If you are a student and want to try something different this summer, check this out:

http://advanced-hindsight.com/apply-for-the-summer-internship-in-behavioral-economics-at-duke/

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.

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Dear Dan,

Ratings systems for different services often aren’t driven by incentives. One example: Instead of just rating Uber and Lyft drivers after they drop us off, what if their ratings were based on the size of the tips they got? In such a system, drivers who consistently received larger tips would get higher ratings; those who were penalized would be seen less favorably. Wouldn’t this be better than the current rating system?

—Ruoxi 

Would you really give a bad tip to an annoying driver who had just dropped you off at home and knows where you live? (I am partially joking here, but I do wonder whether tips for taxis are higher when people are coming back home.)

Like other pay-for-performance approaches, your proposal for a tip-based ratings system would raise a lot of problems. First, discretionary payments such as tips reflect satisfaction, but they also reflect wealth and price sensitivity. Basically, some people care less about money and are likely to give higher tips than more price-sensitive people. Since the wealth and the price sensitivity of the passenger aren’t a precise reflection of the quality of the driver, your suggestion would just replace one flawed system with another. A second, even more serious problem: Drivers would get an incentive to drive more in areas where people are less bothered by high prices, thereby providing worse service to other people who might need transportation more. Finally, what would stop drivers from giving cash back to passengers who gave them larger tips—returning some of the extra money but gaining reputation points in the process?

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Dear Dan,

Some time ago, I bought some bitcoins. In just a few months, their value increased by 1,000%. They’ve just kept rising and are now about 4,000% higher than when I originally purchased them. My original investment is now worth more than $100,000—a substantial amount of money for me. Should I sell or hold onto them and hope for further increases?

—Geoff 

It is hard for me to say whether this is a good investment or not, but here’s a more rational perspective for examining the question: Simply ask yourself if you would buy these bitcoins now, at their current price. If your answer is yes, you should hold onto your investment and maybe even buy more. But if your answer is no, it means that you don’t really think that the expected increase in value is worth the risk, and you should sell.

The more general point here is that our investment decisions should be about what we think the future will hold (hard as that is to predict), and we need to work hard to overcome the influences of our past actions. No matter what you purchased a given investment for, and regardless of what it is worth now, you should make your decisions only about where you think this investment is headed.

One last piece of advice: If you do decide to sell your bitcoins, don’t look up their value afterward. Yes, if the value drops, you’d be a bit happier that you sold, but if the value rose, your misery would be much higher—so resist the urge to check.

See the original article in the Wall Street Journal here.

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.

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Dear Dan,

I’m organizing a long weekend of skiing with 10 friends who have very different financial situations. I’d like everyone to be able to pay what that they’re comfortable with, and I also want to avoid creating an awkward social dynamic. I considered charging everyone a low base amount and then asking the wealthier friends to pay extra, but that doesn’t seem quite right. What’s the best way to divide up the cost?

—Zach 

Dear Dan,

Why do I still listen to the radio and watch live TV when I have access to all the same content from different streaming services, which lets me skip what I don’t like and more easily change my experience?

—Colin 

One possibility is that you are listening to the radio and watching live TV because you don’t want to have the ability to switch. When you just experience something that cannot be changed, you are more likely to get into the flow and fully enjoy it. By contrast, when you are continuously monitoring the experience and asking yourself how happy you are, it can be exhausting, ultimately taking away from the sense of immersion. Sometimes the freedom to choose among options isn’t a recipe for happiness.

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Dear Dan,

I recently experienced some turbulent emotional times, and I realized that I was eating a lot of chocolate and gaining weight. I am now wondering if chocolate really has mood-improving powers, as many people seem to think, or if I just gained weight for no good reason.

—Mia 

Some research has found that chocolate can in fact boost your mood—perhaps due to compounds found in cocoa. Interestingly, women seem to be more likely than men to eat chocolate to try to boost their moods. That could mean that experiencing some heartbreak is a good diet for men but not for women.

See the original article in the Wall Street Journal here.

