Everything is relative right?  Well, at least in our decision making process that might actually be the case.  Dain Ariely wrote a bestselling book last year called Predictably Irrational in which he described various irrational decision making behaviors that we crazy human beings engage in.  The “predictable” part comes in because these irrational behaviors are consistent and predictable.  We are irrational in truly predictable ways.  I’m going to share some of them with you in a series of articles.

Other than being interesting in their own right, hopefully by being aware of our irrational decision making tendencies we can do a better job of avoiding them.  Maybe we can even use them to our advantage.

One of the behaviors he described really fascinates me.  We humans seem to make choices by comparison shopping.  We have a hard time choosing between dissimilar alternatives, but throw in something to compare one of the choices with, and all of a sudden the decision becomes easy.  Watch out for this one because it affects your purchasing decisions!

Professor Ariely conducted a fascinating experiment with photos of good looking people.  He first collected data on which photos were judged as the most attractive.  Then he picked a couple of evenly rated photos of men who did not look similar to one another and asked people to pick the most attractive of the two choices – A or B.  The results split about evenly.  People had no obvious basis on which to judge one of them more attractive than the other.

Now here is where it gets really interesting.  He “uglycized” one of the photos on his computer and included this less attractive version in the set of alternatives.  People were asked to choose the most attractive from among the original A and B and the less attractive version of A.  Now, the overwhelming majority of people chose A as the most attractive of the three.

From a rational and objective perspective this makes no sense.  Nobody is going to pick ugly A as the most attractive, but the pictures of the original A and B remained unchanged.  A is objectively no more attractive than he was before, but with someone similar to compare him to, he seems to get a lot more attractive than B.  When the photo of ugly B was used instead of ugly A, most people chose B as the most attractive.  The professor suggests you take along a less attractive friend who resembles you in some way when you are trolling for dates

Marketers will use this trick to influence your buying decisions.  It’s called a decoy and it dramatically affects the decisions you will make.  Professor Ariely conducted another experiment based upon a real advertisement.  He saw an advertisement for a subscription to the Economist that had the following three choices:

1. Online version only – $59
2. Print version only – $125
3. Print and online version both – $125

Of course nobody is going to pick the print version only when they can get both for the same price so why include it?  Well it turns out that you include it because it drives most people to pick the most expensive third option.  When Professor Ariely studied the choices people make with these options, 84% chose option 3.  Why?  Because it is an obviously much more attractive $125 choice than option 2.  Irrational maybe, but it works.

What happened when he removed option 2 and presented the following choices?

1. Online version only – $59
2. Print and online version both – $125

Without the decoy option, 68% chose the least expensive online only option.  That’s an amazingly significant difference in behavior.

It seems we are wired to compare things that are easily comparable while avoiding trying to compare things that are not.  It takes a lot of thinking to decide between two good looking but dissimilar looking men, but easy to decide between two who share similar characteristics.  The inclusion of a less attractive alternative increases the absolute attractiveness of a similar choice.   Our brains take the easy way out.

Here are some more examples.  Home bread making machines were not selling when they were first introduced.  Nobody had anything to compare them to so they were not selected.  People chose to buy other appliances with their money where they could comparison shop.  So guess what the manufacturer did to solve the problem?  They introduced a second model that made the same kind of bread but that was much larger and much more expensive.  Magically it seems, the original version started flying off the shelves.  It was a much better alternative than the expensive model.

People will drive 15 minutes out of their way to save $7 on a $25 item, but they will not drive 15 minutes out of their way to save $7 on a $500 item.  If saving $7 is worth a 15 minute drive, it rationally shouldn’t matter how much you are spending in total.  Our brain thinks in relative terms and relative to $500, $7 is a piddling amount.  We are predictably irrational and everything is relative.

This trait in our decision making has enormous consequences and if you can stay aware of it, you are more likely to avoid it.  On the other hand you may be able to take advantage of it in your own marketing efforts.  Now let me think.  Hmm…  Which personal development blogs should I mention right now? 

What do you think?  Leave a comment and join the conversation.