Predictably Irrational

When you consider the approach to security so far, who knows what the next step might bewill we have to wear certain clothes only, carry only certain kinds of luggage, or no luggage at all? Instead we need a comprehensive approach that addresses concerns more fully, rather than the reactionary, piecemeal approach we have at present.

Imagine that you have a flight at 8:00 in the morning. Which would be worse, arriving at the gate, breathless, at 8:02, just after theyve closed the door, or at 10:00, thanks to a couple unplanned delays in your morning. Obviously, the first scenario would cause far more misery, but why? Either way youre stuck at the airport until the next flight, eating the same bad, overpriced food, missing whatever you were supposed to do after your planned arrival, whether thats meetings or a stroll on the beach.

Apparently, Britons are becoming less honest. At least according to a recent study conducted at the University of Essex, where several thousand respondents filled out an online survey that repeated questions from a study on citizenship and behavior conducted in 2000. According to researcher Paul Whiteley, the purpose of the study was to try to gain an idea of the level of dishonesty in British society, and moreover, whats considered acceptable and whether that has altered over time. The problem is that over time, if no one counteracts the spread of dishonesty, it is likely to continue.

Want to know how to ensure your wife or girlfriends satisfaction with her Valentines Day present? Over breakfast, casually mention that recent census data shows women outnumber men in your area, and that men are apparently a scarce commodity. Why would this matter? Well, according to a recent study, perceived gender ratio affects economic behavior in both men and women. So for those of you who are single and looking to find a match, heres a little help from the US Census Bureau. Ladies, youll want to try your luck in the blue areas; guys, your best bet is in the red.

When making simple choices, consumers can spot and choose most of their preferred items in as little as a third of a second. Granted, the visual saliency bias may, in some instances, lead us to make suboptimal choices, but that may be a small price to pay in order to go about our daily lives making rapid, mostly good, decisions. After all, who wants to spend an entire afternoon in front of the store shelf choosing between Snickers and Sour Skittles?

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. 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.

The Unlimited Movies Cinema in the Netherlands has offered moviegoers the opportunity to see free movies for an entire yearall they have to do is get the theaters logo (a dog-like creature flying under a banner of unfurled film reel) tattooed on their body (for pictures, check this page out). The offer is part of a promotion for the latest movie in The Girl with the Dragon Tattoo series. I developed an appreciation for the surprising power of FREE! from the experiments my colleagues and I conducted on how people respond to things when their cost is zero.

If youve been to the doctors office recently with any kind of complaint, its likely you were ask to rate the pain you were experiencing on a scale from 0 to 10 (being the worst pain possible). Well, a group of researchers from the Stanford University School of Medicine recently analyzed the self-reported pain measurements from 11,000 medical records from 2007-2010 and discovered something surprising: women report greater levels of pain than men for the same injuries and ailments.

I got this picture this week. What is interesting about this price menu it is that the Fuel and Service priced at $9.29 is so off the scale (and so outrageous) that perhaps it makes the pre-paid option for $3.65 look attractive. After all it is about 1/3 of the price if the Fuel and Service.

I came across a funny cartoon the other day that captures an interesting aspect of our purchasing behavior. We are perfectly willing to spend $4 on coffee (for some of us this is a daily purchase), or $500 on devices that you can argue we dont really need. However, when it comes to buying digital items, such as apps, most of which are priced at $1, we suddenly get really cheap.

Rational economists fixate on a situation in which, say, your Aunt Bertha spends $50 on a shirt for you, and you end up wearing it once. Her hard-earned cash has evaporated, and you dont even like the present! Rational economists thus make a simple suggestion: Give cash or give nothing. But behavioral economics, which draws on psychology as well as on economic theory, is much more appreciative of gift giving. Behavioral economics better understands why people (rightly, in my view) dont want to give up the mystery, excitement and joy of gift giving. In this view, gifts arent irrational.

We realize that if we face the problem, well feel compelled to do something about it, and so we avoid looking and thereby avoid the temptation to give in and help. We know that if we stop for a beggar on the street, we will have a very hard time refusing his plea for help, so we try hard to ignore the hardship in front of us: we want to see, hear, and speak no evil. We can trick ourselves into believing that it doesnt exist. The good news is that, while it is difficult to stop ignoring the sad things if we actively chose to pay attention there is a good chance that we help a person in need.