Dear friends,

For many of us, email is a source of joy and stress –  we learn a lot from it, but we also never seem to be able to keep up with our inboxes.  And in today’s world, it’s likely that we’ll be using email more and more.  A project I’m working on right now is to try to better understand how we work with email, with the hope of figuring out what is broken and what we can do about it. 

My first step is to research how we currently use email.  If you’d like to help me by completing a 5-minute survey, please contact me at dan.ariely@gmail.com.  Survey participants will not only receive my gratitude, but will also be entered for a chance to win any of my books, a 30-minute chat with me, or $500. 

Irrationally yours,

Dan

Hello hello,

I think that my website needs a bit of a facelift, so I’ve created a contest on 99designs to design a new one.

Check out the contest right here, and apply if you’re up for the challenge!

Thanks and best wishes,

Dan Ariely

UPDATE: I needed to revise the contest so that it would be supported by wordpress. Please use the updated link above instead of the old link. Very sorry for the inconvenience and I look forward to your designs!

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.

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Dear Dan,

How would you handle a community college student who—bluntly put—just smells absolutely horrendous? My other students are complaining that they can’t focus in the classroom. I think that the student should be made aware of her smell so that she can try to resolve it and avoid jeopardizing her social and professional future—but I’m not sure how to broach the topic.

— Kelly 

Sharing this information isn’t going to be easy, but doing so could create many long-term benefits for the student, the community and maybe even yourself—which is why you should definitely tell her.

It might be tempting to convey the information anonymously, which would save you some awkwardness, but it isn’t in the student’s best interest. Some research shows that it is particularly nice to get an anonymous love note because the uncertainty lets us imagine that we are adored by many people. The opposite is likely to be the case with an anonymous note about a negative trait.

My advice: sit the student down and break the news to her. You could start by saying that some people are more sensitive to smell than others and that you suspect her sensitivity is below average. Next, tell her that she has an odor that is noticeable to others and add that you worry that this is making interactions more difficult for her. Finally, offer your ongoing help as she tries to figure out what works for her and what doesn’t.

One last point: A while ago, I decided that every time I see someone with something in their teeth, I would tell them about it. Making this a rule was very helpful for me because now I don’t even need to consider whether to raise this potentially embarrassing point—and 100% of the time, people have thanked me for telling them.

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Dear Dan,

What’s the best way to give a guest speaker a gift they would truly love and appreciate?

—Wilma

Not long ago, I gave some lectures to a very nice group of people. At the end of the retreat, they held an auction of all kinds of souvenirs, and I bid on a homemade blanket that I particularly liked. Later that night, I discovered, they took the blanket out of the auction after I bid on it and gave it to me as a gift.

This was particularly nice for three reasons. First, I clearly liked the blanket because I bid on it. Second, I assumed that other people also wanted it. And finally, it didn’t have a real market value. All this made it a wonderful, highly appreciated gift without a specific price tag.

If you’re willing to be a bit manipulative, you could take this approach a step further: What if you held a live auction, and when you saw something that the guest speaker was interested in, you got other people to dramatically outbid him or her (offering, say, 10 times more than the speaker would)—and, at the end of the night, gave the item in question to the speaker? This process would make clear that your guest coveted the item, as did other people, and that its value was very high. Clearly an ideal gift.

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Dear Dan,

Why will many people not stop on the street to pick up a dime but would certainly stop to pick up a dime if it fell out of their pocket? Isn’t the value of 10 cents the same in both cases?

—Baruch

These might seem like the same case, but they aren’t. When we pick up 10 cents, we add to our wealth (just a bit), but when we reclaim a dime that we dropped, we prevent a loss—and preventing a loss is much more important and valuable.

See the original article in the Wall Street Journal here.

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.

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Dear Dan,

I’ve noticed more people taking selfies. Some are even walking around with specially designed phone holders that help position their phones a bit farther away for taking better selfies. I’m not part of this selfie age group, and I find it all odd and somewhat annoying. Can you help me understand the fascination? Why can’t the new generation take pictures the good old way?

