Ask Ariely: Firing Failures, Deceptive Deals, and Noisy Neighbors

Here’s my Q&A column from the WSJ this week  and if you have any questions for me, you can tweet them to @danariely with the hashtag #askariely, post a comment on my Ask Ariely Facebook page, or email them to AskAriely@wsj.com.

______________________________________________________

Dear Dan,

Is it smart to fire someone for failing? We often hear about politicians, generals and executives who blow it and then lose their jobs, but how can anyone gain experience if failure means their dismissal?

—Danny 

This problem is worse than you might think. Organizations that don’t tolerate failure not only stop their employees from learning from their mistakes but also create a risk-averse culture that fears trying anything new. A related problem is that organizations generally reward (and punish) people based on the outcomes of their decisions, not on the quality of their decisions. In general, you’d hope that good decisions would lead to good outcomes, but that causal link rests on probabilities, not certainties—so reward and punishment are often misapplied. Imagine, for example, the manager of a chain of seafood restaurants who invested in five new branches along the Gulf Coast—six months before the BP Deepwater Horizon oil spill. The chain lost money, its share value plummeted, and the manager got sacked. But should he have been? What if the manager had meticulously analyzed the market and made the best decision given the information available at the time? Should the company have punished him—or rewarded him for making a sensible, thorough decision? Obviously, we should reward and retain people who know how to make good decisions, but most of the time, we just reward good outcomes. As long as organizations behave this way, we will be stuck with conservative, risk-avoiding behavior, and we will keep firing some of the wrong people.

______________________________________________________

Dear Dan,

My son wants a Nerf football. I found a real bargain online—just $2.50 on Amazon, but with a $7.50 shipping charge. The combined price of $10 is a really good deal, but paying three times as much for shipping as for the product itself seems like a rip-off. I know that what really matters is the total amount paid, but I somehow feel that the cost of delivery ought to matter too. Am I being irrational?

—Fay 

This is exactly why Amazon introduced Amazon Prime back in 2005. For only $99 a year, you get “free” shipping on your orders.  Of course, the shipping isn’t really free, but it gives you the feeling that you aren’t paying for it. One other clever aspect of Amazon Prime is that once you have paid for it, every additional purchase on Amazon further amortizes your investment, thereby helping you further justify your initial decision.

______________________________________________________

Dear Dan,

A friend of mine and her husband live in an apartment building, and their upstairs neighbors often have noisy sex between 3 and 8 a.m. My friend’s husband has no problem sleeping through the raucous romping, but my friend is being woken up every night. Should she let her neighbors know that their early morning love sessions aren’t as private as they might think (without embarrassing them or herself) so she can get her beauty sleep again?

—Kim

Maybe she could start with a compliment, explain the problem and offer a solution. How about, “I’m very impressed with your level of energy during the early hours of the day. How do you stay so passionate after so much time together? I’m a bit jealous.  And by the way, we got a heavy carpet for the bedroom to help give us more privacy.”

See the original article in the Wall Street Journal here.