Everything Is Obvious_ _Once You Know the Answer - Duncan J. Watts [20]
Our responses can also be skewed by the presence of irrelevant numerical information. In one experiment, for example, participants in a wine auction were asked to write down the last two digits of their social security numbers before bidding. Although these numbers were essentially random and certainly had nothing to do with the value a buyer should place on the wine, researchers nevertheless found that the higher the numbers, the more people were willing to bid. This effect, which psychologists call anchoring, affects all sorts of estimates that we make, from estimating the number of countries in the African Union to how much money we consider to be a fair tip or donation. Whenever you receive a solicitation from a charity with a “suggested” donation amount, in fact, or a bill with precomputed tip percentages, you should suspect that your anchoring bias is being exploited—because by suggesting amounts on the high side, the requestor is anchoring your initial estimate of what is fair. Even if you subsequently adjust your estimate downward—because, say, a 25 percent tip seems like too much—you will probably end up giving more than you would have without the initial suggestion.12
Individual preferences can also be influenced dramatically simply by changing the way a situation is presented. Emphasizing one’s potential to lose money on a bet, for example, makes people more risk averse while emphasizing one’s potential to win has the opposite effect, even when the bet itself is identical. Even more puzzling, an individual’s preferences between two items can be effectively reversed by introducing a third alternative. Say, for example, that option A is a high-quality, expensive camera while B is both much lower quality and also much cheaper. In isolation, this could be a difficult comparison to make. But if, as shown in the figure below, I introduce a third option, C1, that is clearly more expensive than A and around the same quality, the choice between A and C1 becomes unambiguous. In these situations people tend to pick A, which seems perfectly reasonable until you consider what happens if I introduce instead of C1 a third option, C2, that is about as expensive as B yet significantly lower quality. Now the choice between B and C2 is clear, and so people tend to pick B. Depending on which third option is introduced, in other words, the preference of the decision maker can effectively be reversed between A and B, even though nothing about either has changed. What’s even stranger is that the third option—the one that causes the switch in preferences—is never itself chosen.13
Illustration of preference reversal
Continuing this litany of irrationality, psychologists have found that human judgments are often affected by the ease with which different kinds of information can be accessed or recalled. People generally overestimate the likelihood of dying in a terrorist attack on a plane relative to dying on a plane from any cause, even though the former is strictly less likely than the latter, simply because terrorist attacks are such vivid events. Paradoxically, people rate themselves as less assertive when they are asked to recall instances where they have acted assertively—not because the information contradicts their beliefs, but rather because of the effort required to recall it. They also systematically remember their own past behavior and beliefs to be more similar to their current behavior and beliefs than they