Switch - Chip Heath [126]
In 1954, the economist L. J. Savage described what he perceived as a basic rule of human decision-making. He called it the “sure-thing principle.” He illustrated it with this example: A businessman is thinking about buying a piece of property. There’s an election coming up soon, and he initially thinks that its outcome could be relevant to the attractiveness of the purchase. So, to clarify his decision, he thinks through both scenarios. If the Republican wins, he decides, he’ll buy. If the Democrat wins, he’ll do the same. Seeing that he’d buy in either scenario, he goes forward with the purchase, despite not knowing the outcome. This decision seems sensible—not many people would quibble with Savage’s logic.
Two psychologists quibbled. Amos Tversky and Eldar Shafir later published a paper proving that the “sure-thing principle” wasn’t always a sure thing. They uncovered situations where the mere existence of uncertainty seemed to alter how people made decisions— even when the uncertainty was irrelevant to the outcome, as with the businessman’s purchase. For instance, imagine that you’re in college and you’ve just completed an important final exam a couple of weeks before the Christmas holidays. You’d been studying for this exam for weeks, because it’s in a subject that’s important to your future career.
You’ve got to wait two days to get the exam results back. Meanwhile, you see an opportunity to purchase a vacation during the holidays to Hawaii at a bargain-basement price. Here are your three options: You can buy the vacation today, pass on it today, or pay a five-dollar fee to lock in the price for two days, which would allow you to make your decision after you got your grade. What would you do?
You may feel some desire to know the outcome of your exam before you decide, as did the students who faced this choice in the original experiment. So Tversky and Shafir simply removed this uncertainty for two groups of participants. These groups were told up front how they did on the exam. Some students were told that they passed the exam, and 57 percent of them chose to go on the trip (after all, it makes for a good celebration). Other students were told that they failed the exam, and 54 percent of them chose to go on the trip (after all, it makes for good recuperation). Both those who passed and those who failed wanted to go to Hawaii, pronto.
Here’s the twist: The group of students who, like you, didn’t know their final exam results behaved completely differently. The majority of them (61 percent) paid five dollars to wait for two days. Think about that! If you pass, you want to go to Hawaii. If you fail, you want to go to Hawaii. If you don’t know whether you passed or failed, you … wait and see? This is not the way the “sure-thing principle” is supposed to behave. It’s as if our businessman had decided to wait until after the election to buy his property, despite being willing to make the purchase regardless of the outcome.
Tversky and Shafir’s study shows us that uncertainty — even irrelevant uncertainty—can paralyze us. Another study, conducted by Shafir and a colleague, Donald Redelmeier, demonstrates that paralysis can also be caused by choice. Imagine, for example, that you are in college and you face the following choice one evening. What would you do?
Attend a lecture by an author you admire who is visiting just for the evening, or
Go to the library and study.
Studying doesn’t look so attractive compared with a once in a lifetime lecture. When this choice was given to actual college students, only 21 percent decided to study.
Suppose, instead, you had been given three choices:
Attend the lecture.
Go to the library and study.
Watch a foreign film that you’ve been wanting to see.
Does your answer differ? Remarkably, when a different group of students were given the three choices, 40 percent decided to study — double the number who