It is traditionally assumed (and much of economics is based on this assumption) that people and firms behave rationally. That is, a person always maximizes benefit. The behavior of people, even in such seemingly weakly formalized areas as the family, religion, charity, can be very well described based on rationality.
However, in 2003, the Nobel Prize in Economics was awarded to psychologist Daniel Kahneman, who, together with his colleague Amos Tversky, showed that people are not always rational. As a result, a whole new field of research has emerged - neuroeconomics, which explores the work of the human brain at the time of making economic decisions.
Daniel Kahneman - psychologist, one of the founders of psychological (behavioral) economic theory, winner of the Nobel Prize in Economics 2002 "for the use of psychological methods in economics, in particular - in the study of the formation of judgments and decision making under uncertainty" (together with W. Smith) . Kahneman became the second "non-economist" (after the mathematician John Nash) to win the Nobel Prize in Economics. The main object of Kahneman's research is these are the mechanisms of human decision-making in a situation of uncertainty . He proved that the decisions people make significantly deviate from what is prescribed by the standard economic model homo economicus. Criticism of the model of "economic man" was engaged even before Kahneman (one can recall, for example, Nobel laureates Herbert Simon and Maurice Allais), but it was he and his colleagues who first began to systematically study psychology of decision making.
Intuition is the ability of direct, immediate comprehension of the truth without preliminary logical reasoning and without evidence.
From the dictionary of the Russian language S.I. Ozhegova: Intuition is a direct comprehension of the truth without prior logical reasoning.
In 1979, the famous article appearedProspect Theory: Analyzing Decision Making Under Risk , written by Kahneman in collaboration with psychology professor Amos Tversky (Jerusalem and Stanford Universities). The authors of this article, which marked the beginning of the so-called behavioral economics, presented the results of a huge number of experiments in which people were asked to make a choice between various alternatives. These experiments proved that people cannot rationally estimate either the magnitude of expected gains or losses, or their probabilities.
First, it was found that people react differently to equivalent (in terms of gain/loss ratio) situations depending on whether they lose or win. This phenomenon is called asymmetric response to changes in wealth. A person is afraid of loss, i.e. hisfeelings of loss and gain are not symmetrical : the degree of satisfaction of a person from acquiring, for example, $ 100 is much lower than the degree of frustration from losing the same amount. That's why people are willing to take risks to avoid losses, but not willing to take risks to gain . Second, experiments have shown that people tend to make mistakes when estimating probabilities : They underestimate the likelihood of events that are most likely to occur and overestimate much less likely events. Scientists have discovered an interesting pattern - even mathematics students who know the theory of probability well do not use their knowledge in real life situations, but proceed from their stereotypes, prejudices and emotions.
Instead of decision theories based on probability theory, D. Kahneman and A. Tversky proposed new theory - perspective theory (prospect theory). According to this theory, a normal person is not able to correctly estimate future benefits in absolute terms, in facthe evaluates them against some generally accepted standard, seeking, above all, to avoid worsening his position. Prospect theory can be used to explain many irrational actions of people that are inexplicable from the standpoint of "economic man".
According to the Nobel Committee, having demonstrated how badly people are able to predict the future, D. Kahneman "with sufficient reason called into question the practical value of the fundamental postulates of economic theory."
It is curious to note that the American economist Vernon Smith, who was awarded the Nobel Prize in Economics at the same time as Kahneman, is his constant opponent, arguing that experimental verification basically confirms (rather than refutes) the principles of rational behavior familiar to economists. In the decision of the Nobel Committeeshare the economics prize for 2002 equally between a critic and an advocate of the rational "man of economics" model noticeable not only academic objectivity, but also a kind of irony over the situation in modern economics, whereopposite approaches enjoy about the same popularity.
Here are some interesting experiments carried out during the study.
PROBLEM ABOUT LINDA.
Students of the Faculty of Mathematics were asked to solve approximately the following problem:
Linda is a mature woman who got slapped in her thirties and the energy is rushing out of her. At her leisure, she wraps beautiful toasts no worse than the mustachioed Georgian toast makers, and at the same time she can knock over a glass of moonshine without batting an eyelid. In addition, any manifestations of discrimination infuriate her and excite demonstrations in defense of African rhinos.
