Transcription
I recently read another book on psychology called The Art of Thinking Clearly by Rolf Dobelli and learned seven amazing psychological facts about human behavior that causes us to make really dumb decisions. These are the decisions you look back and say, "How could I be so blind and not see that? What was I thinking? How could I trust him?" I believe that understanding these psychological traps will help you to make high-quality decisions, whether it's with your money, job, business, or day-to-day things. So, let's get started.
Tip number one: Zygarnic effect. A group of university students and professors visits a restaurant in Berlin. The waiter takes order upon order, including special requests, but does not write anything down. Against all odds, after a short wait, everyone receives exactly what they ordered. "That waiter has an impressive memory," they think. Later, after they've left the restaurant, one of the students notices that she has left her scarf behind in the restaurant. She goes back in, finds the waiter with the incredible memory, and asks him if he has seen it. He stares at her blankly. He has no idea who she is or where she had been sitting. When she sounds a little offended, the waiter replies, "I keep every order in my head until it's served." The student in question is Russian psychology student Bluma Zygarnik. She later found out that most people function more or less like that waiter, and this behavior was called the Zygarnik effect. It states that incomplete tasks tend to remain in our consciousness. On the other hand, once we've completed a task and checked it off our mental list, it's erased from memory. If you've ever had to study for a difficult test and forgot everything you studied as soon as you left the exam, you know exactly what I mean. The good news is that our brain is very efficient in forgetting all the things it believes we won't need anymore. The bad news? Unfinished business takes up a large chunk of our energy. So, what can you do to get rid of it? Further research proved to Zygarnik that it's not necessary to complete tasks to erase them from memory. Though, a good plan of action is enough, one that allows you to relax knowing that whatever it is you have to do is covered. Clear your head by carrying a small notepad with you. Every time you remember something you need to do, jot it down, and if possible, also write how you plan to tackle the task. This will bring your focus back to the present. Check items off your to-do list if you had a productive day. This will make you feel like a burden was taken from your back. It will also help you feel energized and improve your health. Stop the urge of reading emails if you are not going to respond to them. I am sometimes guilty of this. I see an email coming and I jump to read it. Even if I say I will respond later, it still stays in my mind and wastes energy.
Number two: Illusion of averages. Here's a hypothetical situation. Let's say you run a small private bank that manages the money of wealthy individuals. Two money managers, A and B, report to you. Money manager A manages the money of a few ultra-high-net-worth individuals. Money manager B has rich but not extravagantly rich clients to deal with. The board asks you to increase the average pool of money of both A and B. Where do you start? It's quite simple, actually. You take a client with a sizable but not huge pool of money from A and give it to B instead. In one movement, this brings up A's average managed wealth as well as B's, without you having to find a single new client. Here's another experiment that can prove to you that averages are illusions and shouldn't be trusted. Suppose you and your two best friends are in a car. You make $10,000 a month, and one of your friends makes $5,000, and the other one makes an impressive salary of $15,000 a month. That means that the average salary in the car is $10,000, which is not about average at all. Now, suppose your friend stops to give his friend a ride, and his friend is no one but Bill Gates. What can you tell me about the average salary in the car now? So, the conclusion is this: be alert if you're an investor or a board member, and all the numbers you get about the company are averages. Depending on the size of the sample, it might mean nothing at all.