Now, its one thing to waste time, but its particularly bothersome when you feel like you are backtracking. In my case of flying to Chicago, the trip took a detour that sent me in away from my final destination. This is the second reason that my flight experience was so irritating it included an element of backtracking in the opposite direction of my goal. We wasted lots of time, and we were diverted in the opposite direction. To overcome the feeling of idleness, I can try finding something to make me feel that the time is spent productively.

Janet Schwartz of Tulane University and I recently spent an evening with a few pharmaceutical reps, men who used to be in the business of selling a wide range of drugs to treat all kinds of diseases and conditions, from fibromyalgia to depression to restless leg syndrome. As drug representatives, they would go from doctor to doctor attempting to convince physicians to prescribe their companys drugs. How? They would typically start by passing on informative pamphlets and give out products like pens, clipboards and notepads advertising their drugs.

From a behavioral economics point of view, the field of financial advice is quite strange and not very useful. For the most part, professional financial services rely on clients answers to two questions: How much of your current salary will you need in retirement? What is your risk attitude on a seven-point scale? From my perspective, these are remarkably useless questions but first, lets think about the advisors business model. An advisor will optimize your portfolio based on the answers to these two questions. Not to be offensive, but I think that a simple algorithm can do this.

A new paper by Mike Norton and his collaborators sheds a very interesting light on the ways that organizations should use money to motivate their employees, boost morale and improve performance. The researchers looks at a few ways that money can be spent and how that affects outcomes such as employee wellbeing, job satisfaction and actual job performance. Specifically, they examine the effect of prosocial incentives, where people spend money on others rather than themselves, and they find that there are many benefits to spending money on others.

While it may seem like good news that fewer students cheat than they suspect, in fact such an overestimation of the real amount of cheating can become an incredibly damaging social norm. The trouble with this kind of inflated perception is that when students think that all of their peers are cheating, they feel that it is socially acceptable to cheat and feel pressured to order to stay on top. In fact, a few students have come to my office complaining that they were penalized because they decided not to cheat and what was amazing was that they felt that there was injustice done to them.

When it comes to sterilization, Denmark has had a rather turbulent history. In 1929, in the midst of rising social concerns regarding an increase in sex crimes and general degeneracy, the Danish government passed legislation bordering on eugenics, requiring sterilization in some men and women. Between 1929 and 1967, while the legislation was active, approximately 11,000 people were sterilized roughly half of them against their will.

In recent years there seems to have been a surge in academic dishonesty across many high schools (a lot of it has been showing up in the last few weeks). No doubt this can be explained in part by 1) increased vigilance and reporting, 2) greater pressure on students to succeed, and 3) the communicable nature of dishonest behavior (when people see others do something, whether its tweaking a resume or parking illegally, theyre more likely to do the same). But, I also think that a fourth, and significant, cause in this worrisome trend has to do with the way we measure and reward teachers.

Sometimes (perhaps even very often) we don?t make choices based on our internal preferences. Instead we have a gut feeling about what we want, and we go through a process of mental gymnastics and rationalization in order to manipulate our choices so that at the end we can get what we really want but at the same time keep the appearance (to ourselves and to others) that we are acting according to our preferences.

Spider-man: Turn Off the Dark is an upcoming rock musical. This musical is also the most expensive Broadway production in history, with a record-setting initial project budget of $52 million. The show?s opening has been repeatedly delayed while the production cost continues to accrue, currently totaling a whopping 70 million dollars. The final estimated budget approaches 100 million dollars, with no guarantee of profit return and below-average reviews. Spider-man?s situation exemplifies a classic case of organizational failure.

It turns out that being tired isn?t just detrimental to exam performance. One theory in decision making that we are beginning to understand better, Depletion Theory, holds that our ability to make any type of difficult decisions are also adversely affected by fatigue. In most of our day to day lives, being tired at the end of a long work day doesn?t lead to too many terrible decisions sometimes, however, the effects are more significant. Consider the dramatic results of a recent study investigating a large set of parole rulings of judges in Israeli courts. Their conclusion is striking.

The scientific community is increasingly coming to realize how central self-control is to many important life outcomes. We have always known about the impact of socioeconomic status and IQ, but these are factors that are highly resistant to interventions. In contrast, self-control may be something that we can tap into to make sweeping improvements life outcomes. If you think about the environment we live in, you will notice how it is essentially designed to challenge every grain of our self-control.