Question:
Which of the two options is more likely: 1 - that Linda is a bank teller or 2 - that Linda is a bank teller and a feminist?
Over 70% of the participants in the experiment chose the second option because Linda's preliminary description matched their idea of a feminist, even though the description was irrelevant and distracting, like a silver lure with an inconspicuous pike hook. Probability students knew that the probability of a simple event occurring is greater than the probability of a composite event occurring - that is, the total number of cashiers is greater than the number of feminist cashiers. But they pecked at the lure and got hooked. (As you can see, the correct answer is 1).
Conclusion: stereotypes that dominate people easily overshadow a sober mind.
THE LAW OF THE CUP.
Imagine the following situation.
A visitor entering a cafe is greeted by a waitress with exclamations like this: oh, it’s kind of cool, it came true! - finally, the thousandth visitor came to us! - and here is a solemn prize for you - a cup with a blue border! The visitor accepts the gift with a forced smile, with no overt signs of delight (and why do I need a cup? - he thinks). He orders a steak with onions and chews silently, staring blankly at the unnecessary gift and thinking to himself where to attach it. But before he can take a sip of jelly, the same waitress in an apron runs up to him and says apologetically that, they say, I'm sorry, miscalculated - it turned out that you are with us - the 999th, and the thousandth - that disabled person who entered with a club - grabs a cup and runs away shouting: who do I see! and so on. Seeing such a turnover, the visitor begins to worry: uh!, uh!, EEE!!! Where are you going?! Here is the infection! - his irritation grows to the level of rage, even though he needs a cup no more than an oar.
Conclusion: the degree of satisfaction from the acquisition (cups, spoons, ladles, wife and other property) is less than the degree of grief from adequate losses. People are ready to fight for their pocket penny and are less inclined to bend down for a ruble.
Or if, say, during the negotiations no one pulled you by the tongue, and you happily promised your opponent an additional discount, then, as a rule, there is no way back - otherwise, the negotiations may reach a dead end or collapse completely. After all, a person is such that he usually takes concessions for granted, and if you change your mind, want to replay and return "everything as it was" - then he will perceive this as a shameless attempt to steal his rightful property. Therefore, plan your upcoming negotiations - clearly know what you want from them and how much. You can, at minimal cost, make your opponent be happy like an elephant (there is a psychology of communication for this), or you can spend a lot of time, nerves and money and, as a result, remain the last fool in his eyes. Be soft on the opponent's personality and hard on the subject matter.
EMOTIONAL DISTORTIONS OF THE LAWS OF PROBABILITY.
Kahneman and Tversky, again, math students were asked to consider the following situation:
Let's say an American aircraft carrier sinks with 600 sailors on board (however, in the original condition of the problem, the hostage situation, which is unpleasant today, was considered). You have received an SOS signal and you have only two options to save them. If you choose the first option, it means that you will sail to the rescue on the fast, but small-capacity cruiser "Varyag" and save exactly 200 sailors. And if the second one, then you will sail on the squadron battleship "Prince Potemkin-Tavrichesky" (popularly - the battleship "Potemkin"), which is slow, but roomy, therefore, with a probability of 1/2, the entire crew of the aircraft carrier will either sink into the abyss, or everyone will drink champagne, in general - 50 to 50. You only have enough fuel to refuel one ship. Which of these two options for rescuing drowning people is preferable - "Varyag" or "Potemkin"?
Approximately 2/3 of the students participating in the experiment (72%) chose the option with the Varyag cruiser. When asked why they chose it, the students answered that if you sail on the Varyag, then 200 people are guaranteed to survive, and in the case of the Potemkin, perhaps everyone will die - I can’t risk all the sailors!
Then, to another group of the same students, the same task was formulated somewhat differently:
You again have two options for rescuing the aforementioned sailors. If you choose the cruiser "Varyag", then exactly 400 of them will die, and if the battleship "Potemkin" - then again, 50 to 50, that is, all or no one.
With this wording, 78% of the students have already chosen the battleship Potemkin. When asked why they did this, the following answer was usually given: in the version with the Varyag, most of the people die, while the Potemkin has a good chance of saving everyone.
As you can see, the condition of the problem has not essentially changed, just in the first case, the emphasis was placed on 200 surviving sailors, and in the second - on 400 dead - which is one and the same (remember? - what we are silent about, for the listener, as it were does not exist).
