“Turn your idea into a licensing Goldmine by having your idea prototype in front of a potential company in 60 Days” — A program announced. “We will guide you to achieve this”.
“ Go through some of our success stories” Many of characters in stories looked like me. Vow!! Nice innovations. Oh! They made so much money! Great! Let me join the program and try!
So, what happened here?
In daily life, when Successes are made more visible than failures, we overestimate our chances of success. Chances of success might be very minute, but we succumb to the illusion. This is called Survivorship Bias in psychology.
“Half of the tickets are filled..that too for a weekday show. Let’s book it” I told my wife and then booked the tickets for the movie.
Next day, when I entered the theatre, I felt the crowd was less than the expected. I had a feeling that some of the tickets which were shown filled already online were not occupied.
“Oh! This book is not that interesting! Maybe It’s not meant for me. Why did I buy? Because, I saw almost 1000 reviews and 4.8-star rating” So, what’s happening?
Social Proof in Psychology — On a weekday, if so many people could take time out to watch a movie, then the movie would be good. I doubt whether I’d have booked the ticket if only two seats were booked. And the movie was bad and we came out with a headache!
“Only Rs.2500, and colour cartridges are free with this printer.” The salesman told me.
I took the printer home and within few days, the cartridges were emptied. The new cartridges were costing around Rs.2500. I bought them and again they emptied soon. I had a feeling that printing at home seems to be expensive than taking prints from a local photocopying shop. But then I had already invested Rs.2500 on the printer. “No way, I’m not throwing away Rs.2500”. I kept buying cartridges for another year. One day my wife pointed out. Should this factor play a role in our decision?”We have already spent Rs.2500 whether you use the printer or not”. Then the realisation and the search. It is called “Sunk Cost Fallacy”.
“We cannot give up now…we have already invested time, money….” — Forget about sunk costs and make rational decisions.
I received an envelope with greeting cards made by poor children. When I opened them, I saw a note -”The cards enclosed were to be considered as a gift from the organisation, and it was designed to encourage kindness” There was a link for a donation if I’m interested in. I and my wife felt obliged to transfer the money for the kindness and we did it immediately through online transfer. In the next 6 months, I received a couple of more personalised gifts from other charity organisations. Those organisations were using “Rule of Reciprocation”. The rule says that we try to repay, in kind, what another person has provided us. By virtue of this rule, I was obliged to repay the gift.
A few years back, one of my friends invited me to a meeting in his home, which could help me to earn money. I was introduced to AMWAY products and MLM marketing. He gave me a small bag containing a collection of AMWAY products to try it in the home at no cost.
“It’s a special toothpaste. Try it tomorrow” he said to me. After a couple of days, he came to pick up the items. Once I had used the gift and got trapped….Partially consumed….I had to buy the whole collection. Ah!! Reciprocity Rule and ……he being a friend…how could I avoid him. It’s like rejecting the friend. This is the psychology principle of “LIKING” — We prefer to say yes to the requests of someone we know and like.
For a short period, I had been tracking particular brand of jeans after its launch in Chennai. The price was around Rs.8000. One day, they announced 50% discount for the festival rush. I rushed and bought the jeans. After a couple of weeks, the price of jeans was marked Rs.4000 without any discount. For the last few years, their price remained same. I didn’t like the cloth material of jeans, which I had bought. “Contrast Principle” from psychology — when you experience two similar things in succession, your perception of the second is influenced by the first.
After shopping for 45 minutes, I was going through Cake Varieties in the supermarket. All unknown brands. Could not decide. Moved to the counter to bill the items. I saw a couple of Cake Brands near the counter. Took a packet each and placed in my trolley for billing. Are they same brands which I had seen earlier? Why did I buy the same when I was near the counter? Abundance makes us Giddy…..too many choices destroy the quality of life — “Paradox Of Choice”.
“Drum Stick is very old. See the holes in green leaves…there’s fungus. Banana- fully black on the other side…tomorrow we cannot use this banana. Banana stem — did you see this colour on one edge? Why are you wasting money? Apple — see the dents…. will go waste. Tomato — Oh! My God. Why do you keep buying items from the same shop?” My wife was shouting….sorry…..spoke softly to me.
Why did I buy there….because the shop owner was so nice, friendly….really likeable? This is “Liking Bias” — The more we like someone, the more inclined we are to buy from that person.
“Buy One and Get One Free” — board placed over tower like stacked-up 1-litre honey bottles, in the supermarket. There was another board, “Only one order per person”, as they would like to serve more people. I rushed and bought the item. After billing, I realised that we already had enough honey in the home and our usage of honey is very limited. So, what to do with those 2 litres of honey? “Scarcity Rule” in psychology — an economic principle in which a limited supply of a good, coupled with a high demand for that good, results in a mismatch between the desired supply and demand equilibrium
I’ve bought many items on Amazon. Many times, my sales were prompted by — “Only 2 left”. When I bought Kindle paperwhite — it was “Limited time offer of Rs.2000 discount”. Next time, Kindly had the offer in another format. Scarcity Rule.
“Can you tell me a number within 1 to 10?” asked the sales guy.
“7” I said
“Vow. Congrats Sir. If anybody says the number “7”, we have to give the Rs.250 watch for Rs.100. Congrats again”
Excited, I had bought a watch, and this happened a long time ago. “Principle of Co-incidence”.
FEAR OF LOSS
“Why is your car insurance so high? Show me the details” A friend asked me. I showed him.
“Why did you add these components to your policy?”
“He told me that in the case of certain accidents, you may not be able to claim cost for those items and it would be a loss.”
That sales guy has used the “Loss aversion” principle to take money from you. Loss Aversion — People have fear of losing something and they value it more than gaining.
I selected a book in Amazon for Rs.340 and about to check out. It showed me “FREE deliveries of order over Rs.499. Otherwise, delivery charges of Rs.60 are applicable. I spent another half an hour and bought another Rs.200 book. Did I waste Rs.200 for Rs.60? and 30 minutes of time? A thought lingered in my mind. “Loss Aversion”
“You have got so much Dandruff”
“I’ve been using “Anti-Dandruff” shampoo for so many years, and they had given so many ads on TV. Still no result”
“Did you check the labels and what they claim”
“In the front, it is written as “Anti-Dandruff” shampoo. On the back side, it is written, protects scalp from dandruff”
“It never says that it will remove Dandruff and moreover the sentence is vague. Did you see? Watch those lines closely hereafter” This is Pricniple of “False Causality”
Three years back, bought a Macbook. After a year bought an Ipad mini. A few months back, bought iPhone. Occasionally I feel other products have certain better features or benefits. I realise that I never tried to explore any other options for those recent purchases. “Halo Effect” — One or two qualities produce a positive or negative image, which outshines everything else.
“This shirt is not 100% linen sir. 20% Non-Linen.” Sales girl informed me.
“No, I want 100% linen shirts. I’ve been buying 100% linen shirts for some time. Thanks”
Came back home and checked my old shirts. It’s written 80% Linen.
“Framing Effect” — Make the information feel different based on the facts the way it is projected. 98% fat-free or 2% fat?
5–6 years back, I’ve ordered 4 assembled desktops for my office. The vendor was providing me with the configurational options and the vendors. I could not understand. One name I recognised….INTEL….”Boss, I want Intel. Nothing else.”
Reason — Law of Association through repetition and persistence. Countless repetitions of brand exposure through PC makers advertisements had played the role.
References — The Art of Thinking Clearly by Rolf Dobelli, Influence by Robert B.Caildini.