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September 22, 2009
The architecture of choice
Ariely asked half the audience to come up with three reasons why they loved their significant other, and the other half to come up with 10 reasons why they did. Those in the latter group had a much harder time coming up with reasons.
If you make the question too difficult, people won’t try to answer it.
The same thing happens when you ask people for 10 reasons to buy a BMW, for good reason: “There aren’t 10 reasons,” Ariely said.
For advisors, the implication is that questions for clients should be framed with the least number of applicable answers. “If you think about the process by which people come up with answers, and understand how central this process is to the answer they come up with, you will think very carefully about how to customize choices for your clients,” Ariely said.
Presenting choices in scale – such as asking a client to rank their risk tolerance between 1 and 10 – can lead to misleading outcomes. For example, assume people are asked how often they floss their teeth.
In the first case, they can choose from a scale of daily, starting with 1 on the left and increasing to “10 or more” on the right. In the second case, they can choose from a monthly scale with the same choices. Someone who flosses daily will choose the left-most option on the first scale, but someone who flosses only every other day will choose the right-most option on the second scale. In the latter case, the person might easily conclude that they don’t need to see a hygienist, since they are at the right, most extreme end of the scale, and the in the former case the person might conclude the opposite.
“The scales that we use to get people to think about problems influence greatly what they end up deciding,” Ariely said.
The decoy effect
In another experiment, people were offered either a free trip to Rome or a free trip to Paris. A second group was also offered a third choice – also a free trip to Rome, except that it did not include coffee in the morning. This third choice is a useless option and should not affect the decision to go to Rome or Paris.
The useless option, however, greatly influences behavior – people in that group chose Rome far more frequently (with the morning coffee).
It turns out that a great way to influence decisions, especially between two alternatives, is to present a third alternative similar but clearly inferior to one of the choices. That choice will then more likely be selected.
“When we face a situation we focus on those things that are easy to compare,” Ariely said.
Ariely illustrated this effect in an experiment where women were asked which of two men they found more attractive. When a third choice was introduced – a picture of a man identical to one of the two choices but with an unattractive feature added – the women chose the man similar to the third choice, but without the unattractive feature.
We often have a view that we can ask questions and people “open a drawer” revealing their attitudes, Ariely said. “But in most cases people have no idea what their attitudes are.”
Moreover, once people make a decision – a decision to reallocate their portfolio, for example – it can have an enduring effect.
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