Some new studies on power and corruption

Sep 28

John Antonakis and his colleagues just came out with a new paper on power and corruption (and Testosterone). 

Important and fascinating — and for sure worth the 14 min of this video

Ask Ariely: On Technology’s Painless Payment, Email Equilibrium, and TP Tribulations

Sep 27

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


Dear Dan,

Apple recently announced Apple Pay, which will allow iPhone and Apple Watch users to simply wave their gadgets to pay for purchases. How might this technology change our spending habits? Could Apple Pay and other such hassle-free payment mechanisms (such as Amazon’s “1-click ordering”) lead us to spend more—particularly on stuff we don’t need?


The essence of payment is opportunity cost. Every time we face a purchasing decision, we should ask ourselves if getting this one thing is worth giving up the ability to purchase something else, now or in the future.

Different ways of paying make us think differently about those opportunity costs. For example, if we have $20 in cash in our pockets, we will have a hard time not thinking about opportunity cost. If we consider buying a sandwich, we realize that we won’t have money for coffee; if we get a cab, we realize that we won’t have money for dinner. But when we use a credit card or gift certificate, our thinking about opportunity cost will be less natural and prevalent—which means we’re likely to spend more without fully thinking about the consequences.

This is why the general answer to your questions is both yes and no. As you suggest, electronic payment mechanisms can easily lead us to think less about opportunity cost and spend more recklessly. But this doesn’t have to be the case. Electronic payment could be designed in ways that get us to more fully understand our opportunity costs and make more reasonable decisions. Apple Pay and the like could be game-changers, helping us think about our spending much more rigorously than we ever could with cash.

So the questions are: Who is designing these electronic wallets, and for what purpose? Will they be designed to get us to spend more money—or to help us make better decisions? Right now, electronic payments seem to be going down the path of less thinking and more spending—but I hope that at some point, some of the payment companies will change their approach, adopt the perspective of their users and offer electronic payment methods that help us make better financial decisions.


Dear Dan,

How can I tell people who email me that I simply don’t have the time to respond to everyone?


There is a well-known finding that when you ask couples how much each of them contributes to their relationship, the total far exceeds 100%. That is because we see all the things that we do, small and large, but we fail to see all the things that our partner does. The same is true for the people you respond to. They probably see how busy they are, but they have a hard time understanding the demands on your time.

So why don’t you create an automated email response that lists all the demands on your time, including how little time you have for sleep, exercise and your social life? With this kind of information, I hope, the people you email will understand why you can’t help them.

And while you perfect this approach, make sure you also—nicely—make your significant other aware of all the things you’re doing for the household and the relationship.


Dear Dan,

Do people use twice as much single-ply toilet paper as double-ply?


When toothpaste makers started putting a larger hole in the tube’s cap, people started using more toothpaste. That is because we judge the amount of toothpaste we apply largely by the stretch it covers on the toothbrush, not by its thickness or total volume. I suspect that the same principle is at work with toilet paper, which would mean that we judge the amount of toilet paper by its length—and don’t sufficiently adjust our use to take the added thickness into account.

See the original article in the Wall Street Journal here.

My attempts to reduce email overload…

Sep 23

As some of you might know, in addition to the general problem we all have with email overload, my specific issues are exacerbated by my disability (mostly limitations to moving my hands and some pain). I am not pointing my disability out to complain, but I do think that sometimes disabilities can act as a magnifying glass, letting us focus with more intensity on a problem we all have.  And I think that email overload is one of these problems

One of the main reasons for email overload is that email has become the one gateway for many different types of communications. We get email that are quick questions from co-workers, communications with family members and friends, mass communications, things we need to act on now, things that just keep us informed, invitations, discussions, and of course a lot of things we are not interested in.

With these various types of communications flooding one place—our inbox—and often interrupting us throughout our workday, is it any wonder that we feel frustrated and unproductive? That we are developing a collective ADHD, and that people look forward to sitting in an uncomfortable chair for a long time during flights just because there is no internet and no source for distraction (of course more and more flights are losing this advantage).

While complaining about email one day over breakfast with Dominik Grolimund—we came up with one partial solution to this problem: Why not ask the people who write email to be a bit more explicit about the type of email that they are sending and use this classification to redirect the email at the client side?  This way email will will behave differently based on its purpose and origin.

We used me as a case study, Dominik created the system, and I started asking people to email me using by linking to it on my website and using it in my email signature.

