Prospect theory: How you make decisions when you don’t know the outcome

prospect theory

Every day you make decisions. Sometimes you can predict the outcome. Sometimes not. Sometimes your decisions are binary—this or that—both with positive outcomes. You’re choosing between two wins. Other times, you need to decide to take action--or do nothing. Even the decision not to decide is still a decision. Other decisions are complicated. Like this: … Continue reading Prospect theory: How you make decisions when you don’t know the outcome

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The center stage effect: this is why you choose the product in the middle (even if it’s bad)

center-stage-effect

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 … Continue reading The center stage effect: this is why you choose the product in the middle (even if it’s bad)

The decoy effect: Why you make irrational choices every day (without even knowing it)

Decoy effect - Apple iphone

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 … Continue reading The decoy effect: Why you make irrational choices every day (without even knowing it)