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Reflections on Sway December 7, 2009

Posted by allenb120 in Sway: Pull of Irrational Behavior.
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I really enjoyed Sway: The Irresistible Pull of Irrational Behavior by Ori Brafman and Rom Brafman.  I thought it was easy to read and conveyed useful information to identify various psychological factors in decision making and possible solutions.  However, it seemed to rely too much on anecdotes. The thesis is that psychological factors can cause people to take irrational actions, but that recognition and corrective action can overcome the effects of these irrational psychological factors.  The psychological factors the authors discuss are loss aversion, commitment bias, value attribution, diagnosis bias, fairness and peer pressure.

Loss Aversion is the tendency to go to great lengths to avoid possible losses.  The authors note that people have much stronger reactions to losing $1,000 than winning $1,000 and that loss aversion increases the more that is at stake.  One example of loss aversion discussed is buying rental car insurance.  The authors note that this behavior is irrational because a standard car insurance policy would cover rental cars as well.  However, faced with the uncertain expense of a catastrophic car accident many people buy rental car insurance anyway.  Another example mentioned is buying flat rate phone service as most people would have saved money by paying a per minute charge.  However, faced with the possibility of an excessive phone bill, most people play it safe and buy a flat rate service.  People could have saved the additional expense in these situations by stepping back and asking whether the additional expenses are justified.

Another irrational behavior discussed is diagnosis bias.  This bias is a blindness to all evidence that contradicts an initial assessment of a person or situation.  Bias makes first impressions as well as brand very important and can skew our judgment.  The authors noted a study of NBA players that found a player’s position in the NBA draft selection had a greater impact on the player’s playing time, trade prospect and length of career than points per minute or other performance measures.  Someone can counteract the effect of this bias by being open, observant and withholding judgment until necessary.

In terms of the goals our course, I think this book could apply to the “observation” and “solution” parts of the Innovation Process outlined in the Beckman and Barry article by helping the observer understand personal biases of the observer and the observed as well as by helping frame better solutions through taking into account how psychological factors may influence the implementation and acceptance of new ideas.  As a general matter I felt that the lessons of the book fit into the Assumptions and Mental Models component of the course.

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