The correct solution to the problem is this. We multiply the probability of 0.5 (which is in the version with the Potemkin) by 600 sailors and get the probable number of rescued equal to 300 (and, accordingly, the same probable number of drowned). As you can see, the probable number of rescued sailors in the variant with the battleship "Potemkin" is greater (and the probable number of drowned, respectively, is less) than in the variant with the cruiser "Varyag" (300 > 200 and 300< 400). Поэтому, если отставить эмоции в сторону и решать задачу по уму, то вариант спасения на броненосце "Потёмкин" предпочтительней.
In general, as you can see, most of the participants in this experiment made decisions based on emotions - and this despite the fact that they all understood the laws of probability better than ordinary people from the street.
Conclusions: ..more than two thirds of humanity are potential patients of Professor Kahneman, because although people know a lot, they know little how to use knowledge in practice. And, again, a person is more impressed with losses than with achievements. And one more thing: to understand the theory of probability, sometimes, is much more useful than to own foreign languages and accounting principles .
For more information on interesting or unpublished experiments, see the writings of Daniel Kahneman.
The conclusion is disappointing: a person, making a decision either intuitively or emotionally, takes a big risk. And, if the first option gives him the correct, rational solution, then the second one leads to disaster. . In any case, he does not use the knowledge that he received during his life in the exact sciences. “Although people can theoretically integrate and operate with cotangents on paper, in practice in life they tend to only add and subtract and usually do not go further than multiplication-division.”
Both intuition and emotions are inherent in every person. But how to make the voice of intuition prevail when making decisions? You need to learn to understand intuition.
Now let's get back to business. Who are they - productive players in the economic market? These are the people who, at key, decisive moments, are guided simultaneously equally successfully by two tools - both iron logic and intuition! But rational thinking is not always effective.
A striking example of such a spontaneous intuitive decision can be considered the task of Henry Ford to mount an eighteen-cylinder engine into a single block. During the year, experts argued to Ford that this was from the realm of fantasy, the task was impossible. But Ford firmly insisted on solving the problem. As a result, the world received an excellent car.
Noteworthy is the insight of Steve Jobs, which was not, in principle, supported by rational evidence. Almost two dozen firms with a staff of excellent analysts and experts tried to prove him wrong. At that time, indeed, no one really needed a personal computer. And still no rational explanation has been found for the fact that personal computers began to be bought in incredible quantities... N. But the fact remains.
A person has conditionally two tools for realizing reality - "right hemisphere" and "left hemisphere" thinking, logical and intuitive consciousness. And a harmoniously developed person must masterfully master this wealth in all its volume, power and beauty, realizing that all living things are one!
Daniel Kahneman (Daniel Kahneman, March 5, 1934, Tel Aviv) is an Israeli-American psychologist, one of the founders of psychological economics and behavioral finance, which combines economics and cognitive science to explain the irrationality of a person's attitude to risk in decision-making and in managing their own behavior.
Known for his work, with Amos Tversky and others, in establishing a cognitive basis for common human fallacies in the use of heuristics, and for developing prospect theory; Laureate of the Nobel Prize in Economics in 2002 "for the application of psychological methods in economics, in particular - in the study of the formation of judgments and decision-making under conditions of uncertainty" (together with W. Smith), despite the fact that the research was conducted as a psychologist, and not as an economist.
Kahneman was born in Tel Aviv, spent his childhood years in Paris, and moved to Palestine in 1946. He received a bachelor's degree in mathematics and psychology from the Hebrew University of Jerusalem in 1954, after which he worked in the Israel Defense Forces, mainly in the psychological department. The unit in which he served was engaged in the selection and testing of recruits. Kahneman designed the personality assessment interview.
After his discharge from the army, Kahneman returned to the Hebrew University, where he took courses in logic and the philosophy of science. In 1958 he moved to the United States of America and received his Ph.D. in psychology from the University of California, Berkeley in 1961.
Since 1969, he collaborated with Amos Tversky, who, at the invitation of Kahneman, lectured at the Hebrew University on the estimation of the probability of events.
