Why Smart Brains Make Stupid Decisions On Money, Work and Health

It happens. Often.

Why?

We just secured an interview with Ori Brafman, co-author of Sway: The Irresistible Pull of Irrational Behavior (Doubleday Business, 2008), to discuss our Dark Side (well, he calls if "different hidden forces" and "psychological undercurrents").

While reading some reviews about his book, I particularly enjoyed finding, after the usual impressive long collection of endorsements, this "disclaimer":

*DISCLAIMER: If you decide to buy this book because of these endorsements, you just got swayed. One of the psychological forces you'll read about in Sway is our tendency to place a higher value on opinions from people in positions of prominence, power, or authority. (But you should still buy the book.)

Alvaro Fernandez (AF): Ori, what is SWAY? can you give us a couple quick examples?

Ori Brafman (OB): Sway is about why perfectly rational people make irrational choices. We interviewed business executives, airline pilots, doctors, and even a Supreme Court Justice to uncover the psychological forces that affect our decision-making. What was especially interesting was to find out that we all get swayed, and that these psychological forces are much more ubiquitous than we thought.

Take, for instance, the story of Jacob Van Zanten who was the head of safety for KLM. One foggy afternoon, Van Zanten took off without getting tower clearance, causing the biggest airline accident in history. Why would this man, who's the head of safety make such an irrational choice?

Or look at the story of Harvard Business School students who paid $204 for a twenty-dollar bill.

AF: Happy to have attended Stanford... Now, how did that happen?

OB: The professor set up an auction for a $20 bill. But there was a twist. The winner would get the $20 bill. But the second place bidder, would still have to honor his bid, but would get nothing. At first there are lots of bidders, but then as the bidding approaches $20 people start pulling out. Inevitably, though two people stay in. As the bidding continued to rise, the second-place person became determined to not be the sucker who pays good money for nothing in return. The amazing thing is that time after time the auction continues well past the $20 point. People are just so determined not to lose, that they keep on bidding up.

AF: Why do people get Swayed?

OB: Without realizing it, we get swept up by a host of different hidden forces. I think of it like being in a boat in the middle of the ocean. It may look like we're standing still, but underneath the surface, undercurrents move us without us realizing it. The same thing happens with psychological undercurrents. In Sway, we look at some of the major undercurrents and explore how they intersect triggering so many different irrational behaviors. The thing is that we're prone to psychological sways all of the time--whether we're conducting a job interview, going out on a first date, or deciding whether to sell a stock.

AF: Let's be practical for a minute... what can people do to Sway other people?

OB: We're constantly engaged in a hidden dance of sorts where we sway people around us and are swayed by others. One of the most unusual studies we encountered has to do with what we call the chameleon effect. In the study, a group of men and women--who had never met each other--were told to have a short phone conversation. Now, before the conversation, each man was shown a picture of the woman he'd be talking to. Unbeknownst to the men, the pictures were fake. And half the men were shown a picture of a beautiful woman, while the other half were shown a picture of a less attractive woman. The pictures had nothing to do with how the real women looked like, and the real women had no idea that there were any pictures shown. The kicker is that the women who the men thought were pretty ended up sounding beautiful on the phone. And the women who the men thought were less attractive ended up sounding less beautiful. We take on the roles others ascribe to us. Think about that with employees or even with your kids. If we think someone is smart, there's a good chance they'll live up to that role.

AF: And what can people do to prevent being Swayed?

OB: The biggest step is to recognize how often we get swayed. We have a tendency to think that our decisions are rational, when in fact, different sways may have informed the decision. Once we realize that we're prone to get swayed, the second step is figuring out specific strategies to counter the sway. It ranges from taking a long-term perspective to using empirical models for job interviews.

AF: For example?

OB: We have a propensity to "diagnose" a job candidate from the first moment we meet him or her. We assign a diagnosis, and are unable to see things in a different light despite objective evidence to the contrary. It's for this reason that job interviews are terrible predictors of actual performance. A much more effective approach is to conduct very structured interviews that don't allow managers to get swayed. In these interviews, the questions are pre-scripted and focus on experience and ability rather than vague things like "what's your biggest strength?" We call these the Joe Friday interview (just the facts...) These interviews may seem less personal, but they're actually much more effective for actually selecting a good candidate.

AF: Ori, thank you very much for your time.

OB: My pleasure!

Alvaro Fernandez is the CEO and Co-Founder of SharpBrains.com, which reviews resources to test your brain and provide cognitive exercise. SharpBrains has been recognized by Scientific American Mind, Newsweek, Forbes. Alvaro holds MA in Education and MBA from Stanford University, and teaches The Science of Brain Health at UC-Berkeley Lifelong Learning Institute.