money
---Week 2: The Psychology of Money
Part 1:
Opportunity Cost
money - what we'll not do in the future when we buy
something, money must come from somewhere
shortcuts - look at money to feel we're making rt
decisions
way we pay
relativity
relative prices
do we understand how money works?
influence what we're willing to do
money good sides
what would the world look like without money?
barters domain by domain
money creates central mechanism where everything
can be traded
one exhange with money
money allows the market to operate efficiently
bad
psychological side of money
we should think about money in terms of opportunity
cost
opportunity cost:
what you are giving up by choosing one thing over
another
when was the last time u thought about opportunity
cost/tradeoffs
I guess i can't buy honda if i buy toyota
across time/categories
hard so we don't
the way money functions in environment makes it
more difficult

when problems are complex, we take shortcuts

buy a sony ps $700 or pioneer system 1000 dollars
300 dollars vs. quality
lots chose pioneer
pioneer 1000, more appealing: ps 700 plus 300 only
cds and dvds
what is 300 dollars - vague
one domain -more concrete, more excited
coffee
capuccino 3 dollars
not willing to do to 3 dollars
presentation of capuccino worth more in mind
emotional appeal
We face a higher value on specific items than the
monetary value of those items
Part 2: Relativity
tricks
we often think of money in relative rather than
absolute terms
pen 15 dollars walk three blocks to get it for 7 dollars
- yes
camera 1000 dollars (same) minus 8 dollars - no
car for 2000 dollars more u can get leather seats
chair for office 500 2000 more dollars, you can get a
leather seat
but u sit more in office
ratios
renovations involve many quick decisions with large
amounts of money
but tomatoes more careful decisions
amount of money we start with is so large
think about them as independent

17

happiness
or 100-90 k but lowest paid
60-85 k highest paid
prefer first
where they'll be happiest with, second group
salary satisfaction is influenced by comparisons to
coworkers
are we willing to sacrifice money for happiness?
usually not
we have diminishing returns
happiness starts high and then diminishing returns
percentages, ration increases
the psychological effects of monetary amounts
x axis dollar amount
y axis: psychological intensity
same physical amount of money has very differnet
psychological implications
Part 3: the pain of paying
expensive dinner paying cash or credit card
u know how it costs
The "pain of paying" is magnified when our feelings
about spending money are coupled with
consumption.
saliency - see money going away
same time as we consume
bite you took
50 cents
quite terrible meal
stuff their faces
cruise to alaska
three months in advance
pay moment you get off the boat-more economic
how u will feel during the cruise knowing at the end
of the cruise you will pay
buffet
gym to lose extra weight
The "pain of paying" adds a moral tax to
consumption Timing and method of payment affects enjoyment saliency, attention

use credit cards

keep payment hidden
prepay before consumption
Prepayment can focus our attention on the
enjoyment of an experience
What is an ideal gift?
Removes pain of paying from other people
hat
The pain of paying involves:
-the opportunity cost
-a hassle component
-a moral tax, with its associated guilt
-method of payment
-timing of payment
we experience less pain of paying when the form of
payment is distanced from the pure representation of
money
token
Pre-paid money in a certain category is easy to
spend
thousand dollars in online shopping
America Online
20 hours 19.95 dollars
2.95 each additional hour
or
9.95 5 hours
2.95 each additional hour
end of 1996
no charge for each additional hour
1995 unlimited
marginal cost constraint
4x demand
The pain of paying influenced the number of hours
that people used when they switched to unlimited
internet packages.
Part 4: Mental Accounting
assign bwn different departments
not fungible

change how we enjoy experience

are there cases u want to increase or decrease pain
of paying
To increase the pain of paying:
-use cash
or debit cards
-receive notification whenever money is spent
-increase salience
difference between paying for gasoline and
electricity
meter
electricity meter outside
air conidtioning - put bills
To decrease the pain of paying:

lost pieces of paper

item lost buy ticket
cost if purchased
case1
ticket
no
case2
money
yes

perceived ticket
$200
$100

The ticket and the cash are each worth $100 but we
treat them differently
Mental accounting - we assign money to mental
categories
1. Assigning money to categories controls how we
feel about that money

18

2. we treat unassigned money differently

get money back assigned to one category
return policy, gift certificate
easy to spend
$5000 Japan
money for the trip is either
deposited to your checking account in advance
or
given to you in cash when you arrive
1st-bad on spending in
2nd - easier - connected to trip
Saving - low interest checking account
spending - high interest loans
money is not fungible
has categories
Even though money is fungible, it isn't always
treated that way
mental accounting good strategy
think about every purchase how it could translate to
other purposes
restricting - assign money to bucket
not optimal leads to mistakes
Mental accounting can be an adaptive strategy
it allows us to
-partition our spending
-make financial decisions more manageable
Two approaches for helping people think about
money
1. assume we are rational and can effectively
manage money between categories
OR
2. optimize existing mental accounting technqiues,
even if they are irrational
/
Part 5: Fairness and Reciprocity
Locksmith
break the lock, charge lock, charge for repairing lock:
pay
minutes to open the lock - standard fee, no charge
lock: angry
which situation would you prefer
hour or 2 minutes
mechanic
1 dollar bang
99 dollar knowing where to bang
It's easy for us to pay for something that requires
conspicuous effort, but much harder to pay an expert
who performs the job effortlessly.
experiment, how much to pay for recovering info
from hard drive
willing to pay more money for data recovered

5 minutes-12 hours, day, week

5 minutes: 1 month data lost: 50 dollars, 5 yrs 150
12 hours: 1 month 130, 5 yrs 210
size
teller - check
you saw their effort and took some of their time
atm -you don't see the marginal cost of the service
Our ideas about fairness are based on marginal cost
rather than fixed cost
express your hard work
how much of effort is fixed cost and marginal costfixed cost harder to feel need to pay
internet
coke
temperature
why should i pay more when it's not costing them
more?
fairness
not abt how much money you can charge me
how much costs you and how you're willing to pay
enjoyment
argument for fairness
We are willing to pay more when we see the costs
involved
willing to pay more beer in hotel than grocery
taxes -airlines
different taxes
-the govt charges them
some airlines take some portion
Purchasing decisions should be based on weighing
pleasure against price, but we have trouble
calculating these tradeoffs.
When buying something, we should think about what
we're getting and
how much it costs us
heuristics and strategies inc. fairness
not pleasure
but how much effort
expressing effort is easy or hard
think about how to do it
beach
get beer
What's the most you'll pay for one?
You are buying a beer from either:
1. a hotel
or
2. a grocery store
joy is same
notion of fairness enters the process
Judgement of fair price depends on perceived costs
How much value we get from it -ideally

time worked

19

Because determining value is so difficult, we use

shortcuts-like assessing the level of effort required to
produce something.

We adjust to our level of ownership, and it becomes

the baseline by which we judge future gains and
losses

-consumer; biasing tool, overcome

producer how do i signify effort

Mugs and Candy

Mugs: For how much would you sell your mugs? How
much would you pay for candy?vv
no one switched

internet economy
effort, fairness harder to think about
hidden
high fixed cost and low marginal cost
effort, expression of effort, fairness, willingness to
pay
Part 6:
Loss Aversion and the Endowment Effect
Loss aversion happy when we make money and
suffer when lose
Bet
Tails 150 heads -100 Expected value: +25 No
Tails 125 heads heads -100 12 no
Prospect Theory
Symmetry
Loss Aversion: assymetry around a neutral point,
where losses are perceived as ~2.5 times more
powerful than gains.