Using this system I inform people how I prefer to get my email, I provide links to my online schedule, and I answer some questions I am most often asked. Most importantly, this simple contact form asks those who write me to choose their request type from a menu, the timeframe they want a response by, and if they need a response at all. With this classification system on the front end, my own email makes more sense and is less distracting. In my email client (Apple Mail) I have filters that redirect the email based on these tags and their requested timeframe.  For example, urgent emails appear in red in my inbox, while email that require a response by the end of the week find their way into a folder with that name. This sorting procedure allows me to stop my workday only to deal with important and urgent requests, and keep the rest of the email for the evening, weekend, downtime, and flight delays.

What has been incredibly satisfying about using Shortwhale for a few months is that it improves my use of time and it helps me respond more effectively to more people. After using Shortwhale for a while it was interesting to discover that the number of emails that are tagged “no response necessary” is rather large, and on top of this, I have also learned that a lot of people are happy to wait a week or even a month for an answer. Another feature of Shortwhale is that it allows people to easily create multiple choices within the email, and I find that providing people with this opportunity helps them get right to the point and saves me time.

Underlying all of this is the idea that while we we call a lot of things email, there are, in fact, different types of email and they each serve different purposes. The different types of email have different levels of importance, and we need to figure out how to differentially interact with them if we don’t want to continuously stop everything to check our inbox.

It is true that as it stands now, Shortwhale puts more demands on the sender. However, I think that the gains on the receiver’s side, coupled with the ability to respond quickly more than compensate for this extra initial hassle.

And, if you are under heavy email load, I’d love to hear what you think about this. You can contact me on Shortwhale :)

Ask Ariely: On Staying in School, Balancing School with Family, and Two Things about Consultants

Sep 13

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


Dear Dan,

I am a senior in high school, and I really dislike doing homework. We get a lot of it, and it adds nothing to my education. Writing countless essays for English and doing numerous labs for biology isn’t making me smarter, let alone better in those subjects. Here’s my quandary: I know that doing homework is valuable because it assesses how hard I work in school, which is what universities fundamentally look for in applicants—but I feel that if I really want to educate myself, I should dedicate all my free time to gulping down many books on a wide range of subjects. Should I dedicate myself primarily to school and homework, or should I read as much as possible and absorb information primarily through books?


I believe deeply in trying to find things at which we can excel. We can all read poetry, and many of us can probably write bad poetry. But to be really good, to be a poet, you need to devote a lot of time, read widely, work hard, study things from different angles and (ideally) learn from the best. This is what school should give you. Not every teacher and topic is going to be enthralling—but it is still worth it for the teachers and topics that are. My advice: Stay in school, and try to pick a subject or two that excite you enough that one day, you could become the world’s expert on them.


Dear Dan,

What advice would you—as a university professor who has been teaching for a long time—give to students who are starting the new academic year?


Simple: Keep on investing in your relationships with your family—your parents, of course, but particularly your grandparents.

Here’s why: Most professors discover that family members, particularly grandmothers, tend to pass away just before exams. Deciding to look into this question with academic rigor, Mike Adams, a professor of biology at Eastern Connecticut State University, collected years of data and concluded that grandmothers are 10 times more likely to die before a midterm and 19 times more likely to die before a final exam. Grandmothers of students who aren’t doing so well in class are at even higher risk, and the worst news is for students who are failing: Their grandmothers are 50 times as likely to die as the grandmothers of students who are passing.

The most straightforward explanation for these results? These students share their struggles with their grandmothers, and the poor old ladies prove unable to cope with the difficult news and expire. Based on this sound reasoning, from a public policy perspective, students—particularly indifferent ones—clearly shouldn’t mention the timing of their exams or their academic performance to any relatives. (A less likely interpretation of these results would be that the students are lying, but this is really hard to imagine.)

Kidding aside, social relationships truly are important for our health and happiness, in good times and bad—and fostering them is a wise goal for anyone at any stage of life.


Dear Dan,

Why do consultants always break problems and solutions into three?


When consultants give answers, they often try to strike a delicate balance between making the answer simple (on the one hand) and complete (on the other). I suspect that offering three things to consider strikes this sweet spot.


See the original article in the Wall Street Journal here.

Ask Ariely: On Mandatory Meetings, the Meaning of Free Will, and Macroeconomist Musings

Aug 30

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


Dear Dan,

I’ve been recently been promoted, and I now receive all sorts of requests for activities that have little to do with my love for my job. I recognize the importance of doing things for coworkers and the organization as a whole, but these other activities are taking up too much of my time and making it impossible for me to do my job. How can I set my priorities better? 


