Hindsight bias reflects your tendency to view the outcome of an event as inevitable. It’s your belief you could have accurately predicted an outcome after knowing what the outcome is. A few years ago I had the worst night of camping of my life. We arrived at Lopez Island, off the coast of Washington state, […]
6 psychological tactics behind the Starbucks menu
The menu at Starbucks is designed with one thing in mind: to make you feel better about buying coffee at Starbucks. And it doesn’t hurt if it gets you to spend a little more—while making you feel like you spend less. There are lots of ways Starbucks gets you to do this. Among the more […]
The center stage effect: this is why you choose the product in the middle (even if it’s bad)
The center stage effect describes your tendency to choose options in the middle of a choice set. In some cases, these choices are low-risk: which route you drive to work, which pen you pull from the drawer. The center stage effect also influences which products you buy, which students you call on in class, or […]
The decoy effect: Why you make irrational choices every day (without even knowing it)
The decoy effect describes what happens when, while choosing between two items, a third item is introduced that causes you to switch your preference between the first two items. A few weeks ago, I was at a clothing store trying to decide between two shirts. I liked the way one shirt fit, but I liked […]
Why you spend more when prices end in .99
I once worked at a company that priced everything with a .95 ending. The bestselling software package was $999.95. Add-on products were $9.95, or $19.95, or $49.95. Everything ended with a .95. It had been this way for more than twenty years. One day, one of the VPs suggested we change all prices to end […]
Jeff Bezos on the 4 differences between “Day 1” companies and “Day 2” companies
In his recent letter to shareholders, Jeff Bezos explains how he plans to keep Amazon a “Day 1” company. A “Day 1” company is defined by vitality. But a “Day 2” company is defined by “statis… irrelevance… excruciating, painful decline… death.” 1. Focus on customers first. Bezos writes, “You can be competitor focused, you can […]