As the American population ages, the debate about the ethics of physician-assisted suicide for terminal patients becomes more important. Proponents of legalizing of physician-assisted suicide argue the practice is ethically justifiable because it can alleviate prolonged physical and emotional suffering associated with debilitating terminal illness. Opponents claim that legally sanctioned lethal prescriptions might destroy any remaining desire to continue living ? a sign of society having ?given up? on the patient.

There?s been plenty of talk lately ?in these pages and elsewhere? about a new kind of capitalism. About creating things because they?re good for society. About understanding, as Michael Porter and Mark Kramer suggest (?Creating Shared Value,? HBR January-February 2011), that not all profits are created equal: Profits derived from making the world better are superior to those derived from the consumption of useless, or even harmful, junk. At the risk of touching the third rail, I propose that getting people to want things they don?t really need may be far more valuable to society than we think

April 15th ? Tax day is upon us, so it?s a perfect time to contemplate a few aspects of taxes. In the past I?ve written about how I used to think that tax day was a wonderful day of civic engagement. Of course, over the years, as my taxes have become more complex, this task becomes one that is less about civic engagement and thoughtfulness, and more about annoyance and frustration. But that?s for another time. The US tax system makes it very difficult for us to understand how much money we make and how this may actually lead us to spend more money than we really have.

The publisher for Michael Connelly?s latest thriller it decided to charge $14.99 for the Kindle version and $14.28 for the hardback version. While standard economics tells us that consumers will be willing to pay more for items they derive more utility (pleasure and usefulness) from, in practice, factors such as fairness and manufacturing costs play a role into our decisions of what to buy and how much to pay. It is not easy to focus on what we really care about (the quality of the time we spend) rather than the price. On top of that the unfairness of the differences in price can make us mad.

I am a fairly avid squash player. One of my favorite aspects of squash is the strategic thinking required. The other day while playing, I had a slight itch to change strategies. It wasn?t a conscious process, and it was more like a kind of the desire to pick a scab. Like picking a scab, my better judgment told me that making this switch would be a bad idea, but the urge was too great, and I switched my playing style. And it worked! After the game I wondered, where does this itch come from? Is it part of our creative instinct for exploring and trying out new strategies?

The organization that funded science in the UK decided that instead of asking people to submit grants by 2 specific dates each year (which is that the US funding agencies do), and get people all stressed over the deadlines ? they will let people submit grant at any time that they want and they will review the grants that have arrived using the same 2 times a year. What happened? Fewer grants were submitted and eventually the Brits changed back to the twice a year setup. All this is to show us, how useful deadlines can be.

You are shopping for a car, find a seller, and agree to purchase his car in a couple of days. The day before the sale, you find a better deal. Under what conditions would you renege on your original agreement? Would it be easier if your original agreement was made over the phone? Or over coffee? Last week we put out a survey to find out, and here are the results:People have the hardest time reneging on deals made in person (compared with phone and email), and we have much less of a problem reneging deals made via a car dealer relative to one that was mediated by a mutual friend.

One of the main difficulties I face on a daily basis is an inability to say ?no.? I have always had this problem, but it used to be that nobody really asked much from me, so this weakness didn?t pose a real problem. But now that behavioral economics has become more popular, I receive invitations to speak almost every day. Accordingly, my inability to say ?no? has turned into a real challenge. So why do I, and many others, suffer from this problem? I think it is because of three different reasons: 1) Avoidance of regret 2) The curse of familiarity and 3) The future is always greener.

Imagine we meet at a party, and I tell you about my research on behavioral economics. You see opportunities to use the principles to improve your business and think we could work together. You have two options: You can ask me to collaborate, with a handshake promise that if things work out, you?ll make it worth my while. Or you can prepare a contract that details my obligations and compensation, specifies who will own the resulting intellectual property, and so on. For most of you, the decision is obvious. The second approach, the complete contract, is the way to go. But should it be?

Tip #1: Go for the chocolate and flowers. Tip #2: Be careful. Kids are expensive. Tip #3: Don?t let your expectations run away.

Recently I decided to come up with a rough measure of generosity across different communities. Which communities have a culture of giving away unused items as opposed to trying to sell them? And why?

The CEO of a software company cancels a project that was developed by a group of highly motivated employees, who believed their work would have been the best new idea in the computer world. The group was demoralized and the key people ultimately quit. How could the CEO have better handled the situation?