Once ownership is established, people favor the

object that they own, even though ownership is
randomly selected
basketball tickets camped out
lottery
ticket owners and not ticket owners
For how much would you sells us your tickt
HOw much would you pay for a ticket?
Endowmnet Effect
Ticket owners 2000 dollars
100 dollars buyers
reasons very different
reasons about their side
but thought about money
the moment u move ownership curve u start
evaluating things from that perspective
When we own something, we focus on what we
would give up rather than what we could gain.

not 0 but around where you are

30 day money back guarantee

no risk

salary

After taking possession of an object, people consder

themselves owners and like the object more, making
it difficult to give up.

TVa TVb
commision
sell more of tvs
increase commission
loss aversion
prepaid-take away
TvA in advance
TVb after the fact
Selling B instead of A would require you to pay back
$10 but you would still net $2 more
People sell more TVs when their commission is
prepaid, because they don't want to give back $10
(even though they will make $12)
when you give money, they value money more and
redirect efforts
employee employer
retirement plan
money we don't get is a shame
but money that goes away has a lot of psychological
impact
Endowment Effect:

loss aversion - one of first impt findings in behavioral

economics
everywhere
introduce
financial savings to behave better
Part 7: Market and Social Norms
date
So far I have spent $124 on our date
kiss?
prostitution exchange
mentioning money
$40 on a wine
here's 30 dollars and buy the best wine
not so much in friendship
In some situaitons, adding money to the equation
makes things worse.
goes to woman and asks if she'll have sex with him
for money, says no do you thnk i'm a prostitute?
how about a million dollars? yes
now that we've established you're a prostitute, let's
renegotiate

20

car broke, would you please change tire?

how likely are you to help
i need help i give u 3 dollars
do it as a job
i don't work for 3 dollars, 150
financial motivation comes in
feeling good about yourself, action goes away
continuum
financial domain, market norms pay people for their
work
marriage, long term relationships etc
We live in a continuum between market norms and
social norms.
ask things
willingness to work as function of payment
down steeply and up
willingness to work x axis
amount paid y axis
Gifts are in the social domain
If you advertise the cost of your gift you violate social
norms.
Social norms often dictate when money is an
appropriate gift.
money registery gift cert. real gifts
The Social Value of Gifts
Social Value inefficiency /
Office
cash/gift
Gifts in the workplace move relationships toward the
social domain and build social capital.
Social relationships create a greater sense of
reciprocity.
social benefits in companies
daycare center
Uri Gneezy and Aldo Rustichini introduced a small
fine for parents who were late to pick up their kids
from daycare.

social norms - we can expect more, cost build the

other side
complete contracts
incomplete contracts
In an effort to write complete contracts, social norms
suffer.
Complete contracts enforce the letter of the law,
rather than the spirit of the law.
handshakes, etc
Barry Schwartz
janitor - specific rules
somebody needs help
losing potential to go beyond job
focus on what's there than what's impt
what kind of contracts do you want, get people
happier, motivated do more
professional/private domain
ad in Craigslist
woman
250,000 dollars stuck
advice to go about it
beautiful women marry wealthy guys
explicit
makes the whole thing dirty
beauty for money
answer: wealthy
but my assets are likely to appreciate over time
beauty depreciate over time
i prefer to lease than buy
The woman's proposal moved any potential
relationships from social to market norms, and her
chance of success was spoiled.
think abt where relationships lie and where they
should be ideally
Part 8: The price of FREE
standing in line - not willing to pay if with cost
alcohol drinking lots

Introducing a fine moved behavior from social to

market norms, and then it was impossible to go back.
There were no consequences to being late.

25 cents truffle or 1 cent choco

joy
How does the price difference compare to the quality
difference?
larger difference? get expensive truffle
not worth it, get cheap choco
give better truffle
reduce both prices for one cent
24 and free
same computation
go for free

2 credit card companies

1 company gave gift, we care
other just business

grocery, same experiment cashier

not adding to hassle
free

no
first-cancel
second-just business

trick or treat
hold 2 hersheys
one kiss for small snicker

At this cost, the kindergarten can hold on to my kids.

I have more impt things to do!
no guilt
worth it or not

21

2 kisses for large snicker

itunes
appstor

small hershey-free /
one hershey-large
We only see the benefits, not the costs, of things that
are FREE.
We could eliminate the co-pay for unpleasant
medical exams, like colonoscopies.
not less but free tax for helping environment
also works for part of product

-Consolidating multiple purchases into one invoice

reduces the pain of payikng.
-Gift certificates and pre-payment options reduce
micropayments and therefore the pain of paying.
-offering apps for REE reducs the number that can be
sold for a profit
get free but not spend .99 cents on better app

book-10$ and free shipping, $20 free book free

shipping /, free plus $20 shipping //

free to paid = huge

Some ways to manage a restaurant bill with friends:

1. split the bill exactly, according to what each
person had X
end
2. split the bill evenly, according to the number of
people
3. have one person pay and alternate each time you
go out /

The psychology of money is a topic where our

intuitions are not always correct.

understand money works, payment

Why is a single payer best?

For receptients:
-pain of paying is eliminated
they get a FREE meal

Special Guest: Michael Norton, harvard Business

School
Co-author (with Elizabeth Dunn), Happy Money: The
Science of Smarter Spending

For the payer:

-warm fuzzy feeling of giving
-pain of paying has diminishing returns as price
increases

Money Time and Happiness

Giving and Getting
spend much mental energy thinking about happiness
money and time

Part 9: Micro-payment
partition things for small amounts and charge for
what they take
Micro-pricing breaks up the cost of a purchase into
smaller componentes
100 cents not equal to 1 dollar
the micro-pricing experiments
cartoons
news & sports
"post modern literature

how do we want payment systems to look like

better or worse decisions
merchant/indv, long/shortterm, eliminate pain of
paying or not

the best ways to spend them

not good at how to spend them
money
we think money will make us happier -mistake
tapers off
doesn't keep making you happier
money makes us selfish

cent

->use for other people

half cent
FREE

Condition:
1. micro-payment on demand
least
2. micro payment at end
more
3. deduct from prepaid account
even more
4. subscription / spend more than no. 1
most
2<3
eliminate pain of paying
Keeping prices equal simplifies the decision making
process, making us more likely to buy

study in british columbia

gave envelope with money, spend money on self/on
somebody else (happier)
even with poor countries
Time
choose how we spend with time
time=famine
spend time on themselves to cope
giving time away makes you feel you have more time
much better-bec. less stress
do more
Sexual Economics: A Model of Heterosexual Behavior
Kathleen Vohs
University of Minnesota

22

sex of women can be traded

countries, culture, indv treat female sexuality as
precious
decides when with who why or how
male trade resources
monetary, rights, land, emotional, relationshiporiented commitment, devotion marriage children
high price of sex
men want it low
women - obtain many resources before sex
men low
sex - talking, near, viewing, acts dating flirting
touching sex
dates before sex
men - half
correlated
women more negotiate
divided, if men or women want more sex
emotions, beliefs, attitudes, behaviors
motivations, sex fantasies, number partners, variety,
masturbation
men wants sex more than women
*the principle of least interest
think about sex,
anthro, socio, clinical psych demography medicine
health history

study 2: emotional resources

sexual imagery without resource transfer makes
women upset and angry
proofreading task
loyalty prime
disloyalty prime
students working on activities together neutral
those who have loyalty prime liked sexual image
disloyalty-transfer broken
1. female sexuality is treated value, precious has
price
2. sex is a female resource, men do not treat as
precious or traded at a price
3. women sex can be traded for other resources
4. trade can make sex seem more appealing to
women
WEEK 4: Labor and Motivation
Golf story
money
feeling of completion, connection, camaraderie,
goals,
not unmotivated/unhappy in workplace
Part 1: extrinsic vs intrinsic motivation
mice in maze - care only aabt chese
How much of motivaiton is driven purely by reward?

