Dan Ariely's Ira Sohn Presentation on Psychology ~ market folly

Wednesday, May 16, 2012

Dan Ariely's Ira Sohn Presentation on Psychology

We're posting up notes from the Ira Sohn ConferenceDan Ariely, Professor of Psychology at Duke University gave a presentation on loss aversion, regret, and various psychological topics.

Had extreme burn injuries in college. Researched pain, and became a behavioral scientist. Wrote the book "The (Honest) Truth About Dishonesty. Self control problems. Example only have $3 per day to motivate people to take their medicine.

Loss aversion: people hate losing more than they value gaining. People also love lotteries. They are motivated by 10% chance to win $30

Regret: Miss flight by 2 minutes or 2 hours? Two minutes is much more annoying, because you can imagine many ways to how you could have made it. Silver medal winners were most upset, because they could have made gold. Bronze, happy just to be there.

How to use regret? Give everyone a lottery ticket, whether you took medicine or not. Then, tell them they won, but since they didn't take their pill, they don't get paid. Wow- compliance goes up from 30% to 60%

Other ways to motivate, if they show up on time, they keep their deposit. Two thoughts: 1. To fight lack of self control, you need to change the environment  2. How do we create mechanisms to help us overcome our own limitations?


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.


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