He currently works at Princeton University and also at the Hebrew University. He is on the editorial board of the journal Economics and Philosophy. Kahneman never stated that he was the only one involved in psychological economics - he indicated that everything that he received in this area, he and Tversky achieved together with their co-authors Richard Tailer and Jack Knetsch.
Kahneman is married to Anne Triesman, a renowned attention and memory researcher.
Books (2)
Making Decisions Under Uncertainty
Decision making in uncertainty: Rules and biases.
Decision Making under Uncertainty: Rules and Prejudices is a fundamental work in the psychology of decision making.
References to individual works of these authors are quite common in the academic literature, but a complete collection of these articles in Russian has been published for the first time. The release of this book is certainly an important event for specialists in the field of management, strategic planning, decision making, consumer behavior, etc.
The book is of interest to specialists in the field of management, economics, psychology, both in theory and in practice, who deal with such a complex and interesting area of human activity as decision making.
Psychologist, Nobel Laureate in Economics
Psychologists distinguish between two modes of thought, which we will call System 1 and System 2. System 1 works automatically and very quickly, with little to no effort and no sense of intentional control. System 2 highlights the attention needed for conscious mental effort, including complex calculations. While we are awake, both systems work: the first - automatically, and the second - is in a comfortable mode of minimal effort. When everything goes smoothly, System 2 accepts System 1's suggestions with little or no change. As a rule, you believe your impressions and act according to your desires, and this is usually quite acceptable. System 2 comes into action when an event is detected that violates the model of the environment in the representation of System 1. Most time System 1 performs its functions well, but it has its own distortions and systematic errors, it is especially bad at logic and statistics.
Illusion of truth
If something seems familiar, we assume that it is correct. System 1 gives a feeling of familiarity, and System 2 decides based on this feeling whether the statement is true. Everything that facilitates the work of the associative mechanism distorts the assessment. Frequent repetition is a reliable way to get people to believe lies, because it is not easy to distinguish between truth and the feeling of something familiar. Authoritarian regimes and marketers have known this for a long time, but psychologists have found that it is not even necessary to repeat the entire statement to be plausible. If you have often heard the words "chicken body temperature", you will more easily accept the statement "chicken body temperature is 62 degrees" as true. If you can't remember how you know it, and can't relate the statement to other known facts, all you're left with is a sense of cognitive ease that you've heard something similar somewhere before. The feeling of "past" indicates to you the presence of a previous experience that did not exist in reality.
mood effect
Good mood, intuition, creativity, gullibility, and increased dependence on System 1 are in the same group. At the other extreme are frustration, vigilance, suspicion, analytic approach, and extra effort. Being in a good mood weakens System 2 control over activity, and people in this state are more prone to logical errors. Such a connection has a biological meaning: a good mood is a signal that in general everything is going well, the environment is safe, the defense can be weakened. A bad mood is a sign that the situation is not very good, there may be a threat, vigilance is required. So be careful about making responsible decisions if you wake up in a good mood in the morning.
halo effect
If you like the president's politics, you probably also like his looks and voice. The tendency to see well (or badly) everything about a person, including things you haven't seen, is called the halo effect. This is another way in which System 1 generates a representation of the world around it, simplifying it and making it more logical than it really is. Information about the subject accumulates gradually, and their interpretation is determined by the emotion associated with the first impression. The halo effect increases the power of first impressions, sometimes to such an extent that the rest of the information is almost completely lost.
In a normal state, your mind has intuitive feelings and opinions about almost everything that you encounter.
For getting useful information from multiple sources, their independence from each other should be ensured. It is because of this that the police do not allow witnesses to the incident to discuss it with each other before testifying - they are afraid that they will influence each other's opinion and start making the same mistakes. The principle of independence of judgment can be successfully used by company leaders during meetings. All participants must write down summary their point of view before discussion, then the diversity of knowledge and opinions within the group can be effectively used. In a standard open discussion, too much weight is given to the opinions of those who speak earlier and more convincingly than others.
What you see is what it is
System 1 does a great job of building the best possible story that includes the currently activated ideas, but leaves out the information it doesn't have. The measure of success for System 1 is the integrity of the history created, and the quantity and quality of the data on which it is based do not really matter. It works as a mechanism for jumping to conclusions. Consider the following: “Will Mindik be a good leader? She is smart, strong…” The answer quickly came to your mind: “Yes.” You've chosen the best option based on the limited information available, but you're in a hurry. What if the next two adjectives turned out to be “corrupt” and “cruel”? Your mistake is that you did not ask yourself the question: “What do I need to know in order to form my opinion about the quality of leadership?” When you turn to System 2, you start looking for information that you do not have, rather than building a story based on sketchy facts.