many more men compared to women - even more

negotiating power
skirt lengths longest

pride
reputation
sense of purpose
meaning
camaraderie
helping the world
money
= motivation

converse true
across history

George Loewnstein Carnegie Mellon University

mountain climbing

advertising

Even though mountain climbing can be miserable at

the time, people continue to repeat the experience

women-sellers, men-buyers

women's complaint: offers relationship promises

before sex but doesn't ensue
men: shower resources but never turn sexual
feelings about sex
ads
10 digit numbers
spontaneous gut reactions can come out more
women doesn't like sexual ads
as representing resource trade
gifts men give to special women
sex < mountain ad
sex paired with idea of trade /
hard stance

Ariely's hiking exp

accomplishment, competition, achievement,
overcoming nature, proving something to yourself
What if you knew you would never reach the top?
-probably not
What if you knew you wouldn't remember it? prob.
not
Money is not necessarily the best motivator.
not the richest and most impt.
give money - to get other
People derive value from a wide range of sources
aim for, strive for, and get value

23

Ariely's student Wall Street

for weeks - presentation for merger and acquisition
Thank you but merger is canceled
The fact that his efforts were in vain made him
demotivated at work.

HOw much dos the lov of Legos affect the number

built?
yes - meaningful condition
sisyphus - 0
In the meaningful condition, greater love of Legos led
to more being built, but this differential increase
didn't hold in the Sisyphus condition

he worked, he enjoyed, but somebody is not going to

use it

Part 2: Meaning

Devrah - editor in Univ. presses

book in history work hard to improve it

NW of US
200 engineers arranged 6 months in advance

she got paid, appreciated by boss, thought of

contributing but cancel publication
the purpose and actual use of work contributes to its
meaning

worked for 2 years

outside the office
canceled proect

The Issue of Meaning:

We are motivated to do things that we find
meaningful.
not only creation
Build LegosWould you like to build one for $3.00?
another 2.70
The finished Bionicle is put under the table in a box.
As more are built, they are collected and
disassembled after the participant leaves.
2.40
2.10
1.80
stop
Create something until they decide to stop
At what point is the value of building the next
Bionicle not worth the effort?
Sisyphus big rock
before the top roll down
again and again with no sense of progress
Doing the same task over and over without a sense
of progress can be the ultimate demotivator.
prisoner soil hole rock
built more Bionicles in meaningful condition than
Sisyphic condition
Sisyphus attribute meaning to enoy more
Participants in Sisyphus condition had higher
"reservation wages" for the same work.
The consultant Experiment
"Predict how much people would work in the two
conditions"
factories
4 bionicles
Participants understood that the meaning condition
would be more motivating, but they underestimated
the magnitude of the effect.
corellation
love legos

The cancellation of a "revolutionary" project, after

two years of diligent work, was an incredible
demotivator.
show up later, earlier, played more at work and
worked less seriously
play with expense reports - show
The company's CEO did not acknowledge the
importance of meaning in his employees' work
How could the CEO have canceled the project without
removing the sense of meaning?
-present it to others in the company
-build prototypes
-fit aspects of their technology in other projects
time and effort
Purpose and meaning are so important that they can
be worth a substantial investment of time and
money.
Google
20% of time to work on other projects
to make people valuable, meaningful, worth pursuing
Part 3:
Acknowledgement
letters randomly arranged
pairs of letters
Payment fper sheet
.55-.25 less and less 7
COnditions:
1. acknowledge A-ha (with name)
2. ignored (no name)
pile
3. shredder
shredder .30
acknowledge .15
ignored 0.2

3.01
2.42
2.42

1. It's relatively easy to make people feel good about

their work.
meaning appreciation
aha, thank you,
2. In contrast, simply ignoring people can be almost
as demotivating as destroying their work.

24

what are the cases where we can inc. meaning and

eliminate cases to dec. meaning
lots of room for improvement
Part 4: IKEA effect
toy cabinet
How does labor lead to love?
not misremembering agony of building but like it
more
effort into something makes you love it to higher
degree
story - cake mixes
people did not like cake mixes
taste was great
egg theory
powder mix in water pan and bake it
not yours
pie crust biscuits- part of meal
cake is a whole dish
"The Egg Theory"
The minimal effort required to add eggs and milk to a
cake mix makes us value the cake more.

evaluations change dramatically

can't see people don't see kids same way as we do
The effort we expend on our kids increases our love
for them and blinds us from the perspective of
others.
tailor made shoes, tshirts
very different set of preferences
Custimzation is about more than individual
preferences. The effort invested also increases liking.
hard-to-get
higher level of love and commitment
Too much effort can have negative consequences, so
we need to strike the right balance.
love
personality
etc
not require to invest too much that they will just give
up
Part 5: not-invented-here bias

not just what it is but effort

how to deal with global warming, pollution et

formulate your own solutions
evaluate our solutions
evaluate own solutions

Origami

People liked their own solutions better than ours.

builders

Why?
1. xtheir solutions might be better
2. xidiosyncratic fit
3. the act of creation
Ideas
Are you overly committed to your own ideas?

Objectively, the origami were not very impressive

valuable for you but not other people x
The creators (mistakenly) thought everyone would
love their creations
Some people got easy instructions with a
legend...while others got the same instructions but
no legend.

love
love it more
easy difficult
builder

low
lower
easy difficult
evaluator

not origami - no love

More labor led to more love only when participants
were able to complete their creations.
kids
How much money would you take for your kids?
erase memory
They're not for sale!
These kids are for sale!
Not interested
Love partly due to them and us (effort)
kids ultimate IKEA effect
no instructions, hard, effort

How can communities reduce the mount of water

they use without imposing tough restrictions
use only following words in your solution
50 words
Water lawns using recycled gray water recovered
from household drains.
they still thought their ideas much better
7 words
even liked it more
Investing even a small amount of energy in a solution
makes people like it much more.
Thomas Edison DC
Nikola Tesla AC
defame AC
electric chair AC
pay pr
DC limited
Even Edison could not overcome the perference for
his own ideas
toothbrush theory

25

want our own

The "Not-Invented-Here" Bias:
Pro: results in more time and passion devoted to our
ideas
Con: hinders our ability to consider other ideas
only inside company
SONY
digital camera
memory
tv
Sony missed several revolutions in technology
because of a bias toward their solutions
We should love what we do but not too much.
happy marriage - to have life insurance but not too
much
Part 6: Cognitive Dissonance
zappos.com shoes
hiring process
training
We'll pay you $500 not to take the job
2000

rats
Contrafreeloading:
Even rodents (sometimes) enjoy working for food.
Almost all animals like working to some degree
dogs squirrels etc
except the domestic cat
Money is, of course, an important motivator
Bonus: a form of payment contingent on
performance.
In theory, high bonuses should get people to work
harder.
Robert Yerkes & John Dodson: the Yerkes-Dodson
effect
Yerkes-dodson Curve
performance
incentives
up down
rat maze
safe zones and danger zones

Why would Zappos pay people to turn down the job?

1. Retaining happy and motivated employees, and
eliminating the rest, helps maintain quality customer
service.
2. Cognitive Dissonance
The tension that results when there is a mismatch
between our beliefs and behaviors
Leon Festinger
-we can't change what we did but what we believe
(to fit with that)

inc. electric shock

learn slowly when shock is low
learn fast - high
so strong shocks - worse

screw on a big board

paid very well
a dollar
paid very well - this was a boring task but paid well
paid a dollar - dissonance, worked a lot for one dollar
shifted how interesting the task is, more interesting

Bonuses increase motivation but do they increase

performance?