Ah yes—the perils of success. Promotions usually sound good, but once we get them, we realize that they come with extra demands and annoyances.  We also don’t seem to remember this lesson from promotion to promotion, so every time, we’re surprised when we discover those extra obligations.

Here’s how I suspect your new life looks. Every day, someone asks you to do something at some point far in the future—say a month from now.  Your calendar looks rather empty, and you say to yourself, “Well, since I’m free then, how can I say no?” But your future is not really going to be free; the details are just not yet on your calendar.  When the day arrives, you have to do all kinds of things that you wish weren’t on your plate. This is a very common problem, but three simple tools can help you better stick to your desired priorities.
First, every time a request comes in, ask yourself what you would do if it was for next week. If you would cancel other things to make time, go ahead and accept—but if you would not prioritize it higher than your other obligations, just say no.
A second tool: Imagine that you are fully booked that day, then try to gauge your emotional reaction to declining the request. If that prospect makes you feel sad, you should accept; if you feel happy at the prospect of getting out of it, turn it down.
Finally, learn one of the most beautiful words in English: “cancel-elation,” the glee you feel when something is canceled. To use this tool, imagine that you accepted this particular request, and it promptly got canceled. If you can taste the joy at the prospect of its being scrubbed, you have your answer.


Dear Dan,

If people make decisions in a way that depends on their environment, does that mean that there is no free will?


Yes and no.  Imagine that every day, I came to your office and covered your desk with doughnuts.  What are the odds that you will not weigh more by the end of the year?  Close to zero, I suspect. Once the environment is set, we are largely helpless, but we don’t have to be tempted by doughnuts every day: We can keep the doughnut peddlers out and otherwise design offices that help us make better decisions. That’s where free will resides—in our ability to design our environment for the better and make the world more compatible with our weaknesses.


Dear Dan,

I’m thinking about investing in real estate. Have we passed the bottom of the market?

I’m happy to speculate about human nature, but predicting market trends should be left to those who divine the future from cards, coffee grounds and crystal balls (and to macroeconomists).  The only interesting thing I can tell you about real estate is that I once met one of the founders of Siri, Apple’s personal assistant, and he told me that he decided to work with Apple when Steve Jobs offered him the most valuable real estate in the world: the button at the bottom of the iPhone.

See the original article in the Wall Street Journal here.

Ask Ariely: On the Bordeaux Battlefield, Irrationality Impact, and Ruminating while Running

Aug 16

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


Dear Dan,

I love eating out, including some wine with dinner—but I can’t tell much difference between different bottles, and I never know which wine to order or how much to spend. When I ask waiters or sommeliers for advice, they often give some flowery descriptions about soil and accents of apricot, but these never help me figure out which wine pairs best with my meal. The whole wine-ordering business makes me feel incompetent and inadequate. Do you have any simple advice for how to order wine?


The first thing to realize when picking from a wine list is that you are in a battlefield. This is a battle for your wallet—a fight between the restaurant, whose interest is to get as much of your money as possible right now, and your savings account. The restaurant’s owners have much more data than you do about how people make their wine decisions, and they also get to set up the menu in a way that gives them the upper hand.

In particular, restaurants know that people make relative decisions: If a place includes some very expensive wines on its list (say, bottles for $200 or more), customers are unlikely to order them, but their mere presence on the list will make a $70 bottle seem much more reasonable.

Restaurants also know that many of us are cheap—but we don’t want to seem cheap, which means that almost no one orders the cheapest wine on the menu. The wine of choice for cheapskates is the second-cheapest wine on the list.

Finally, the restaurants have another weapon in their arsenal: waiters and sommeliers who add to our feelings of inadequacy and confusion and, in the haze of our decision-making, can easily push us toward more expensive wines.

Now that you are starting to think about ordering wine as a battle, or maybe a game of chess, you can think ahead. Perhaps decide in advance to spend up to a certain amount of money on wine. Or tell the waiter that you have a religious rule against spending more than a set sum on wine and ask for a recommendation that would fit within your boundaries.

And if you really want to strike back, inform the waiter that you have allocated a total of $50 for the tip and wine combined—so the more you spend on wine, the less you will leave for a tip. Now let’s see what they recommend.


Dear Dan,

I am convinced that some of our decisions are irrational, but what’s the proportion of irrational decisions?


The right question, I think, isn’t the proportion of irrational decisions but their impact. Think about something like texting and driving—perhaps you do it only 3% of the time, but each of these instances could kill you and other people. So what we really need to ask ourselves isn’t the proportion of our irrational behavior but the extent to which such behavior can harm our lives, the lives of those around us and society in general.