Is there symbolism of the choice of art at the world economic forum? Maybe. On the surface the world economic forum and the attendees are trying to maintain the feeling that we are over the recession and that the economic life is more or less back to what it used to be. But maybe the unconscious thoughts of the people at the world economic forum feel somewhat different ? and maybe this is the reason for this particular piece of art?

I am deeply attracted to the process of hacking ? perhaps because I taught at MIT for a long time, or maybe because I tend to approach life with a similar problem-solving mindset. think social scientists often work in an analogous way, though (of course) with nobler intentions.

It is often hard to remember to take medication, especially when you hardly feel the severity of the illness or the relief of the medication. On the other hand, no one forgets to take heartburn medication ? you?ll probably sprint for it as soon as heartburn begins to set in.

I value standard economics. It provides important and useful insights into human endeavors. But I also think that it is incomplete, and that accepting all economic principles on faith is ill-advised. If we?re going to try to understand human behavior and use this knowledge to design the world around us?including institutions such as taxes, education systems, and financial markets?we need to use additional tools and other disciplines, including psychology, sociology, and philosophy. Rational economics is useful, but relying on it alone is unlikely to help us maximize our long- term welfare.

A fascinating new study just came out, showing that tears that were produced by women under negative emotions reduce the sex drive of men! This gives a men yet another reason not to upset women.

Considering Michael Jackson and his doctor Conrad Murray, I won?t argue for the physician?s innocence, but I do think we should ask ? how common is the tendency to prescribe patients what they want? Is this a singular incident, a case of a drug-pushing ?bad apple,? or could there be more general forces at play?

If we assume that our past decisions have always been sensible and reasonable then we should not scrutinize our long-term habits. After all, if we?ve done something for five years, it must be a great decision. But if we understand that long-term, repeated behaviors might reflect our habitual decision- making in the face of complex financial decisions more than they reflect what is truly best for us, we might first examine our old habits and carefully consider whether they indeed make sense or not.

The realization of how relative happiness is became very apparent to me some years ago when I was in the burn department.

One of the challenges of human life is what?s good for us in the long term often doesn?t seem good for us right now. Dieting, for example, is not so much fun now, but good for the future; the same goes for saving money or submitting to preventive medical tests. When we face such tradeoffs, we often focus on the short term rather than our long-terms goals, and in the process we get ourselves into trouble.

I recently had an interesting meeting with a locksmith. The locksmith was penalized for getting better at his profession. He was tipped better when he was an apprentice and it took him longer to pick a lock, even though he would oftentimes break the lock! Now that it takes him only a moment, his customers complain that he is overcharging and they don?t tip him. What this tells is that consumers don?t value goods and services solely by their utility, benefit from the service, but also a sense of fairness relating to how much effort was exerted.

I think that the best gifts circumvent guilt in two key ways: by eliminating the guilt that accompanies extravagant purchases, and by reducing the guilt that comes from coupling payment with consumption. The best advice on gift-giving, therefore, is to get something that someone really wants but would feel guilty buying otherwise.

Recent research shows how physical contact can promote trust, even among complete strangers. Participants who were physically touched by a female experimenter (on the shoulder or with a handshake) made riskier financial decisions like gambling or investing money. Being physically touched, whether with a kneading massage or a comforting pat on the shoulder, seems to encourage cooperative behavior.

Rewarding and penalizing leaders based on outcomes overestimates how much variance people actually control. Here are four ways companies can create more-sound reward systems.

In many past experiments we have shown that people are often overly excited about Free (see Predictably Irrational). An interesting opportunity to further look at this behavior presented itself when a few weeks ago nightclub in New York City promoted an event with ?free tattoos,? and we just had to check it out, and see if the offer for free tattoos would tempt people to get one?

This guest post by Omar Adams discusses ethical standards in the accounting professional. For example, Adams discusses cases where accountants are torn between reporting misbehaviors or minding their own business ? should they open up a can of worms and be at the center of a controversy or just take heart in the fact that they were true to the ethics of their profession? This type of case presents the 'action inaction bias' where people view their own actions as much more important than inactions.

Many people have contributed over the years to behavioral economics. The individuals on this list have not only changed the face of economics as we know it, but they are likely to contribute a great deal more in the years to come. Each of these individuals has tremendous creativity and insight that has enabled them to capture and explain our odd, complex, and sometimes irrational human nature. Armed with this new understanding of human behavior, and taking our human weaknesses into account, behavioral economics could help us take steps toward designing a better world.