When we work harder for something, we value it

more.
person
they must be really fantastic
zappos 48 hours
I must really love Zappos since I gave up $2000 to
work here
wonderful cult
Part 7: Monetary Stress and Performance
assumption: people want to rest
salary as motivator
payment-motivation-labor-bills and mojitos
Is it true that work is aversive, and people work only
for money?
satisfaction in labor

fear of shock - paralyze and not think of anything

else
memory go down
Learning incentives have an inverse-U relationship

India
Task Performance
above
"Very Good" Standard
(higher payment)
between
"Good" standard
(payment)
below
small bonus 1 day salary
2 weeks
5 months salary
Packing QUarters
low 30%
middle 40%
high 0
Simon
lights and tones
low good
middle almost same

26

high went down dramatically

recall last three digits
same as above
labryinth
went down
dart ball
went down
slight increase and decrease
roll-up
decrease
All Six Games Combined
creativity concentration mobile
no diff. low middle decrease high
loss aversion
-hate losing more than they enjoy gaining
prepaying
We tried to test the principle of loss aversion by prepaying participants.
the first participant completely choked.
all

The intuition about bonuses increasing performance

relies on what we know about mechanical (not
mental) tasks.
we think we are just engines
mind - concentration thinking memory more
complex, can't will yourself for higher performance,
can actually backfire
surgeons
-bonus, punishment
think abt yacht and knees
A state of "flow" drives the highest quality
performance
nothing else matters
Bonuses can be distracting, and may actually
decrease performance.
Part 8: Social Stress and Performance
social recognition
Anagram Task
solve anagram in front of everybody from time to
time

2nd did yoga, meditation but didn't do

more important
When working in front of a group, social concerns are
added to the financial motivation.

and so did the second, but he ran away with the

money

However, anxiety caused by public pressure impedes

performance.

gave money at end

test anxiety, etc

if we want to, doesn't mean we can

Do real-life bonuses operate like the gain or loss

condition?
buying homes and cars etc under assumption on
making bonus
bankers; Of course, it would never affect me!
self-justification
executives etc
performance was going down on highest level of pay
mechanical - assume it will go up
Do mechanical tasks work differently than mental
tasks?
control of muscles
To separate mental from mechanical tasks, we
created a very simple typing task.
Matrix Test
one first, vv
mechanical and mental task results
mental down
mechanical up

HIgher motivation does not necessarily translate into

better performance
Social Motivation
Performance, incentives inverse U curve
How well would you play next to Tiger Woods?
The stress from golfing next to Tiger Woods causes
other golfers to perform worse.
affairs
easy to get people distracted
has no release for sexual energy
We are special, and we're immune to stress.
Do these results apply to Wall Stree t executives, or
are they immune to the impact of big bonuses?
not interested to go to the lab
professional basketball players
Duke's Coach K asked NBA coache to name "clutch"
players
agreed on 17

27

5 minutes of first part/2nd part

Performance of Clutch Players vs. Teammates
1st half clutch little bit higher than others
2nd
clutch
very high than others (same
performance)
ball pass to u more
try more often
or improve percentage average
"Clutch" players did not make a higher percentage of
shots, they just ried (and succeeded) more
frequently. Therefore, they scored more points.
Coaches believe there is a percentage improvement
in the points scored by "clutch" players.
Clutch players may actually outperform other
players, but the heavy defense against them could
equalize their performance.
freethrows
Clutch players take more free throws but do not have
a beter free throw percentage.
Part 9:
Bonuses, Labor and Motivation
belief of clutch players but not reality
basketball much more selective
banking just mental
think about bonus
Money is only one aspect of motivation
-small amounts of money can move relationships
from the social to the financial domain
-large amounts can increase motivation but decrease
performance
-we do not operate by simple rules of reward

Adam Smith
Karl Marx
-pin factory
12 step process:
more efficient when each person
focuses on one of the steps
work should be specialized, and a production line
environment is the most effective.
(pre-industrial revolution)
efficiency>meaning
Karl Marx
when work has meaning, people are more connected
to the output
post-industrial revolution
knowledge economy
current world - meaning
connecting people, changing economies
much harder to supervise people
trust peopel to do right thign
agency to decide how much to work and how much
effort
value for creativity and ingenuity
-useful even if it takes time and money
Special Guest: Lalin Anik Duke University
"Lionel Messi meets Salvador Dali: A motivation(al)
story
swimmer
6 physical act
competing adrenal competing
mental
different types of motivation
motivated - moved towards something, energized for
action
global economic crisis
money - scarce

Motivation = money
meaning
creation
challenge
ownership
identity
pride

cars
population
gas reserves

big bank
16 equations
How much would a hug, a glass of beer, or dinner
motivate your employees?

hybrids or bicycles

why not?
immoral

selves-vehicles
psychologically healthy happiness friendly

move away from individual incentives to social

incentivs
social motivation - energy from social context

if not, harm to company and employees

Michal Norton - Global Giving

npo
providing info of other people's behavior gives
motivation now and commit to donating to future
70%-commit
legitimizing an act
kickstarter.com
crowd-funding website
2 painters
0 / 50?
-being part of a community

Efficiency Vs. Meaning

wikipedia

We should think of ways to motivate and make

people happier besides paying them more.
student working in big bank in NY
small bonus
boss gave his apartment in new york city
A thoughtful gift can mean much more than money

28

giving info
community shares interest and needs
alternative currency - time
google 20% time
3M 15% projects and initiatives
best buy
freedom and autonomy
happiness
concentrate on work
creative and flexible 20%
Lionel Messing
soccer
cook knit

everything we want.
And, and these, these things that we get
are not dependent even on our labor.
they, they might be used as incentives by
our bosses, by our parents, but when we
have everything and when a generation has
everything, how can you incentivise them?
How can you get them going, and how can
you keep them active for, for labors or
for things that they need to do for basic
things?
a French novelist and
memoirist, George Sand.
And she said, work is not man's
punishment.
It is his reward, his strength, and his
pleasure.

social facilitation paradigm

social presence of others motivates us
familiar - really well
not familiar - disable performance

WEEK SIX
Self-Control

automatic reactions
practiced
better

self-control now vs. later

what causes problems and how to fight them

incentivize
creativity hard to incentivize
will hobby pay bills
money vs intrinsic motivation
also organizations
Adam Grant and James Berry

surgery joke

how much better you can get

overcome challegnes in environment
Part 1: Difficulty in Self-Control
blood transfusions
liver disease
can't define what it was
grad school
flare up
hepatitis C

US Army, security force officers

how pro-social

Interferon
3x a week for year and a half unpleasant medication
14 hrs sick headaches

intrinsically motivated - more creativity

need to be prosocial, care about others
to take their perspective
to be productive

Would you make yourslef sick to prevent cirrhosis?

30 yrs after

social motivation (caring about others, being part of

them)
caring about what others will think, need
has more access to new ideas
able to pick through ideas and work thoroughly
different incentives
-social motivation, time, part of community
different types of task,
simple complex, familiar novel, creative how can you get them motivated?
So moving forward, well, how shall we,
how shall we proceed with these
incentives?
And my question there, and this is
something I wonder about is with, with
every new generation it seems like we get

eaten more than you think you should

underexercising
procrastinated
texted while driving
unplanned/unprotected sex
procrastination
new year resolution
Although we start out with the best of intentions, we
often end up falling behind in our work.
sleep
current needs or need to sleep
Present focus bias: the tendency to give more weight
to our current environment or state
Would you sacrifice eternity in the Garden of Eden for
an apple? Depends on how hungry you are.