Dear Dan,

I often hear people say that after they go for a run, their minds are clear, and they can focus better on big questions at work. Can this be so? Do we need to exercise to think clearly?


I suspect that running isn’t the best way to clear the mind. In fact, I suspect that running while thinking about work is a recipe for designing products and experiences that enhance agony and misery. Now that I think about it, maybe this was the start of what we know as “customer service” for cable companies.

See the original article in the Wall Street Journal here.

Ask Ariely: On Reservation Reservations and the Psychology of Parking

Aug 02

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


Dear Dan,

I recently went to a restaurant that doesn’t take reservations. The maître d’ told me that the wait would be 20 minutes. Twenty minutes later, he said it would be 15 more minutes—and after that, 10 more minutes. It took just over an hour to get seated. How can I rationally decide when to wait—and when to cut my losses and go to another restaurant?


Let’s start with a basic issue: Are the hosts at restaurants all over the world lying on purpose about the wait, or are they simply (like most of us) overly optimistic about time? It’s tempting to suspect that they’re lying because it seems so unlikely that hosts, who have so much experience predicting wait times, can so often be so wrong. But I’m the same way: Every day, I think that I’ll leave work at a certain hour, and every day, my predictions get crushed. I also don’t seem to learn much from my prediction errors. So let’s not assume that the host is deliberately giving you a biased estimate.
The question now is what you can do about it. As an outsider, you have an advantage over restaurant hosts. You’re not trapped in their biased views, so you can develop a “fudge factor” and apply it to their estimate —maybe make it 1.5 times as long as the host’s estimate. So when the host tells you an expected wait time, multiply their estimate by your fudge factor and ask yourself if the food is worth this more realistic amount of time.
Then, if you do decide to wait, don’t look at your watch all the time—it only makes waiting more annoying. If it is a nice day, take advantage of the unscheduled time, leave your cell number with the host and go for a stroll. The street will probably be a fine environment for a chat with your dinner companion, and it will help you burn some calories in preparation for the meal—all good things.


Dear Dan,

When I drive home at night, I have to look for a parking spot in my neighborhood.  Should I stay in one place and wait for a parking spot to become available, or should I drive around in circles in search of a free space?


I’m not sure there’s an objectively correct answer, but here are a few things to consider.  On the one hand, you never know when and where a parking spot will free up, but you know for sure that driving around wastes more fuel than staying put. This suggests that waiting in one spot is the right approach.  On the other, if you idle in place, you might be waiting at a location where everyone has already parked for the night, and if you drive around, you at least get to spread your risk and hedge your bets. And this suggests that driving around is the right approach.
But you should also consider the psychology of waiting: Staying put and doing nothing is much more annoying than being active. When we just wait, time passes more slowly, and patience wears thin. Regardless of how much fuel they might save, a lot of people would go crazy if they had to just sit in their cars and wait. So between fuel economy and mood maintenance, the best thing to do is to buy a fuel-efficient car and keep moving.


See the original article in the Wall Street Journal here.

Why you should watch football until the very end

Jul 22

By Wendy De La Rosa, Dan Ariely, and Kristen Berman

During the last month, the World Cup has captivated the globe, including our team at Irrational Labs. We have watched all 64 games and rejoiced / suffered through each of the 171 goals (not counting penalty kicks).  This  2014 FIFA World Cup turned out to be an entrancing tournament: Eight of the “Round of 16” matches went into overtime, four went to penalty kicks, and the final match ended with Germany scoring in the 113th minute!

When we watched the now infamous Germany – Brazil game, we couldn’t help but come up with some interesting behavioral questions.  When German midfielder Thomas Mueller scored the first goal against Brazil 11 minutes into the game, many of our Brazilian friends said this is just the start of the game.

And while we all know what happened, we started thinking: Were our Brazilian friends onto something – are there more or less goals and attempts late in the game?

One would stipulate that there is no difference in scoring between the first and the second half.  Every goal matters equally, regardless of when it is scored, and players should attempt to score with the same amount of effort and success over time.

Another hypothesis is that fewer goals are scored in the second half as players fatigue  Unlike basketball, where players are often substituted in and out, most of the football players are on the field for the full 90 minutes of play (sometimes 120 minutes if it goes to overtime).

Yet another hypothesis is that players score more goals in the second half as they are closer to the end of the game.  Motivation research suggests that agents are more motivated as they near the end of their stated objective, whether a marathon or a life altering championship.

