Audio: How the U.S. Feels About the Wealth Gap

Dan Ariely, author of Predictably Irrational, talks with Kai Ryssdal about wealth distribution.

Source

Are you too conservative at the blackjack table?

Apparently. (Omission Bias is the favor of inaction over action (our tendency to do nothing in some decision environments). Perhaps a better example of omission bias are parents who fail to vaccinate their kids even when this risk pales in comparison to the incidents of death caused by the primary disease.)

This paper uses proprietary data from a blackjack table in Las Vegas to analyze how the expectation of regret affects peoples’ decisions during gambles. Even among a group of people who choose to participate in a risk-taking activity, we find strong evidence of an economically significant omission bias: 80% of the mistakes at the table are caused by playing too conservatively, resulting in substantial monetary losses. This behavior is equally prevalent among large- stakes gamblers and does not change in the face of more complicated strategic decisions.

Source: Judgment and Decision Making, Vol. 4, No. 5, August 2009, pp. 385–396
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Why, over the past century, have good people repeatedly ignored mass murder and genocide?

Because numbers are abstract and fail to spark emotion or feeling and thus fail to motivate action. This is a powerful and deeply unsettling glimpse into human nature that transcends political orientation.

Most people are caring and will exert great effort to rescue individual victims whose needy plight comes to their attention. These same good people, however, often become numbly indifferent to the plight of individuals who are “one of many” in a much greater problem. Why does this occur? The answer to this question will help us answer a related question that is the topic of this paper: Why, over the past century, have good people repeatedly ignored mass murder and genocide? Every episode of mass murder is unique and raises unique obstacles to intervention. But the repetitiveness of such atrocities, ignored by powerful people and nations, and by the general public, calls for explanations that may reflect some fundamental deficiency in our humanity — a deficiency that, once identified, might possibly be overcome. One fundamental mechanism that may play a role in many, if not all, episodes of mass-murder neglect involves the capacity to experience affect, the positive and negative feelings that combine with reasoned analysis to guide our judgments, decisions, and actions. I shall draw from psychological research to show how the statistics of mass murder or genocide, no matter how large the numbers, fail to convey the true meaning of such atrocities. The reported numbers of deaths represent dry statistics, “human beings with the tears dried off,” that fail to spark emotion or feeling and thus fail to motivate action. Recognizing that we cannot rely only upon our moral feelings to motivate proper action against genocide, we must look to moral argument and international law. The 1948 Genocide Convention was supposed to meet this need, but it has not been effective. It is time to examine this failure in light of the psychological deficiencies described here and design legal and institutional mechanisms that will enforce proper response to genocide and other forms of mass murder.

Source: Judgment and Decision Making, Vol. 2, No. 2, April 2007, pp. 79–95
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Are you tricked into thinking music identifies you as a unique individual?

I'm all for (what i thought was) individual taste but this is fascinating. We deviate from social pressure (norms) when we perceive things to offer something that signals identity.  Perhaps someone should have tried to convince Citigroup that selling sham mortgages was signaling its identity and hope they bucked the trend.

We propose that consumers often make choices that diverge from those of others to ensure that they effectively communicate desired identities. Consistent with this identity‐signaling perspective, four studies illustrate that consumers are more likely to diverge from majorities, or members of other social groups, in product domains that are seen as symbolic of identity (e.g., music or hairstyles, rather than backpacks or stereos). In identity domains, participants avoided options preferred by majorities and abandoned preferences shared with majorities. The social group associated with a product influenced choice more in identity domains and when a given product was framed as identity relevant. People diverge, in part, to avoid communicating undesired identities.

Source: Where Consumers Diverge from Others: Identity Signaling and Product Domains, Journal of Consumer Research, August 2007

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Does being busy help you make more rational decisions?

Possibly.

Consumers often face emotion‐laden choices involving conflicting goals of personal importance (e.g., safety). Research suggests that consumers cope with the negative emotion associated with these choices by avoiding certain behaviors, in particular attribute trade‐off making. This research investigates a factor that moderates these coping effects. Four experiments show that simple cognitive load can make consumers less averse to making attribute trade‐offs. This research demonstrates, counterintuitively, that a reduction of cognitive resources through increased load can result in more normative decision behavior. Load apparently disinhibits trade‐off making by disrupting consumers’ abilities to consider relevant self goal information and the negative emotional consequences of trading off something of personal importance, thereby reducing consumers’ need to cope.

Source: The Rationalizing Effects of Cognitive Load on Emotion‐Based Trade‐off Avoidance, Journal of Consumer Research, June 2004

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