29

A half box choco now (in front)

full box choco 1 week
or
half box in 1 year or full box 1 year+1 week
in future we are wonderful people
we get to live in present
only pt took protocol correctly
i invented a little trick
loves movies
rent videos
connected movies with injection
Relative importance of things in Life
liver
side effects and injections
discounted bec. of time component
solution did not involve liver
Reward Substitution: using an alternate reward that
is immediate, and therefore more motivating.
global warming
Why Climate Change Maximizes Human Apathy
1. far in the future
2. affects others first
3. we do not see its progression
4. we don't see a particular person suffering
5. individual efforts to mitigate are a drop in the
bucket
Can we use reward substitution to encourage ecofriendly behavior?
money/tax
convenience
appearance/prestige/make look
recognition/points make them feel progress
Gamers have devised many ways to motivate people
leaderboard compared to other people
Toyota Prius hybrid - looks so different/noticing "You
drive a Prius! You must be a wonderful, kind human
being
Honda hybrid - didn't do that well
(it's not a scientific study at all)
What else have you done to conserve energy?
lightbulb
high efficiency appliances
insulation
temperature
X
In addition to fuel conservation, driving a Prius
provides social rewards (like an ego boost).
get people to know other elements
Reward substitution can get us to act like we care
about the world when we really care about our
image.

Part 2: Reward Substitution

Coumadin-antistroke medication
Warfarin (Coumadin)
-significantly reduces 24-4% chance of 2nd stroke
-eating leafy vegetables, bleedings, relatively few
side effects
-low compliance
structure about discounting
measure something
rewarding/punishing it
Internet-enabled pillbox
register in the internet
To encourage Rx compliance
-pay
-charge
-guilt
-competition
-create obstacles
-cover pills with chocolate
George Loewenstein - Carnegie Mellon Univ
Kevin Volpp - Univ. of Pennsylvania
What if we gave people $3 a day to take their
medication on time
1000 a day - yes, but no thousand dollars
small amount of money but look larger
supersize the incentive
Inflate the incentive with the principle of loss
aversion.
What if we pre-paid you and then took money back
for days you didn't take your medicaiton on time?
effective
What if we gave you $100 for taking your medication
over a period of time?
amount larger but discount higher
kid in africa pic
somebody else
-ethical problems
money is great but people love lotteries
vegas, random reinforcements
/ What if we gave peopl a 10% chance of making
$30.00 instead of a guaranteed $3.00?
The Ideal Lottery:
1. one big reward
2. smaller, regular rewards
-in the game
regret
the comparison between where we are in life and
where we could have been.
Would you be more upset if you missed youf flight by
2 minutes or 2 hours?

30

2 min
2 hours - no way to imagine that reality
lots of reminders of injury and contrast is incredibly
clear
happier
Olympics - won medals
pictures
gold, bronze, silver
Happinness is not where we are, but what reality we
compare ourselves to.
We pick a reality and compare our lives to it.
-If that reality is better than our actual lives, we are
miserable.
-If that reality is worse, we feel good.
Coumadin
part taking time, part not taking on time
Regret Lottery
-everyone gets a ticket
-only those who took the medication on time get to
claim the prize (if they win)
adherence
control
regret lottery 97-98%
Ways to Maximize Reward
-lotteries
-randomization
-counterfactuals
-regret
-reward substitution

Turns off green button (avoid temptation)

The Ulysses Contract: The red button enforces selfcontrol by removing the tempting green button
Yes! Even rats and pigions use self-control strategies
(frequently)
We can do it too
Think of the world in red buttons
think up front given the right tool we might behave
well
naive: unaware of self-control problems
sophisticated: aware of self-control problems, and
can take steps to resist temptation
educate
create more ways to bypass temptations
alarm clock - clocky
2 wheels slightly different speeds
should run
snooze
runs around
below the clock
fatal design
pissed off
egg shape clocky
snuznluz
connected to bank account
and charity you hate
www.stickk.com

add$3
shame
etc

Panda express
willing to limit their ordering
-yes
pay in advance for medical procedures
money back when they show up

Part 3: Ulysess Contracts

Part 4: The Importance of Self-control: The Individual

and the Environment

1. Reward SUbstitution
2. Self-control (Ulysses) contracts
With self-control contracts:
1. YOu know you will be tempted.
2. You bind your current self to prevent your future
self from misbehaving.
appointment with gym trainer - prepaid
buy hundred calorie cookie packs
give to computers to friend, change fb password
instead of working in dorm room, go to library
go on a date, they wear ugly underwear
pigeon or rat
if you see green button press, get one pellet
immediately
purple 10 sec. 10 pellets
both
immediate or delayed rewared?
week
Pigeons (and rats) choose the imediate, 1 pellet
reward over the delayed, 10 pellet reward
forgo 10 to get one now
red button

individual differences
experiments Walter Michel and colleagues
trait over time
marshmallow test
cookies
Kids who were able to resist the marshmallow did
better in college.
Ability to resist temptation is also correlated with:
-better physical health
-less criminal activity
-more financial stability
distract themselves
Is self-control a skill or an innate ability?
will/grace?
When we distract ourselves from our temptation, we
are more likely to resist.
Roy Baumeister - Florida State Univ.
Ego depletion: when we are continually exerting selfcontrol, our ability to resist temptation weakens.

31

If you have tasks that require self-control, better do

them early in the morning
religious Jews smokers not tempted on Sabbath
something we know outside our considerations
religious thought
decision point
nonreligious-religious (option or not
(because it's not kosher)
it's not possible
doesn't tempt us the same way
the more freedom, the more temptation, failing
restrictions, less chances that we would fail
How much does self-control depend on innate ability,
and how much relies on "tricks" we develop to
enhance our abilities?
HOw much does self-control suffer as we are tempted
throughout the day?
What role do rules play in regulating our behavior?
Adam and Eve problems
more and more
commercial world time attention and money right
now
long term financial savings, preventative health
environment - decisions
Doughnut 2.0, FB, smart phones
more tempting
larger and larger, more
design
red-button
software, hardware, reward substitutions that will
help us
why people die
human mortality attributed to bad decisions
1900s 10%
2000 over 40%
new technologies, new ways to kill ourselves
obesity DM smoking texting and driving
challenge of decision making
much more opportunity to fail
Technological advances crete more and more
opportunities for us to succumb to temptation.
understand sc problem and think how to solve it
cognitive limits
Self control mechanisms
ideology
The Denver Drug Program
-attempted to help heroin addicts recover

-required addicts to write a self-incrimnating letter to

the person they did not want to find out about their
habit.
- sent the ltters if the agreement was violated.
cold state
bind ability in the future
lots of people signed up
people started craving drugs
Please, let me out of this contract.
Fine, in three weeks, but we're going to test you
everyday.
-imposed a three-week waiting period, and after that,
most subjects complied with the contract
canceled bec. of human rights violation
Ulysses contracts must be binding to be effective.
balance human freedom and human ability to get
into trouble
incredibly damaging if fail
It is difficult to study Ulysses contracts because
researchers are required to let participants leave a
study at any time.
We must find a balance between the amount of
freedom we crave, and the controls we need to shield
us from temptation.
So, the issue is that we really have to
think about what do we care about in terms
of human freedom, and how much are we
willing to impose on that?
What kind of mistakes are we willing to
and take as so important we can override
human freedom?
And what mistakes are we willing to let
people continue with in the name of
freedom
think about temptations
how you can overcome them now
in the future
Special Guest: Leslie John Harvard Univ.
"Using People's Biases to do Good"
gym club memberships
regularly pledge to exercise
prescription medications
knowlingly engage in harmful behavior, risky sex
lapses in self-control
pay people
Kevin Volpe and
George Lowenstein
direct subsidization not really effective
capitalize on people's irrationality
biases and use them to people's advantage
1. overweighing of small probabilities