It turns out our Brazilian friends were right; more goals are scored in the second half!  Of the 171 goals scored in the World Cup, 39% of the goals were scored in the first half, 57% in the second half, and 61% in the second half when we include overtime.


After learning that players score more goals in the second half, we wanted to know why. There are two ways to increase goals scored: increase attempts or increase skill (measured as goals / attempts).  Which one is at play here?

The skill hypothesis stipulates that players are “super humans” who perform best when they are under pressure.  Consider German Mario Gotza, a substitute midfielder, scoring the game winning goal against Argentina just seven minutes before the end of the match.

To answer this question, we compared a team’s skill in the entire game to a team’s skill in the last 15 minutes of a game.  Our analysis showed that there is no statistical difference in skill when you compare  these 15 minutes. This is consistent with an interesting study done by Dan Ariely and Racheli Barkan, where they studied the shooting percentages of “clutch players.”  Clutch players are NBA players who are widely regarded as “basketball heroes who sink a basket just as the buzzer sounds.”  As it turns out, clutch players do not become better basketball players as the pressure increases in the last few minutes of critical games. Basketball players, like our football players, do not increase in skill towards the end of the game.

So if it’s not a question of increased skill (% conversion), it must be a question of effort (number of attempts).  Given this finding, we decided to analyze the number of attempts made by players, and whether they increase as the game wears on.  Which team is attempting the most goals at the end of the game?  One hypothesis is that the leading team increases their attempts as they are more confident and have strong momentum behind them.  The other hypothesis is that the trailing team would attempt more goals at the end of the game because the cost of losing is more salient to them.

We can see loss aversion playing out in golf green.  According to researchers, Devin Pope and Maurice Schweitzer, “Golf provides a natural setting to test for loss aversion because golfers are rewarded for the total number of strokes they take during a tournament, yet each individual hole has a salient reference point: par (the typical number of shots professional golfers take to complete a hole).”  After analyzing PGA Tour putts (the last shot before a hole), they noticed that golfers are extremely loss averse.  Golfers make putts for birdie (one shot less than par) significantly less often than identical-length putts for par (getting to par).  The researchers estimate that this loss aversion costs the average pro golfer about one stroke per 72-hole tournament, and the top 20 golfers about $1.2 million in prize money a year.

Does this theory hold true in football? After analyzing the data, we found that during the last 15 minutes of each game, number of attempts made by the trailing team (as a percentage of their total attempts made during the game) increase, while the number of attempts made by the winning team decreases.


Why is this? We believe we can explain this phenomenon with loss aversion.  Loss aversion is the behavioral economic concept that states that we value losses more than we value commensurate gains.  The other stipulation in loss aversion theory states that we are risk seeking in losses and risk averse in gains.  In other words, our risk appetite increases when we are losing.  This phenomenon is known as “risk shift.”

The feeling of loss aversion is heightened in football.  Think about the cost of a goal in football compared to the cost of a basket in basketball.  Because goals are so difficult to make, the cost of giving up a goal is greater than the cost of not making a goal.  Thus, teams are naturally more defensive, focused on avoiding “a goal” or a “loss” much less than “scoring” or “gaining” for most of the game.

Loss aversion is a powerful concept, and we are all susceptible; even world class football players.  So to go back to our Brazilian fans, expecting more effort as the game continues is a reasonable expectation.  Unfortunately, and as the Brazilian fans found out, sometimes effort is not enough. 

Ask Ariely: On the Perks of Pickup Lines, Puppy Problems, and Probing Personality

Jul 19

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


Dear Dan,

I am happily married and was never much for the bar scene. But I do wonder if those cheesy pickup lines actually work—”If I told you that you had a beautiful body, would you hold it against me” and so on. I can’t imagine anyone would buy such transparently empty flattery, but these lines are so common that they must be doing something. Any insight?


I’m no expert here, but my guess is that these kinds of pickup lines work much better than you might expect. Some interesting research shows that we love getting compliments, that we are better disposed toward people who give us compliments and that we like those people even when we know that the compliments are insincere. So beyond the pickup lines, the real question is why we don’t give compliments more frequently. After all, they’re free, and they make the recipient happy. Try out some pickup lines and compliments on your husband for the next few weeks, and let me know how it works out.


Dear Dan,

One of the not very well-paid cleaners working in my office sometimes chats with me about her life, including her family’s financial difficulties. Last week, she told me that she had just got a puppy. I was shocked that she would take on the responsibility of caring for a pet when she doesn’t have the money to take care of her family. How could someone in her situation be so careless and irresponsible with money?