In Obion County, Tennessee, the right to a fireman is only guaranteed to those who pay an annual $75 fire protection fee before their property lights up. When one house belonging to homeowners who had not paid the fee recently caught fire, firefighters refused to come to the rescue. This problem is related to the question of bailing out people with bad mortgages. Should we help homeowners who took mortgages that they could not afford? Would it encourage them to keep on being reckless?

Research shows that being physically touched, whether with a kneading massage or a comforting pat on the shoulder, seems to encourage cooperative behavior. While cooperative decisions may benefit others more than ourselves (at least in terms of immediate monetary gain), they are not necessarily ill-advised. In fact, the decision-makers who gave money to an anonymous partner in a recent Claremont Graduate University experiment ultimately felt better about their choices.

Dan Ariely recently conducted a study in which he asked Americans to guess at the distribution of wealth in the United States, then asked them to lay out what they think would be the ideal distribution of wealth if they were to reenter society and be placed randomly in an economic class. The results suggest that Americans don't understand the true extent of disparity in the U.S., and that they want a more equitable society.

Institutionally, Chile has cracked an age-old problem with annuities. By law, 11 percent of every Chilean employee's salary is automatically transferred into a retirement account. When employees retire, their savings are converted into annuities. By pooling risk, the Chilean government makes annuities an attractive business with more competition and better prices. And since everyone is forced to annuitize, the adverse selection problem that normally afflicts insurance providers simply disappears.

In a recent experiment, Dan Ariely found that when people are free to choose what type of discussions they want to have on a first date, they often gravitate toward an equilibrium that is easy to maintain but one that no one really enjoys or benefits from. The good news, however, is that if we restrict the equilibria by sticking to a predefined set of questions, we can get people to gravitate toward behaviors that are better for everyone. More generally, this suggests that some restricted marketplaces can actually yield better outcomes than unrestricted markets.

Essay mills are companies whose sole purpose is to generate essays for high school and college students in exchange for a fee. In a recent experiment, Dan Ariely ordered a typical college term paper from four different essay mills. Two weeks later, the papers he got back would best be described as gibberish. Two of the papers were 35-39 percent were even copied from existing works. Ariely's results suggest that students still have no other option but to actually work on their papers (or maybe get help in the old-fashioned way and copy from friends).

Popular online dating site OkCupid recently released some numbers users reported regarding their sex lives. One interesting correlation was between smart phone usage and number of sexual partners. Female iPhone users (at the age of 30) report having had 12.3 sexual partners, more than twice as many as women Android users. Male smart phone users show a similar jump: from 6.0 sexual partners on Android to 10 on the iPhone. A casual observer might infer a correlation between iPhone usage and sexual activity, but Ariely suggests another way to interpret the data.

One of the most general principles of human decision making is that we use relativity as a way to figure out how much we value things. Relativity is not always the right strategy for determining value, but it gives us a quick and handy tool for going about the world making decisions. Over the years the same type of relative decision making that humans demonstrate has been shown in monkeys, birds, and bees, but a recent study has shown that it take place even with very simple life forms, such as slime mould.

Email, Facebook, and Twitter have greatly enhanced the ways we communicate. These handy modes of communication allow us to stay in touch with people all over the world without the restrictions of snail mail (too slow) or the telephone (is it too late/early to call?). As great as these communication tools are, they can also be major time-sinks. And even those of us who recognize their inefficiencies still fall into their trap. Why is this? Dan Ariely thinks it has something to do with the relationships between actions and their associated rewards.

A recent cyber-attack on a major Israeli apartment-listing website, as well as Pizza Hut's local website, led to the revealing of the credentials of more than 100,000 user accounts (roughly 2 percent of internet users in the country) on shady Turkish forums. The data reveals the extent to which people fail to think creatively and incorporate even a touch of randomness into their username and password selection.

In a recent online study, Dan Ariely asked participants to view a potentially funny video involving an individual who would seem to have 'issues.' Participants who were told that the girl had suffered from OCD since childhood thought she seemed more likeable, intelligent, and creative than those who were not told. But participants who were told of the girl's illness also thought that she seemed like a bigger loner and more antisocial. What this suggests is that giving individuals a disorder-label causes others viewing them to place the blame on the disorder and not on the person.

Dan Ariely provides a video of a short talk on cheating he gave on July 7 in San Francisco. While most people think that citizens of other countries cheat more than Americans do, Ariely's research has found that people from Israel, Italy, China and the U.S. all cheat about the same amount. Ariely has also found that bankers cheat twice as often as politicians do.