32

2. loss aversion

stopping yourself from behaving less optimal

lottery
bet on underdogs
really bad at understanding and estimating
probabilities
extremely unlikely events are much more likely to
happen
low prob. events disproportionate effects on
judgements and decisions

we use self control all the time

winning the lottery

weight loss
1% chance of $100
weight loss goal
choose lucky number 2 digit
drew out
everyday
catch: only get hundred dollars if you attained weight
loss goal that day
regret
loss aversion
hold on to losing stocks
put their own money to losing weight
if they didn't lose their weight
forfeit, lost money
if lost weight, get money back plus a match
incentive systems
lottery, loss aversion
after 4 months
lost way more weight than control

Please find ex. of when you exercised self control

successfully in the last month
give a point
We fail at self-control
varying levels of success
long term health happiness and success
consistent with long goals
walter michell's "Marshmallow Test"
Hedy as a child (very stubborn)
variability
better sat scors in high school
/
minutes
more money
didn't go to jail
no drugs
sc more impt in school performance than iq
Self COntrol as a Mental Muscle (a useful metaphor)
1. if you exercise the right technique/strategy - you
can do a lot a more
2. Your self control muscle may have limited capacity
3. you can train yourself to have better self control
Techniques & Strategies

keeping weight off - tricky

reward substitution
ulysses contract - penalty

capitalize on irrationality to make better decisions

and live better lives

can be taught
kids

Special Guest: Hedy Kober

Yale University

adults
-tempt with other food, cig, crack cocaine
craving

Self Control (how to get better)

psych and cog neuroscientist
If you want to, you can train yourself to have better
self-control

regulation of craving
STRATEGY: think of negative consequences if they
engage in behavior
Craving (for food)
Without Strategy 4 using strategy lower 2.4

What is Self Control?

What you exercise when you try to change
something about how you would otherwise think,
feel, or behave in any given situation.

Brain activity while using strategy

inc. activity in prefrontal cortex(associated with
better self control)

tempted by cake
control yourself not to be tempted

didn't work perfectly and for everybody but worked a

lot

control
control
control
control

Muscle with Limited Capacity

-lots of reasons
-anticipate
-pace throughout the day so not use all sc resources

of
of
of
of

thought - persistent thought

emotion - neg. emotion
craving/temptation - canonical
behavior

how to stay focused on tasks

choosing to behave in the way you want

positive emotions reverse depletion

watch funny movie

33

To avoid self-control "depletion"

.Pace yourself throughout the day
.Watch a funny clip
.Don't believe in depletion!

childrean rules
sc - hard in actual than theoretical

You Can Train Self Control

(yes you can)

TM
children live
longer than 100+
-essential

Cognitive behavioral therapy drug and substance

abuse

teenagers
technology

Cathy Carol's lab in Yale

best
least drugs and best over time

tempt>fight

changes in prefrontal cortex more efficient

complex, long several months
brief
half an hour training
cigarette
indirect
training small acts of self control
1 week open doors non dominant hand
gym
refrain from sweets
hand grip
Motivation to Change
(the secret ingredient)
learn right technique
apply in the moent
prepare for being depleted
counteract
practice

Jeannette Betancourt sesame workshop

model it, show them, do it everyday experiences
restraint
Making Sense of Stephen Colbert
Bald Solman
for me for you for later
---WEEK 6 EMOTION
married joke
3 women
rational and emotional side
take over rational
how emotions overpower us
when they work
how they mak us make badgood decisions
Part1: two systems

If you want to, you can train yourslf to have better

self control

"we arrive at truth, not by reason alone, but also by

the heart." Blaise Pascual

How many psychologists does it take to change a

light bulb?
One but only if it really wants to change

cognitive and limbic system

-thoughtful
-emotional

Making Sense on PBS

money tips for tots sesame street
only $1000 tucked away
29% Americans no retirement savings
saving is self-control
start early,
children
identify what they want, can't have it immediately
bec. something we'd have to build towards
marshmallow
"The Science of Us"
1000 most studiet people
Terrie Moffitt
sc more impt than social economic status of family,
grades, iq

stone age
tiger presses a button don't think about it
input then execute command running, fighting,
procreating not dependent on cognitive
execute as fast as we can
The limbic system system is similar across the
animal kingdom
emotion - us in deep rooted way
cognition - separate us from animals
qualia
the internal and subjective component of sense
perceptions, arising from stimulation of the senses by
phenomena
emotions not good at that moment
but teaching us for the future
planning for the future
lesson - do things the better way

now vs later

34

From your experience, how do you think emotions

actually work?

Predictions about behavior in "hot" states are largely

off the mark

not usual feelings or thoughts,

primitive
fast
based on environment
first think that comes perceived differently depends
on what you're thinking that time
transitory

preferences, desires, future

Emotions are transient and more short-lived than we

expect.

People who sign purity pledges have high rates of

sexually transmitted infection

Our happiness fades more quickly than we expect

not taking condom

Dan Gilbert Harvard University

not abt forgiving crimes of passion

ppl responsible for actions

Affective Forecasting:
-proffessors were asked how getting tenure would
affect their happiness
-they thought that getting tenure would make them
happy for a very long time, and not getting tenure
would cause long-term misery
-in fact, they adapted back to their previous state
rather quickly.

we become different people

-we need to account for that, behaviours consistent
don't want to get to state of arousal or recognize
what to do when you're in that state

cold state/hot state

-interventions, educational programs
extent emotions changes us
changes us without us understanding extent and how
big difference

Cchicago california
dbreak up divorce
1. Emotions are transient and more short-lived than
we expect.
2. Emotions can overtake cognition.

Part 2: INtra-empathy Mismatch

internal physiology/external
influence thought

When making predictions about our future acions in

an emotional state, we suffer from an intra-empathy
gap.

tendency of mankind to shift priorities when sexually

aroused
sexual arousal-basic, lots of experience,
consequences for impt decisions -crimes of passion,
ads
The Effect of Arousal on:
1. sexual preferences
2. willingness to take risks
3. willingness to act immorally (lie, exaggerate)
Unaroused ("Cold") Condition
Men predicted that wen they were sexually aroused,
they would:
-be uninterested in quirky sexual behaviors
-always practice safe sex
-not act immorally toward women
Aroused ("hot") Condition
70-80% to cumming
maintain level of arousal
question
Those in the aroused cndition were more likely to
engage in:
1. "quirky" behavior
2. risky behavior
3. immoral behavior

movies
People say they want to watch high quality movies
but often choose lighter, more entertaining movies.
put in high places
George Lowenstein etc
gym - how much money/effort for charities
water
before exercising
thirsty - higher empathy
When thirsty, people ar emore likely to donate to
water-related causes. not food
charity dinner
We might have more success raising money for foodrelated causes if we solicit hungry people.
Part 3: The Identifiable Victim Effect
The Trolley Person underscores the discrepancy
between cognitive and emotional thinking.
Cognition 4 people>1 person
Emotion 1 person>4 people
train track kill 4 people/1 person
redirect? yes
push person?
Do I have the guts to push you to save 4 people?
look in eyes?