This probably wasn’t a great choice on her part, but to understand how she could make such a decision—and to figure out if you or I would have made the same call if we were in her shoes—we need to better understand her circumstances and capacity to make good choices.

Consider the following scenario: You are relatively poor, and as you go through your day, every decision you make is consequential. You decide whether to get coffee and walk to work, or skip the coffee and take the bus. You decide whether to take a short break or make another $6. On your way home, you decide whether to fill a prescription or to have a better dinner. When you get home, you are exhausted from all the difficult choices you’ve made throughout the day. You are depleted—the term we use to describe the type of mental exhaustion that stems from making decisions and resisting temptation. And now your children ask you for the 100th time to get a puppy. You know that, for your long-term financial well-being, you should resist. But do you have the mental stamina? Unlikely.

You may be more likely to make better decisions than your colleague, but we don’t know whether that is because you are better at making sensible long-term decisions—or because you simply aren’t as depleted at the end of the day. My guess is that life circumstances and depletion, not heedless irresponsibility, explain many such less-than-desirable decisions.


Dear Dan,

A few years ago, I discovered the Myers-Briggs Type Indicator and decided to take the test, which seemed pretty detailed. When I was shown my resulting “personality type,” I was blown away: It seemed to explain things about my personality that I had felt but had never put into words. But ever since, I’ve been insecure about whether my MBTI type is my “true type” or just confirmation bias. Help, please?


Next time, just look at the horoscope. It is just as valid and takes less time.

See the original article in the Wall Street Journal here.

Sports and Loss Aversion

Jul 12

I got this question about the World Cup and I can’t put it in my WSJ column, but I still think it is worth while answering, and particularly today.



Dear Dan,

You have mentioned many times the principle of loss aversion, where the pain of losing is much higher than the joy of winning. The recent world cup was most likely the largest spectator event in the history of the world, and fans from across the globe were clearly very involved in who would win. If indeed, as suggested by loss aversion, people suffer from losing more than they enjoy winning — why would anyone become a fan of a team? After all, as fans they have about equal chance of losing (which you claim is very painful) and for winning (which you claim does not provide the same extreme emotional impact) – so in total across many game the outcome is not a good deal. Am I missing something in my application of loss aversion? Is loss aversion not relevant to sports?


Your description of the problem implies that people have a choice in the matter, and that they carefully consider the benefits vs the costs of becoming a fan of a particular team. Personally, I suspect that the choice of what team to root for is closer to religious convictions than to rational choice — which means that people don’t really make an active choice of what team to root for (at least not a deliberate informed one), and that they are “given” their team-affiliation by their surroundings, family and friends.

Another assumption that is implied in your question is that when people approach the choice of a team, that they consider the possible negative effects of losing relative to the emotional boost of winning. The problem with this part of your argument is that predicting our emotional reactions to losses is something we are not very good at, which means that we are not very likely to accurately take into account the full effect of loss aversion when we make choices.

In your question you also raised the possibility that loss aversion might not apply to sporting events. This is a very interesting possibility, and I would like to speculate why you are (partially) correct. Sporting events are not just about the outcome, and if anything, they are more about the ways in which we experience the games as they unfold over time (yes, even the 7-1 Germany vs Brazil game). Unlike monetary gambles, games take some time, and the time of the game itself is arguably what provide the largest part of the enjoyment. To illustrate this consider two individuals N (Not-caring) and F (Fan). What loss aversion implies is that N will end up with a neutral feeling with any outcome of the game, while F has about equal chance of being somewhat happy or very upset (and the expected value of these two potential outcomes is negative). But, this part of the analysis is taking into account only the outcome of the game. What about the enjoyment during the game itself? Here N is not going to get much emotional value watching the game (by definition he doesn’t care much, and he might even check his phone during the game or flip channels). F on the other hand is going to experience a lot of ups and downs and be emotionally engrossed and invested throughout the game. Now, if we take both the process of the game and the final outcome into account — we could argue that the serious fans are risking a large and painful disappointment at the end of each game, but that they are doing it for the benefit of extracting more enjoyment from the game itself — and this is likely to be a very wise tradeoff that maximizes their overall well-being.

This analysis by the way has another interesting implication — it suggests that the value of being die hard fans is higher for games that take more time, where the fans get to enjoy the process for longer. Maybe this is why so many sports take breaks for time outs and advertisements breaks — they are not only doing it to increase their revenues, but they are also trying to give us, the fans, more time to enjoy the whole experience.

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