Choice and reversibility

A fascinating talk by psychologist, Dan Gilbert. Ten years old but worth watching if you haven’t seen it before.

The core point is that people get buyer’s remorse when choices are reversible and become increasingly unhappy with their decision. When choices are irreversible, endowment effects kick in and they become happier with their choice over time. Importantly, most people do not realise that this effect exists.

  • Does this have implications for choice architecture? Would it be beneficial to make some choices irreversible to increase the utility gained from them?
  • If people are unaware of the effect, will they under-utilise commitment mechanisms that make decisions irreversible?

Food: Getting lost in social constructivism

After reading both the Stuff article and the initial article on Gareth Morgan’s blog and the follow up, I am convinced both Gareth and Geoff Simmons (GG) have inadvertently become extreme social constructivists – but may not realise it yet.

Now I hate it when people just whip out rhetoric like “social constructivist” and don’t explain it – so what do I mean, how have they gone this way, and what do we know about this type of framework so we can analyse it?

Read more

The equation for happiness

As the world starts to move from focusing on growth to wellbeing a group of neuroscientists decided to test people’s brains to check whether ‘happiness’ occurred as predicted. The BBC reports that they found

“We can look at past decisions and outcomes and predict exactly how happy you will say you are at any point in time,” said lead author Dr Robb Rutledge from University College London.

The experiment tested decisions under uncertainty, which is a well-researched topic in economics. The best model we have at the moment derives from Kahneman and Tversky’s development of prospect theory. Read more

QOTD: Risky business

…assuming that decision processes are reducible to one-size-fits-all sets of axioms has not and will not produce a descriptively adequate account of human behaviour under risk and uncertainty.

Researchers find that people’s risk preferences are not stable. How risk averse is an individual? That depends on the situation.