35

Mismatched Money and Need

funding\people affected
-closer to us, further away, racial issues etc
look like individual causes, people u might know
u might have been there vs. other people might have
preventative in nature - difficult
The Identifiable Victim Effect
-We care more about suffering when it is represented
by one individual
Joseph Stalin, Mother Teresa
"One man's death is a tragedy, a million deaths is a
statistic" -JOseph Stalin
"If I look at the mases, I will never act. If I look at the
individual, I will." - mother Theresa
Africa starvation
range
one girl
Would you like to help Rokia?
People are willing to donate twice as much money to
Rokia than the masses.
$5
Boston job interview
Would you jump?
toddler
-of course

Condition 1: child is selected randmoly, after

donation is secured
Condition 2: child is selected randomly, but before
donation
When a particular child is pre-identified, people are
more likely to help.
small group vs 1
face
atrocities but don't care so much
too big, massive
biggest successes in caring for atrocities is bring one
example
haiti - transmit very small, specific things
ruwanda A staggering number of cows were butchered to stop
the spread of the disease..
but when one cute calf won the hearts of the British,
action was taken to revise the intervention policy.
The Identifiable Victim Effect:
A single, specific victim inspires action, whereas
general information about masses of victims does
not.
small, contained
as more info, care less

far, not born, not identifiable

compatible with emotions

how to convey
big problem and break into small pieces
we do want people to act

2 sets of info
pic Rokia but also millions

xappeal to cognition
people act time and money based on emotions

Indentifiable and Statistical Life

Part 4: Emotional Decision Making

amount donated
statistical life $1.14
identifiable life $2.38
identifiable life + statistics $1.43

baby Jessica
Texas - fell in hole
50 hrs

not 20% of savings to charity

Adding statistics to the equation dampens our

emotional response.
prime
think in computational ways, math problems
other emotional
Merely thinking in computational terms causes
empathy to decrease.
from an econ perspective we shouldn't give money
away esp. strangers who can't repay us
friend yes
Helping distant strangers in need is economically
irrational.
-emotional
Call it an "upside" of irrationality
The upside of irrationality
8 kids

"Baby Jessica" received more news coverage than

Rwanda and Darfur combined.
sympathize
cute
donate money
genocide
"I am deeply moved if I see one man suffering and
would risk my life for him. Than I talk impersonally
about the possible pulverization of our big cities, with
a hundred million dead. I am unable to multiply one
man's suffering by a hundred million."
Albert Szent-Gyorgyi
"The numbers are important, and yet they are not
everything. For whatever reasons, images often
strike us more powerfully, more deeply than
numbers. we seem unable to hold the emotions
aroused by numbers for nearly as long as those of
images. We quickly grow numb to the facts and the
math."
The Book of Yaak (1996) Rick Bass

36

"...the atrocities that were known remained abstract

and remote...Because the savagery of genocide so
defies our everyday experience, many of us failed to
wrap our minds around it. Bystanders were thus able
to retreat to the twilight between knowing and not
knowing."
A Problem from Hell (2002) Samantha Power
scammers try to create an emotional link
relationship
bad grammar, spelling mistakes
get rid of less gullible
Since spammers test a large population of people,
they may be in a convenient position to learn moer
about human behavior.
emoiton
cognition

mindset - imagine that it's dangerous

saliency of emotion
not just ease of coming into mind
The death toll from car crashes in developed
countries is almost 400 times greater than the
number of deaths caused by international terrorism.
(Injury Prevention 2005; 11:332-3)
driving - feeling of in control
A terrorist attack is intentional and beyond your
control, which causes a higher emotional response.
joke
insurance against nuclear disasters
if it actually happens u might not have to pay out

Emotion vs. Cognition

Our perception of risk is higher when:

1. the event is salient in memory
2. we have an emotional response

When does one overpower the other?

When do we get the most useful information from
each?

arousal, anger, hunger

less emotional-somebody else suffering, something
in book

Which jam would you like?

Which poster do you prefer?

how primary they are, the more they hijack our

system
social-less powerful

-some chose with their emotions (made decisions

they like later on)
-others were given cognitive input
For products that are consumed emotionally, lack of
cognitive input can lead to increased enjoyment and
use.

Emotions:
1. are a basic part of human nature
2. can overtake cognition
3. can work for or against us
giving to each other, reciprocity, honesty, good to
other people - pleasure

The decision environment should match up with the

consumption environment.

more of it if it works for us and less when not

consume based on emotion/cognition?

encapsulate relevant elements

Special Guest: David Pizarro Cornell University

"The Surprising Way Disgust Shapes Our Thinking"

When comparing stereos at a store, tiny differences

in sound quality seem more important than physical
appearance
At home (without the relative sound comparison),
appearance might weigh more heavily.
stays with us longer

psychologist
emotions and how they influence judgement

decision vs consumption environment

roles
compatible/similar

*the power of emotions to influence judgements and

decisions

get people and yourself to make better decisions

Part 5: Risk Assessment
Emotions in Risk Assessment
How do emotions affect your beliefs regarding the
risk of death?
The tragedies most recently shown in movies and the
press are more salient in our minds, and we
overestimate their risk
(news month before)
Apparently Dan has not seen Donnie Darko

*the power of emotions

fear - avoid from getting close from natural predators
most likely to think there are lions everywhere

disgust away from things that might contaminate or

give disease
social moral political and consumer decisions
Charles Darwin - book universal nature of human
emotions
psychologists across the world
adapt to natural environment
fear surprise disgust anger
survival advantage
aversive response that are gross
keeps us clean
disease avoidance

37

infancy - bitter liquid

wrinkle nose protrude tongue
easy to disgust
Universal triggers of disgust
feces
urine
blood
vomit
rotten flesh
pus
In Tierra dl Fuego a native touched with his finger
some cold preserved meat while I was eating...and
plainly showed disgust at its softnes; whilst I felt
utter disgust at my food being touched by a naked
savage, though his hands did not appear dirty.
Charles Darwin (1890) "The expression of emotion in
man and animals"
at people that may be foreign
*the power of contagion
mug
think their own mug is worth more
gave
value our things more than those that belong to
others
wiped out if with disgust
if things that were disgusting touched something that
is not
tampons (closed) touch cookies (closed) disgust
groups of people
"Just look at these guys! The louse-infested beards!
The filthy, protruding ears, those stained, fatty
clothes...Jews often have an unpleasant sweetish
odor. If you have a good nose, you can smell the
Jews.'
Nazi Children's Book (1938)

eat perfectly eat meal worms

choco baked into dog poop shape
political orientation
political coservative easily disgust
liberal - less easy to disgust
5 data collection
*conservatives are more easily disgusted than
liberals
(29,623 US respondents)
/
Inbar, Pizarro, Iyer & Haidt (2012) "Disgust
sensitivity,political conservatism, and voiting.
1.6-2.8
socio econmic income education religiosity x
*disgust sensitivity predicted voting in 2008
presidential election
obama vs mccain
*political conservatives report greater disgust across
the world
evaluate social groups
homosexuality and disgust
fart spray
african american elderly immigrants gay lesbian
*disgusting smell causes more negative attitudes
toward gay men
no smell disgusting smell
-3
-14
Inbar, Pizarro, & Bloom (2011) "Disgusting smell
increases negative attitudes toward gay men"

godhatesfags.com

*conservatives more physiologically aroused when

viewing disgusting images"

'worthy of death for their vile...sex practices...'