AutoCorrect
In a normal state, your mind has intuitive feelings and opinions about almost everything that you encounter. You just somehow feel that you don’t like the person, although you don’t know him well, that the business will be successful, although you haven’t gone into his analysis yet. There is an explanation for how we generate intuitive opinions on complex issues. If a difficult question is not quickly answered satisfactorily, System 1 looks for an easier related question and answers it (assuming that it has found the answer to the first question). For example, the question “How much are you willing to donate to save an endangered species?” is replaced by the question "What emotions do I feel when thinking about dying dolphins?". The question "How happy are you lately?" - to the question "What is my mood now?". “How popular will the president be in six months” to “How popular is the president now?”
Lucky case
Associative mechanisms look for causes. Our tendency to think causally generates serious errors in assessing the randomness of truly random events. For example, let's take the sex of six babies born in the hospital one after the other. The sequence of appearance of boys and girls is completely random, these events are independent. However, it will seem less likely to you that 6 girls were born in a row than that boys and girls were born equally. We are looking for patterns everywhere and do not expect a random process to lead to regular results.
If it's important to you to appear smart and trustworthy,
do not use complex words in cases where simple ones are sufficient
This is the basis of the belief of many coaches and fans that sometimes players have a “light hand”: if he scores three or four goals in a row, there is a casual belief that he will continue to play more successfully than others. The statistics refute this. The illusion of regularity affects us outside of games as well: How many good deals does your financial advisor need to close before you think he's extraordinarily effective? How many successful deals will convince the board of directors that the CEO has talent for management? Following your intuition, you will more often perceive a random event as a natural one.
Imaginary persuasiveness
Suppose you want readers to believe what you write. The main thing is to reduce cognitive tension in any way, so to begin with, it is worth doing everything possible to increase readability: choose quality paper, a clear font, use bright blue or red letters, and in no case pale shades of green, yellow or blue. If it's important to you to appear smart and trustworthy, don't use complex words in cases where simple ones will suffice. Dressing familiar thoughts in pretentious words is considered a sign of low intelligence and low reliability of information. So, companies with pronounceable names feel better in the market in the first week after the release of shares. One study shows that investors expect higher returns from stocks with easy-to-pronounce names like "Emmy" than from stocks with awkward names like "Geberite."
If you can, express your thoughts in the form of verses, then they will be more easily perceived as the truth. The expression "Grief together - fight less" seems deeper than "Grieve together - fight less." If you are quoting someone, choose sources with simpler titles. We all spend the bulk of our lives guided by System 1 impressions and often do not know where they come from. How do you know the statement is true? If it links logically and associatively with your other beliefs, or comes from a source you trust, you will feel cognitive ease. The problem is that there may be other reasons for lightness, including the type of type and the attractive rhythm of the prose, and you do not simple ways trace the source of your feelings.
Psychologist Daniel Kahneman is one of the founders of psychological economics and perhaps the most famous researcher on how a person makes decisions and what errors based on cognitive distortions he makes while doing so. For his study of human behavior under uncertainty, Daniel Kahneman received the 2002 Nobel Prize in Economics (this is the only time that a psychologist has won the Nobel Prize in Economics). What did the psychologist manage to discover? Over the many years of research that Kahneman conducted with his colleague Amos Tversky, scientists have found out and experimentally proved that human actions are guided not only and not so much by the mind of people as by their stupidity and irrationality. .
And with this, you see, it is difficult to argue. Today we bring to your attention 3 lectures by Daniel Kahneman, in which he will once again go through the irrational human nature, talk about cognitive distortions that prevent us from making adequate decisions, and explain why it is not always worth trusting expert judgment.
Daniel Kahneman: "The Mystery of the Experience-Memory Dichotomy"
Using examples ranging from our relationship with vacations to our colonoscopy experience, Nobel laureate and founder of behavioral economics Daniel Kahneman demonstrates how differently our experiencing self and our remembering self experience happiness. But why is this happening and what are the consequences of such a splitting of our “I”? Find the answers in this lecture.
