Lecture on Decision Making and Manipulation

Jul 5, 2024

Lecture: Decision Making and Manipulation

Characteristics and Perception

  • Exercise: Five words describing two persons:
    • First person: love, care, ordinary, take, dark
    • Second person: dark, take, ordinary, care, love
  • Most people associate the first person with being good and the second person with being evil, demonstrating manipulation through word order.

"Thinking Fast and Slow" by Daniel Kahneman

  • Author: Daniel Kahneman, economist and psychologist, Nobel Prize winner (2002).
  • Book Insight: Explores human decision-making processes and biases.

System 1 and System 2

  • System 1:
    • Fast, automatic, intuitive, effortless
    • Example: Immediate reaction to a bear
  • System 2:
    • Slow, deliberate, analytical, effortful
    • Example: Solving complex problems
  • Issue: System 1 often overrides System 2, leading to poor decisions.

Biases and Their Impact

  1. Priming

    • Being exposed to one thing influences subsequent behavior and decisions.
    • Example: French music leads to buying more French wine.
    • Application: Use positive visual cues and gratitude in daily life.

  2. Loss Aversion

    • People prefer avoiding losses to acquiring equivalent gains.
    • Example: Reluctance to risk $10,000 even with a 50% chance to win $10,000.
    • Application: Discuss potential losses when convincing others.

  3. Sunk Cost

    • Continuing an endeavor due to already invested resources.
    • Example: Attending a concert while sick because money has been spent.
    • Reminder: Past costs should not dictate future decisions.

  4. Framing Bias

    • Decisions are influenced by how information is presented.
    • Example: "10% chance of dying" vs. "90% chance of survival."

  5. Halo Effect

    • Attributing positive characteristics to attractive individuals.
    • Example: Attractive people perceived as smarter, funnier.
    • Liability: Can bias decision-making in professional settings.

  6. Anchoring

    • Relying heavily on the first piece of information seen.
    • Example: Adjusting price perception based on initial incorrect price.
    • Application: Set mental spending limits.

  7. Endowment Effect

    • Overvaluing things we own.
    • Example: Preference for self-assembled IKEA furniture.
    • Reminder: Evaluate rationally whether value is emotional or objective.

  8. Confirmation Bias

    • Searching for information that confirms existing beliefs.
    • Example: Finding negative reviews only when searching "is this company a scam?"
    • Strategy: Seek neutral or opposing views to counteract bias.

Conclusion

  • Understanding these biases can lead to better decision-making.
  • Practical applications in interviews, relationships, and business.

Additional Tips

  • Priming: Use positive environments, habits, and gratitude.
  • Framing: Present information in a positive light.
  • Anchoring: Be aware of initial information effects.
  • Endowment Effect: Critically assess the value of owned items.
  • Confirmation Bias: Seek balanced viewpoints and challenge own beliefs.

For Further Learning: Explore more psychology books summarized in video playlists.