Number three: Chauffeur knowledge. After Max Planck received the Nobel Prize in Physics, he went on tour across Germany delivering lectures about quantum mechanics. Every time, he delivered the exact same lecture, as if he were reading from a script. His chauffeur, who accompanied him in each of those lectures, came to know his lecture by heart and offered him a deal. He said, "It has to be boring giving the same speech each time, Professor Plank. How about I do it for you in Munich? You can sit on the front row and wear my chauffeur's cap. That'd give us both a bit of variety." Plank liked the idea. So, that evening, the driver held a long lecture on quantum mechanics in front of a distinguished audience. But at the end of the lecture, a physics professor asked him a complex question. Unable to answer, the driver found an interesting way out. He said, "Never would I have thought that someone from such an advanced city as Munich would ask such a simple question. Even my chauffeur can answer it," and asked Professor Plank to answer the question. This amusing story helps us understand the chauffeur knowledge. There is real knowledge, and there is chauffeur knowledge – that is, knowledge from people who don't know much but have learned to put on a show. Maybe they have a great voice, are very eloquent, and are nice to look at. That doesn't mean they have any idea of what they're talking about. Many journalists and politicians fall into this category. But now, with the internet and influencers popping up here and there, it's easier than it has ever been to find chauffeur knowledge, and it's increasingly difficult to separate it from true knowledge. A person who puts up a good show tends to be preferred, even if what they're saying doesn't make a lot of sense. Being aware of chauffeur knowledge helps you in many areas of your life. In your school life, be careful with the teachers who like to entertain more than to explain. Make your research instead of believing everything they say. If you're hiring, remind yourself to test candidates properly for how much they know and their skills in their area, instead of being easily impressed by beautiful and flattering words or groomed appearance. Your company needs know-how more than appearances. Try to see behind the beautiful words of everyone you consider an authority, from your political candidates to the experts you follow on social media. And how do you recognize the difference? True experts recognize the limits of what they know and what they do not know. If they find themselves outside their circle of competence, they keep quiet or simply say, "I don't know." Now, you don't have to be evil-minded to pass chauffeur knowledge ahead. You just need to believe something you've heard or read and feel like you should inform other people about it – a new diet, a news item, a political view, a piece of striking information. How do you not become a reproducer of chauffeur knowledge yourself then? Easy. Stick within your circle of competence. Be very clear to yourself about what you know and can talk and teach about, and what you don't understand enough. Don't be afraid to admit you don't know. Once you understand what kind of knowledge you have, stick to it. It's powerful to play with your circle of competence. That's what guarantees you can win the game.
Number four: Action bias. To explain this bias, let me give you an example of the most popular sport in the world: football. When we have a penalty situation in football, it's the player against the goalkeeper alone. In such cases, since the ball is kicked from very close and there's no aid from other defense players, the ball simply goes straight into the goal, and it usually takes less than 0.3 seconds to get there. 0.3 seconds is not enough time for the goalkeeper to watch the ball's trajectory and make a decision based on facts. If you've watched penalty situations before, you've noticed that the goalkeeper chooses one side and dives to that side – left or right – virtually at the same time as the ball is kicked, hoping to have chosen the right side. The thing is, sometimes the player who kicks the ball might aim for the middle. Right? So, the goalkeeper has the same chances of catching the ball either if they dive to the left or the right, or if they still stand in the middle. But what do they do? They jump. Why? Because it looks more impressive if they move, even if to the wrong side. At least they tried, right? This is the action bias: look active, even if it's no use. We fall for this bias in medicine too. Suppose you're sick, and your doctor has no idea what's going on. Do you prefer the doctor to intervene immediately by prescribing medication or a procedure, or would you rather she waits until she's sure of what the right diagnosis is? Most patients will request medication right away, even if it's not sure it'll help. We humans would rather do anything but sit and wait in the face of uncertainty. So, what can you do when you feel compelled to do something? Resist the urge to act before thinking clearly about your actions. For example, if you have just received some extra money and you want to decide between two types of investment, but neither of them seems interesting to you, maybe it's time to hold back and assess your options. You don't have to act immediately just to avoid inactivity. Who knows? Maybe a third investment option will come up soon, and you'll know it was worth waiting for. Sometimes, no action is the best action.