'Medium maximization' is when people focus on near-term concrete goals (such as frequent flyer miles), and while trying to maximize these immediate and clear goals forget or discount the real reason for their actions, such as maximizing their financial outcomes. Why do people engage in medium maximizations? Because they are easy. They give people a clear direction for behavior. Just having something measurable within reach can redirect our motivation, while having such immediate and concrete goals give us a sense of progress.

Unlike standard economics, behavioral economics does not assume that people are rational. Instead, behavioral economists start by figuring out how people actually behave, often in a controlled lab environment, and use this as a starting point. While the Chicago economists sometimes admit that people make mistakes, they claim that people make different types of mistakes that will eventually cancel each other out in the market. Behavioral economists argue that people will often make the same mistake, and that those individual mistakes can aggregate in the market.

There are all kinds of reasons why we eat badly, but some are more fixable than others if we only look at our behavior and uncover the nuanced forces guiding our actions. Instead of throwing the bag of grapes into the dark drawer in the bottom of the fridge, for example, we can put some grapes in a tray on the top shelf with some mixed greens and pecans, ready to grab and go. The rest of the grapes can be prewashed and stamped with a homemade expiration sticker. If we make plans to eat them within a few days and mark them as such, we are more likely to stick to our goals.

'What would you think if someone told you: Do the right thing because your life may depend on it. Or more accurately, that you better start making better decisions because it is a matter of life and death. This may sound like something an over protective parent would tell their child) but in reality it?s the way most of us should start to think about our day to day decisions and their potential to lead to harmful habits and fatal consequences.' Dan Ariely argues that ?every decision counts.?

The thing about habits is that for good and bad they require no thinking. Sometimes, something we do 'just once' can wind up becoming a habit and a part of our activities for a longer time than we envisioned. While habits can save us time, energy and unpleasant thought, they can also easily start us down an unwholesome path. Seven of our most common irrational habits include an overemphasis on first decisions, procrastination, the planning fallacy, texting while driving, checking email too much, relativity in salary and over-optimism.

Pfizer disclosed that it paid $20 million in consulting and speaking fees to 4,500 doctors in the second half of 2009. The company also shelled out $15.3 million to U.S. academic medical centers for their clinical trials. This marks the first time a company has disclosed its payments for clinical trials. As such, some may see this as a good deed on Pfizer's part, a noble step towards eliminating or reducing some of the conflicts of interest in medicine. Several studies have shown, however, that when professionals disclose their conflicts of interest, this only makes the problem worse.

Businesses most often rely on small 'focus groups' to answer big questions in marketing. In doing so, they rely on the intuition of about 10-12 lay people with no relevant training, and who ultimately have no idea what they're talking about. Although statistics about how a large group of people actually behaves can tell us so much more than the intuitions of a focus group, the allure of a story is irresistible. Perhaps we should try and supplement the numbers with a story to quench our thirst for an anecdote. What we can't do is forget about the facts in favor of fairy tales.

In this video, Dan Ariely discusses irrationalities surrounding sunk costs. Because he made an initial investment in a razor handle several years ago, he's willing to endure an inferior shaving experience, even though much better, newer models are now available. He also holds onto his razor blades much longer than he should. His habits regarding squash balls follow a similar pattern. His birthday resolution: Throw away the old razor, and the old squash balls.

Power and moral hypocrisy are no strangers ? we see it all the time. Social scientists recently ran a simulation where each participant was assigned a high-power role (prime-minister) or a low-power role (civil servant). Next, the researchers presented all participants with a seemingly unrelated moral dilemma and asked participants to rate the acceptability of the act. Researchers found that compared to participants without power, powerful participants were stricter in judging other' moral transgressions but more lenient in judging their own.

This post features a video by Jeff Monday of the mondaydots blog. In his new book Drive, author Dan Pink distinguishes between extrinsic motivators such as strict schedules and large bonuses, and intrinsic motivators like autonomy, mastery and purpose. Employees performing jobs that require more than just basic cognition, he argues, are less productive when motivated by an extrinsic source than by an intrinsic source. The call for intrinsic motivators is thus really a call to move the employee-employer interaction from a market relationship to a social relationship.