'dogs eating their own vomit and sows wallowing in
their own feces"

Smith, Oxley, Hibbing, Alford & Hibbing (2011)

"Disgust Sensitivity and the Neurophysiology of LeftRight Political Orientations."

disgust sensitivity scale

heartbt, skin conductance

are individual differences in disgust related to

attitudes
hard to disgust
easy to disgust

homosexuality and abortion - disgust nothing to with

those issues

*disgust sensitivity
Even if I were hungry, I would not drink a bowl of my
favorite soup if it had ben stirred by a used but
thoroughly washed fly-swatter
disagree ---- agree
While you are walking through a tunnel under a
railroad track, you smell rurine
not at all disgusted -- very disgusted
Haidt, McCauley & Razin, 1994; Olatunji et al. 2007

keeping us from getting sick

disease prevalent in environment reminder
swine flu prevalent in Cornell
sanitize their hands
moral beliefs and political beliefs
next to hand sanitizing station
*makes people harsher moral judges of deviant (but
harmless) sexual practices
moral evaluation
hand sanitizing reminder -.28
no reminder .26

squemish

38

Helzer & Pizarro (2011) "Dirty Liberals!: Reminders of

cleanliness promote conservative political and moral
attitudes"
political orientation
hand sanitizing reminder 2.7
no reminder 2.2
reminder of disgust/contamination
consumer
social
political
moral decisions
*when should emotions influence our thinking?
how emotions work
how it influences decisions and judgements

things that are wrong

unexpectedly bad - violations
benign violation - range
phys threat, social norms, cultural norms, linguistic
norms
benign
simultaneously ok
tickling, play fighting
mock attacks
physically threatening events not intended to hurt
when not done too aggressively done by someone
you trust
can't tickle yourself, nothing threatening

Special Guest - A. Peter McGraw

humor research lab
humor code
associate
univ. of colorado

creepy stranger tried to tickle you, not funny

word play and pun

associate prof. marketing

1. Distance
Mark Twain comedy is tragedy plus time
Mel Brooks tragedy is when I cut my finger, comedy
is when you fall into an open sewer and die

funny-well liked
humurous - attention-getting
influence
leisure time, dollars
who are friends are, dating, marrying, divorcing
antecedents
|
humor
|
consequences
cognitive response - hey that's funny
emotional - amusement
behavioral response - tendency to laugh
theories of being funny dates back 1000 yrs
Freud Realease of sexual or aggressive tension
jokes
abandoned
Plato and Socrates Superiority when bad things
happen to other people
Hobbes leviathan sudden glory over enemies
Incongruity
predominant
surprising we expect but don't actually get
mismatch bwn expectations and reality
Immanuel Kant
accidentally killing loved one - hardly laughable
Benign Benign Violation Violation
Humor starts with something wrong unsettling
threatening violates how world ought to be
Mark Twain the secret source of humor is not joy it's
sorrow. There is no laughter in heaven.

My Pen Is Huge
wrong and not wrong

violation
Severity
Close tragedy
close mishap
/
humorous

Benign VIolationDistant tragedy

Distant mishap
Benign
Distance

sometimes going closer is humorous

mildmishapes
Being hit by a car five years ago or yesterday
stubbing your toe 5 yrs ago or yesterday
2. mixed emotions
nervous laughter
u need something wrong to find something laughable
moral violations
can become funny
some alternative explanation that explains away the
thing that's seemingly wrong
Jonathan Height social psychologist
kitten
enjoys
whines
Matthew is playing with his new kitten late one night.
He is wearing only his boxer shorts, and the kitten
sometimes walks over his genitals. Eventually, this
arouses him, and he begins to rub his bare genitals
along the kitten's body.
The kitten purrs and seems to enjoy the contact.
whines and does not seem to enjoy the contact

39

3. Individual differences
funny-boring-offensive
values experiences beliefs
sweet spot
church
In order to recruit new members, a church is raffling
off a new H2 Hummer SUV. Anyone who joins the
church in the next six months will be eligible to enter
and win the H2.
distance
4. what is not funny
survey
coded faces
Keith Richard's
Before he passed away, Keith's father told his son to
cremate his body. Then he told Keith to do whatever
he wished with the remains. Keith decided to snort
his dead father's ashes.
wrong or not wrong: 13% offended/bored
wrong and not wrong 44%
benign violations
connects antecedents and consequences
humor
bad makes positive
like
attention getting wrong tend to catch attention
humor help people cope with pain stress and
adversity
-we feel good, the bad are less threatening
-reappraisal process, make fun of bad things violation
appraise to benign and help us cope bec. they don't
seem to be as bad
outliers - community
Thank you very much for persevering
throughout this course and hanging out
with us.
I hope you found it useful.
If you think about the overarching theme
across all of the topics we covered, it's
all about experimentations.
It's all about the fact that many times we
believe that we have an intuition that is
correct.
We believe that we know what's driving our
behavior, and we know what's driving other
people's behaviors, but often this
intuition is not correct.
It's not accurate.
And what we do in the experimental method
is we put these challenges to the
experimental method.
We say, let's see.
Let's compare this condition and the

control condition.
Let's see if what we think will work
better is actually works better.
And I think this is something we need to
incorporate in our daily lives to a higher
degree.
I think much like the FDA, the Feder the
Food and Drug Administration, forces
physicians to test their intuitions about
what medications will work and not work.
I think we need similar things in the
business world, in the policy world and in
our personal world, right?
We make lots and lots of decisions.
Are those the right decisions?
Is following your intuitions really
correct, okay?
And I think that if we took this
experimental approach and said that before
we make any important decision, we want to
try things out, we want to figure out
empirically and not just with other
intuitions, I thinks, I think that we will
make much better decisions.
And finally, I want to say that behavioral
economics, and social science more
generally, is an incredibly applicable
field.
Every principle we learn, every principle
we discover, can have lots of
manifestations in all kinds of areas of
decision making.
People get overburdened with choice.
It has implications for how people choose
online and offline, what we do with health
care, what we do with insurance.
If we think about the roles of emotion, it
has to do with how do we give to charity
and how we think about the kids and what
do we do with education.
When we think about bonuses and salaries,
it has to do with the education system and
Wall Street.
When we think about dishonesty, it has to
do with crime and Wall Street again.
It also has to do with judges and the
legal system and so on.
And I think that the real benefit for
studying social science comes from trying
to apply those principles.
So if I can leave you with this one wish,
it's to try and take those ideas and as
you go forward in life try to think about
where you could apply them.
Try to take any particular situation and
try to analyze what are the potential
forces, what are the potential.
And I think that if we all do it we could
do much better.
And I think that if we all do it we could
do much better.
Special Guest: Dr. Noah J. Goldstein
UCLA Anderson School of Management
Co-Author Yes! NY Times Best Selling book on
persuasion
"Persuasion: Provincial Norms"

40

infomercial
operators are standing by, please call now
changed to if operators are busy, please call again
popularity
herd mentality

Remember the power of similarity. Pick a heard

whose circumstances most closely match the
audience.
Special Guest: Todd Rogers
Behavioral Science and Election Participation
Harvard Kennedy School

Social Proof: People look to others to guide their own

behavior, especially when uncertain.
reuse towels and linens
3/4
standard environmental message
environmental appeal
HELP SAVE THE ENVIRONMENT.
The environment deserves our respect. YOu can
show your respect for nature and help save the
environment by reusing your towels during your stay.
Social proof message
JOIN YOUR FELLOW GUESTS IN HELPING TO SAVE THE
ENVIRONMENT
In a study conducted in Fall 2003, 75% of the guests
participated in our new resource savings program by
using their towels more than once. You can join your
fellow guests in this program to help save the
environment by reusing your towels during your stay.
inc. 20%
Common persuasion mistake:
Organizations often fail to harness the power of
social proof.
When desirable behavior is the norm, be sure to
convey that information.
'best-selling'
internal market research and testing
testing - tell
Pepsi Challenge
campaign roughly 56% prefer their fries to mc
donald's
social proof like most persuasion principles are most
powerful when people don't know how to behave
which herd
Social proof message
(greater similarity)
your room 33%
rewarded
provincial norms
Common persuasion mistake:
When conveying social proof, persuaders often fail to
point to the right herds.
-similar, share context
Sta. Monica ads to recycle

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