Now everyone is talking about happiness. I once asked one person to count all the books with the word "happiness" in the title published in the last 5 years, and he gave up after the 40th, but of course there were even more. The rise in interest in happiness is huge among researchers. There are many tutorials on this subject. Everyone wants to make people happier. But despite such an abundance of literature, there are some cognitive distortions that practically do not allow you to think correctly about happiness. And my talk today will be mainly about these cognitive traps. This also applies ordinary people who think about their own happiness, and to the same extent scientists who think about happiness, since it turns out that we are all equally confused. The first of these pitfalls is an unwillingness to admit how complex the concept is. It turns out that the word "happiness" is no longer such a useful word, because we apply it to too many different things. I think there is one specific meaning that we should limit ourselves to, but, by and large, this is something that we will have to forget about and develop a more comprehensive view of what well-being is. The second trap is the confusion of experience and memory: that is, between being happy in life and feeling happy about your life or feeling that life suits you. These are two completely different concepts, but both of them are usually combined into one concept of happiness. And the third is the illusion of focus, and it's a sad fact that we can't think of any circumstance that affects our well-being without distorting its significance. This is the real cognitive trap. And there is simply no way to get it all right.
© TED conferences
Translation: Audio Solutions Company
Read related material:
Daniel Kahneman: "A Study of Intuition" ( Explorations of the Mind Intuition)
Why does intuition sometimes work and sometimes not? Why do most of the experts' forecasts fail to come true, and is it possible to trust the experts' intuition at all? What cognitive illusions interfere with making an adequate peer review? How does this relate to the specifics of our thinking? What is the difference between "intuitive" and "thinking" types of thinking? Why can intuition not work in all areas of human activity? Daniel Kahneman talked about this and much more in his video lecture Explorations of the Mind Intuition.
*Translation starts at 4:25 minutes.
© Berkeley Graduate Lectures
Translation: p2ib.ru
Daniel Kahneman: "Reflections on the Science of Well-Being"
Extended version of Daniel Kahneman's TED talk. The public lecture given by the psychologist at the Third International Conference on Cognitive Science is also devoted to the problem of two "I" - "remembering" and "real". But here the psychologist considers this problem in the context of the psychology of well-being. Daniel Kahneman talks about modern research on well-being and the results that he and his colleagues have been able to get in recent times. In particular, he explains what factors subjective well-being depends on, how our “real self” affects us, what the concept of utility is, on which decision-making depends, how much the assessment of life affects experienced happiness, how attention and pleasure are interconnected, that we experience from something, and how much do we exaggerate the importance of what we think about? And, of course, the question of what significance the study of experienced happiness has for society does not go unnoticed.
People are stupid.
For this discovery, an Israeli scientist, Daniel Kahaneman, who works in, you guessed it, in the United States, received the Nobel Prize in Economics for 2002.
(However, this does not apply to you, dear reader. This is about others. :)
Through a series of precise scientific experiments, Kahneman was able to prove that most people do not use common sense in their daily lives. Even professors of mathematics in ordinary life rarely resort to elementary arithmetic operations.
Kahneman for the first time managed to introduce the concept of the human factor into the economy, to combine psychology and economics into a single science. Before him, economists wondered why the models they calculated give sudden failures, why do people behave differently from what they should be according to theory? Why does the stock exchange suddenly fall or why do people suddenly rush to the bank to withdraw deposits, change one currency for another?
The most interesting thing is that the Nobel Prize winner in economics has never studied economics, but has been studying psychology all his life. In this case, the psychology of choosing everyday economic decisions.
All economists before Kahneman, starting with Adam Smith, made the same mistake - they assumed that a person is guided by elementary logic and his own benefit - he buys where it is cheaper, works where he pays more, from two goods of the same quality he will choose the one that which is cheaper.
Kahneman's research has shown that things are not so simple. People don't seem to want to think. They are guided not by logic, but by emotions, random impulses; what you heard yesterday on TV, or from a neighbor, established prejudices, advertising, etc.
Here is an example. It turns out that if you lower the price, then the goods will not necessarily begin to sell out faster. Some will think that this is just a markdown of the goods due to poor quality. The same thing - if the price is increased, people will think that they are being offered a better product than before.
