How freaking irrational are we & how can Product Managers/UX designers gain from it?

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We all think that we are rational decision makers. We believe our decisions are solely based on our “holistic” analysis which in turn is based on our experiences and “facts”. But we are so darn wrong. Most of us are irrational and psychology tricks can trigger our cognitive biases in ways that make us like guinea pigs. In fact we all are being "guinea pigged" every day. Psychology and behavioral science play a big role in our day to day lives especially in the way we use products and services. The following 4 psychological phenomenon will blow your mind. You will reconsider many of your actions especially while shopping. Most of these were first suggested by Daniel Kahneman, winner of the 2002 Nobel Prize for Economics.

Priming Effect- In an experiment participants were asked to lie to an imaginary person over phone or email. In a subsequent test the same participants were asked to pick a preferred product (mouthwash vs handsoap), and most people who lied over phone picked mouthwash over handsoap. Surprisingly, most people who lied over email picked handsoap. This behavior can be explained by priming wherein our reaction to one stimulus (stimulus is some event/activity that triggers a reaction) can impact our reaction to another stimulus. In another experiment a group of undergrad students at New York University were asked to create sentences from a jumble of words like forgetful, bald, wrinkle, gray etc. Most of the words were associated with old age. At the end of the experiment, the students were asked to walk to another office down the hall. The results were surprising. The students who were assembling words with an elderly theme walked significantly slower than other students. That means the old age words primed the students to feel and act older! Another crazy example is how reminding people of mortality primes them to become more accepting of authoritarian ideas- a common tool used by dictators.

Framing Effect- Different ways of presenting the same information can trigger different emotions. For example- the statement that “the chances of revival after the treatment are 85%” is much more reassuring than “the chances of not reviving after the treatment are 15%”. Both statements are exactly the same but you feel pretty bad when you hear the latter.

Anchoring Effect- During decision making, anchoring occurs when individuals use an initial piece of information (known as “anchors”) too heavily to make subsequent judgments. A common example is car sales- car sales persons usually show customers an expensive car- so the anchor is set at a high price. Then they show them mid-range cars which seem so much cheaper than the expensive car that customers often decide to buy those!

Peak End Effect- In 1993 Daniel Kahneman conducted an experiment, in which participants of one group were asked to dip their hands in cold water (14 degree F) for 30 seconds.A second group was asked to dip their hands in the water for 90 seconds total - for first 60 seconds the water was 14 degrees F and for the next 30 seconds it was 15 degrees F. Surprisingly, when the two groups were asked to recall their experience, the second group found it less painful than the first group. This effect is an example of peak end effect in which people judge an experience largely based on how they felt at its peak (its most intense point) and at its end, instead of judging the overall experience. Take another example- let’s say you own a web design business. You quote your client a reasonable price that you feel confident you can meet. The client hires you and is ready to pay you the amount you quoted. You do a good job and finish the project faster than expected which saves you money. So you decide to give your client some refund- that’s an example of a great end. Similar strategies can lead to a much better user experience. By the way, in this article even I am trying to apply the peak-end rule. So in the comments, tell me what you think was the peak of this article. There are several such behavioral economics phenomena which explain how we act irrationally. These theories are pretty useful if you are building a new product or shaping your product’s UX. But most importantly these theories are like life lessons for everyone and little bit of caution can make us smarter guinea pigs. So next time you buy too much soda, see if you saw images of happy faces around!

P.S- I came across a funny display of irrationality. However, I hate the fact that they only went up to women and minorities to shoot this video- apparently they could not find any “white irrational male”.