Companies pay amazing amounts of money to get answers from consultants with overdeveloped confidence in their own intuition. And yet, companies won't experiment to find evidence of the right way forward. Ariely thinks this irrational behavior stems from two sources. One is the nature of experiments themselves. As the people at the consumer goods firm pointed out, experiments require short-term losses for long-term gains. Second, there's the false sense of security that heeding experts provides. When we pay consultants, we get an answer from them and not a list of experiments to conduct.

In compliance with a federal integrity agreement, pharmaceutical maker Pfizer released details of its financial involvement with the medical community. Several studies have shown, however, that when professionals disclose their conflicts of interest, this only makes the problem worse. This is because two things happen after disclosure: first, those hearing the disclosure don't entirely know what to make of it, and second, the discloser feels even more liberated to act in his own interest and to disregard the public good.

Past studies have shown that when we reason about other people, we form an opinion of their views based on two sources: egocentric info - what we ourselves believe - and outside clues - what the other person has said and done, and what others have said about them. In one recent study, researchers found that there was a significant correlation between participants' views on moral issues and their estimates of God's views on the same topics. These results may suggest that God may be a blank slate onto which we project anything we choose.

This post features a video by Jeff Monday of the blog mondaydots. Just as our eyes can be tricked by optical illusions, Monday says, our minds can be tricked by cognitive illusions. We tend to measure our alternatives based on relative information. This tendency toward relativity often causes us to lose out on absolute gains by leading us into the trap of immediate gratification. In order to avoid these sorts of traps, we must establish external cognitive rulers to help measure absolute gains and losses.

The heat of the moment is a powerful, dangerous thing. As research going back to Festinger's cognitive dissonance theory shows, the problem with emotional decisions is that our actions loom larger than the conditions under which the decisions were made. When we confront a situation, our mind looks for a precedent among past actions without regard to whether a decision was made in emotional or unemotional circumstances. This means we end up repeating our mistakes, even after we've cooled off.

New research shows that capuchin monkeys, when given a choice, will opt for a buffet of food options rather than their favorite food. They will even select less-preferred food from the buffet. The research shows the power of offering multiple choices to motivate behavior, and relates to Ariely's previous research that people will eat 43% more M&Ms when there are 10 colors in the bowl instead of seven.

Psychology teaches us three main lessons. First, that the environment has a large, as yet unrecognized effect on our behavior; second, that out intuitions about what drives our behaviors are flawed; and third, that our emotions play a large role in our decision-making. These lessons have important implications for economics, and show us the importance of experiments and empiricism in economic research.

At a 2009 conference held by the American Council for an Energy-Efficient Economy, event planners decided to set the vegetarian lunch as the default meal option. Eighty percent of guests opted for the vegetarian option, compared to just 20 percent in 2007.

Exhaustion or stress can cause people to focus only on the short term and avoid the long term, and this can make them more susceptible to mistakes. Squash is a game of strategy. Players must plan several shots ahead in order to score. When squash players are out of shape, however, they tend to focus only on making the next shot.

Dan Ariely needed a new placebo after studies showed that Airborne Effervescent Health Formula did nothing to keep him from catching an illness. A placebo will only work if you think that it is doing something. Luckily, his mother sent him a new medicine in the mail.

In this video, Dan Ariely of Predictably Irrational recalls a meeting he had with economist Paul Samuelson, who died on December 13, 2009. Samuelson signed four copies of his textbook for Ariely to sell under different conditions for an economic experiment.

Dan Ariely says the New York Times may be able to succeed with its new online pay wall if it offers subscribers a new experience that was not available before. Online Times readers will be guided by ?anchoring,? which suggests that they will not be willing to pay more for the same things, but may be willing to pay more for different things.

We are victims of temptation - that's why our resolutions to start dieting or saving or to stop procrastinating often fail. One source of temptation that detracts from productive work is random web surfing. Ariely discusses a new web application that controls the desire to browse "non-productive" sites.

Ariely asks his readers how they would spend $20,000 if their goal was ?to get the most joy and happiness.? You can view the responses.

?A few days ago we looked at some telling search suggestions by Google when it came to what boyfriends and girlfriends searched for in their relationships. On the heels of this insight, I wanted to se

What do Williams Gehris, America?s most decorated war hero, and Walter Williams, our last Civil War veteran to pass away, have in common? Both were frauds: they spun tales of military heroism, duped

You know how Google sometimes ?predicts? what you might be searching for by giving you a little drop down menu of suggested search queries? These suggestions, of course, are based on what other users