Myth #29: People are rational

People don’t make purely rational decisions based on careful analysis of cost and expected utility, despite what classical economics taught us. Research findings confirm that our decisions are driven more by our emotions than logical and conscious thinking.

However, our irrationality is predictable. Good designers, therefore, can learn about human decision making and go beyond usability to create products that effectively influence our behavior.

 

Neuroscientist Jonah Lehrer argues that people are irrational because our logic is slow and our rational brain is still new and very limited in capacity. It is, as he puts it, “a computer operating system that was rushed to market.” The emotional brain, on the other hand, is really powerful and makes good decisions. That’s why most decisions are made on the emotional level.

8 experiments to prove our irrationality from the books Predictably Irrational and How We Decide:

  • People are bad at comparing things in an absolute way
    In an experiment, participants were asked to choose from differently priced offers. The experimenters found that they can double the “sales” of an expensive offer by simply adding another similarly priced offer that was inferior in quality. This offer was a so called decoy whose only purpose was to influence people to buy the original item.
  • People think in relative terms
    Another experiment shows that people would spend 15 minutes walking to save $7 on an $18 item but wouldn’t take the same 15-minute trip to save the same amount on a $455 item. If people were rational, the price of the item wouldn’t matter to them, only that seven dollars can be saved with a 15-minute walk.
  • Our first experiences become imprinted in our brain
    In an experiment, participants were asked whether they would pay a given price for a specific item. Then the participants were asked to make their own bids on the same item. The experiment found that the participants’ own bids were heavily influenced by the price they first saw: people made higher bids when they saw higher initial prices.
    This is called the anchoring effect.
  • People prefer free offers to better bargains
    People rather take a $10 Amazon gift certificate for free than buy a $20 gift certificate for seven dollars. When Amazon’s French division moved from charging a negligible shipping fee of 20 cents to free shipping, their sales dramatically increased.
    Read more on the power of free.
  • People irrationally overvalue what they own
    We value more what we already own. An experiment showed that basketball fans who owned a ticket to a given game would sell it for about $2,400, though those who didn’t own a ticket would only pay an average of $170 for one.
  • Our prior expectations greatly influence our experiences
    Coke fans like Coke better mainly because of Coke’s brand, not because its taste. Experiments show that more expensive painkillers are more effective than cheaper or discounted ones (because of the placebo effect).
  • We respond differently to a question if it’s worded differently
    People make different choices depending on what the default answer is, or whether the description emphasizes what one can gain or what one can lose.
    This is the effect of framing.
  • We’re impatient
    Analyzing a promotion of actual credit card companies, Lawrence Ausubel found that the majority of people fall for low teaser rates even if the lifetime rate is significantly higher. Another experiment shows that people prefer getting an Amazon gift certificate immediately over waiting 2-4 weeks to get a bigger gift certificate.

Further readings on our irrational behavior:

  • Our beliefs are not driven by facts, rather “our beliefs can dictate the facts we chose to accept” – How facts backfire
  • The order of products in a list has a great influence on our decisions – Order Effect Affects Orders
  • We tend to overestimate the likelihood that big events will happen to us -Over-Estimation of Big, Unlikely Events
  • Our decisions can be easily swayed by the design. Restaurant menus, for example, use many techniques to make us pay more: they list decoy plates on the menus, omit the dollar sign, avoid listing prices in a column, etc. – Menu Mind Games
  • People respond to placebos better and better – Placebos Are Getting More Effective
  • Don Norman advises to “Avoid the engineer’s and economist’s fallacy: don’t reason your way to a solution – observe real people. We have to take human behavior the way it is, not the way we would wish it to be.”
  • … also don’t miss the brilliant TED videos from Dan Ariely: Are we in control of our own decisions? and Dan Ariely on our buggy moral code,
  • and by Dan Gilbert: Dan Gilbert on our mistaken expectations and Dan Gilbert asks, Why are we happy?.

Resources every designer should read:

  • Predictably Irrational – book by Dan Ariely
  • How We Decide – book by Jonah Lehrer
  • Influence – book by Robert Cialdini
  • Sway – book by Ori and Rom Brafman
  • Yes!: 50 Scientifically Proven Ways to Be Persuasive – book by Noah J. Goldstein, Steve J. Martin and Robert Cialdini
  • Neuro Web Design – book by Susan Weinschenk
  • You Are Not So Smart – a brilliant blog dedicated to debunk the misconception that people are rational.
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