Number five: Self-serving bias. Please, I want you to close your eyes and try to remember two situations from your past. The first is one test or exam in which you did really well. It can be a school or college exam, or even your driving exam, or a job interview done okay. Now, I want you to recall a situation that is the opposite of that one – a school test you failed, or a school subject you used to hate. I can tell you that I am sure of two things: first, you felt happy when you did well on that test because you felt so prepared and that all your hard work was paying off. Second, you certainly gave yourself some excuse for failing the second test. You told yourself that the test was unfair, or the teacher was an evil person, or that the subject is just too difficult. You've just fallen victim to the self-serving bias. The bias says that we tend to attribute success to ourselves and failures to external factors. All right, maybe you've been away from school for quite some time now, but self-serving bias is still with you. When you make a profit from your stock market investment, you praise yourself for your investing skills. But when your portfolio underperforms, it's because the market is terrible right now. If your marriage is okay, it's because you're a great, loving husband or wife. If it's not okay, it's because your partner hasn't been contributing their share to your relationship. If you often fall victim to this bias, it has terrible consequences that you don't always realize. It prevents you from taking responsibility for the negative events of your life, and if you're not responsible for them, then you're not in control of changing them and making things better. Here are two tips to help you avoid being harmed by self-serving bias: Value honest people. You know that friend who is maybe a little too honest? Keep them around. Keep in mind that honest is different from toxic. Toxic people will project their own flaws onto you. Honest people will be gentle and careful, but will still tell you things you don't want to hear. Remember, you always contribute to every situation you go through. Even if it's only one percent, you have contributed to whatever is going on in your marriage, your career, or your financial investments. First, admit that you've made bad decisions, been too passive, or made a few mistakes. Now, hold yourself accountable so you can learn from negative situations and do better next time.
Number six: Inability to close doors. Some time ago, I realized one of my best friends was juggling three jobs. She taught yoga classes in the morning, had a job as a clinic receptionist in the afternoon, and wrote blog articles in the evening. One day, she mentioned she was thinking about getting a side gig at a gym on weekends. What? I reacted. I tactfully tried to find out if she was struggling financially and if there was anything I could do to help, because that was the only explanation I could think of. After some talking, though, the issue became clear: she was terrified of missing out on opportunities. She said, "What if I stopped teaching yoga and two or three months from now, I find out yoga is my real vocation? What if I give up one of my jobs and find out I'm extremely unhappy without it?" She was not worried about the bills; she just couldn't stand the idea of having to choose. Why? Because choosing one thing meant giving up a thousand others. But if she never made up her mind, all options would remain open. Maybe you've done the same thing before. I know I have, and I can't argue that having more than a few options feels great. The problem is that by not choosing, you dilute your efforts and end up not doing anything properly. My friend wasn't able to dedicate herself adequately to any of her jobs because she was able to give each of them just a small piece of her time and energy. There are no free options in life. Every choice has a price, and it's a price we eventually have to pay. Companies that aim to address all customers end up addressing no one. Authors who write for all audiences end up not being read. Salespeople who chase every single lead close no deals. What can you do? Write down what not to pursue in your life. In other words, be honest with yourself about what you want, but also about what you don't want. This will clear your mind and help you make the right decision about which doors to keep open and which ones to close. Burn your ships. Burning your ships on the things you don't want will allow you to focus on the main goals ahead and make you more productive and happier.
Number seven: Framing. Consider these two statements: A, "The sink is full of dishes." B, "It would be great if you could do the dishes, honey." Which of these sentences do you think has a greater chance of getting your partner to do the dishes? Letter B, of course. In marriage and in other situations too, if a message is communicated in different ways, it will also be received in different ways. This is called framing. Here's an experiment that will help you understand it better. Researchers presented a group of people with two kinds of meat and asked them to choose which was healthier: A, 99% Fat Free, or B, 1% Fat. Can you guess which they picked? Respondents ranked the first type of meat, A, as healthier, even though they were both identical. Even more interesting, when they had to choose between A, 98% Fat-Free, and B, 1% Fat, again, most respondents chose the first option, even though it has a higher fat content. The way the sentence was framed is what affected their choices. Saying "fat-free" with a big number, 99 or 98, in front of it made it seem healthier than focusing on the fat content. It's not what you say, it's how you say it. So, how does knowing that help you make better choices? Always try to realize that whatever you communicate contains some element of framing. If you choose your words carefully, you'll communicate better and reach your communication goals more often. Every piece of information you hear, even if from a trusted or reputable source, is subject to this effect too. So, be careful and analyze the information you receive from different and even opposite perspectives before making important decisions. This is it for this video. I have previously created another video similar to this one based on the same book. If you would like to see that, then check out the video you see on the left side of your screen. And if you would like to see all the psychological books I have summarized, then check out the playlist you see on the right. Thanks for watching.