Economists before Kahneman naively believed that if a pieceworker were to get a higher rate, he would do a better job. It turns out that not always. Some - yes, really better. Others are the same: why give all the best if, with the same productivity, they will still receive more than before? Still others will work more slowly in order to get the same amount as before, with less labor.
The reasoning of economists before Kahneman resembled the reasoning of scientists before Galileo. Indeed, for thousands of years, all great minds have assumed that a heavy object dropped from a height will reach the ground faster than a light one. Children today think so too. This has been accepted for thousands of years, and it never occurred to anyone before Galileo to verify it. Imagine Galileo's surprise when he found that a wooden and iron ball dropped from the Leaning Tower of Pisa reach the ground in the same time.
So, according to Kahneman, in their daily lives people are not guided by elementary logic and elementary arithmetic.
I decided to check it out. Go, so to speak, along the path of Galileo.
Jerusalem street Agripas. On one side is Mahane Yehuda Bazaar. On the other side are a number of shops.
The shop sells eggs. A pack of 10 eggs costs 12 shekels.
Opposite, in the bazaar, they also sell eggs. A pack of 30 eggs costs 18 shekels.
The task for a first grade student is that an egg costs 1.20 in the store and 0.60 in the market. Exactly two times cheaper. Buying one tray of eggs in a store, a person loses 6 shekels. Buying two trays - 12.
I stood at the store and asked the same question to those who bought eggs - why did you do this? Can't you see it's half the price across the road?
The answers were distributed as follows:
1. Fuck you... - 75%
2. What's your business? Where I want, I buy there - 75%
3. Store-bought eggs are better. (Eggs are the same, I checked) - 8%
4.Yes, what's the difference? Will I be petty? - 6%
5. I always buy everything in this shop. It's more convenient for me - 9%
The fact that the answers add up to more than 100% means that one person could give more than one answer.
To the persons who answered under item 4, I suggested:
- By buying two trays of eggs in the store, you lost 12 shekels. If this amount does not matter to you, give me the same amount. The answer to this proposal - see paragraph 1
Here are more examples that, from my point of view, confirm Kahneman's theory.
A man goes to a restaurant and pays 100 shekels for a steak. Whereas a kilo of exactly the same steaks in the store costs 25 shekels. Five pieces. The difference is 20 times! The purchased steak only needs to be put in the oven. For many, this seems to be too much work. People stand in line at the restaurant. And from this restaurant they take out food in trays to a free canteen across the street. Where everything is given for free...
Kahneman is right.
It turns out that the joke is: “Did you buy this tie for $100? Idiot, around the corner are the same for 200!” - has a completely accurate economic justification. People assume that if a product is more expensive, then it is better.
The man wants to get rid of money. And he goes to a restaurant where a stranger will bring him food prepared from unknown products in an unknown way by another unknown person who does not know the tastes and requests of the client. For this, he will pay 10 times more than the products cost, and he will still be rude.
The restaurant is a place of economic and culinary hooliganism. The task of the restaurant is to "unwind" the client. Therefore, in the restaurant kitchen, the most uneconomical and harmful methods of cooking are used. The main thing is that the dish looks beautiful when served. Although in a second all this beauty will disappear.
At the exit from the supermarket, they sell hot sausages for 5 shekels a piece, which inside the same market cost 10 shekels for 20 pieces. 10 times difference!
Isn't Kahneman right?
The best psychologists of the world are racking their brains over how to hand over to a person what he does not need. 98% of Pepsi-Cola's turnover goes to advertising. A person does not buy sweet syrup, but a lifestyle that has been hammered into his head.
A watch for 50 shekels shows the time exactly the same as for 10 thousand. A person does not buy a watch, a suit, furniture - he buys self-respect.
Kahneman is right. For some reason, people do not want to recognize simple and obvious things:
All kinds of parties, "Forums" and "Associations of aid" help only those who create them and work in them. For this they are created.
Here simple rules for those who do not want to be deceived (I understand that thousands of agents of various firms who earn a living by hard work may be offended by me) ...
Anyone who calls you or stops you on the street hoping to sell you something is a scammer.
Anyone who tries to enter your house in the hope of selling you something is a scammer.
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