—Ayelet

The selfies phenomenon is complex, but here are some highlights: Its starting point is those moments we want to capture, for our own memories or to share with others. Now, if we were to stop what we’re doing and ask a stranger to take our picture, we would be stepping out of the moment emotionally: We’d have to stand still while smiling artificially, wait for the picture to be snapped, then try to get back to whatever were doing and feeling.

Selfies solve this problem because we don’t step out of the moment. A selfie can even enhance the moment by getting us to stand closer to one another and look at ourselves together on-screen—a sort of celebration of the shared experience.

Another interesting thing about selfies: We always expect them to produce an awkward, low-quality picture. So those of us who always worry about how we look on camera don’t need to fret as much: Everyone looks bad.

Finally, there is an important interplay between language and decision making at work here: Once we gave a name to the activity of huddling together, looking up at a phone from an uncomfortable angle and taking a picture, it became socially acceptable.

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Dear Dan,

Setting up automatic retirement savings mechanisms (where the default is participation but people can opt out) has been shown to increase savings rates in wealthy countries such as the U.S., Denmark and the Netherlands. But what can be done to raise savings rates in developing countries, where many people work in the informal economy, don’t get regular paychecks and lack access to sophisticated banking services?

—Varun

A recent World Bank report offers some hope. In Kenya, according to the bank, many households report that a lack of cash often holds them back from investing in preventive health products such as insecticide-treated mosquito nets. To help Kenyans save for such needs, researchers provided families with a lockable metal box, a padlock and a place to write the name of the desired item. Simply by making these boxes available, researchers increased the purchase rates of these preventive health products by 66% to 75%, the report said.

The idea behind this approach is that people tend to allocate their funds through a process of “mental accounting” in which they define categories of spending and structure their outlays accordingly. The metal box, the lock and the label all helped people to put money in a separate account dedicated to preventive health products.

More generally, this is an example of the value of labeling for saving and spending—something that each of us can probably use when salting money away for vacations or a rainy-day fund and when grappling with how much to spend on groceries, going out and home renovations.

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Dear Dan,

Broadly speaking, does the advantage of attractiveness differ across gender? Is it better to be attractive as a woman or as a man?

—Ajit

Some scientists theorize that babies look more like their fathers than their mothers so that nature can prove to the father that the baby is indeed his. Once the father is convinced, the baby can morph to look more like the mother. My own theory is that, since babies are often bald, wrinkled and far from attractive, they tend to look more like their fathers. As for your question: Given the rarity of attractive males, I suspect that the (very) few that fit the bill get a larger advantage.

See the original article in the Wall Street Journal here.

Dear Dan,

Thanksgiving is around the corner, including Black Friday, the largest shopping day of the year, when many people spend way too much money. How do we stop this insanity?

—John

People do spend a lot of money on Black Friday, but is that really so irrational? To figure that out, we need to ask which state of the world we should compare this tradition to. If you assume that we could get people to blow less money on Black Friday and decrease overall irresponsible spending, then of course the world would be a better place without Black Friday.

But what if canceling Black Friday just spurred people to start living beyond their means every month of the year? And what if this extra increase in monthly splurging turned out to be larger than the spending increase on Black Friday itself? If all this were true, we would be better off with Black Friday.

Let’s think about dieting as an analogy for shopping. Many diets allow for a “cheat day” because they realize that without the permission to indulge sometimes, people are likely to give up dieting altogether. So the people who design diets have figured out that allowing people to go wild from time to time helps them behave well most of the time. What if Black Friday is the shopping equivalent of the cheat day?

I don’t endorse wasting money, but perhaps we should all figure out how much money we are willing to splurge with, take it in cash and indulge—but only at decent intervals.

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.

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Dear Dan,

Recently, the German auto maker Daimler gave employees the option of automatically deleting all emails that arrive while they’re on vacation. Senders get a note suggesting that they resend their email later or write to other colleagues who are still in the office. This way, employees don’t have to face overflowing inboxes when they return. Is this a good idea?

—Kathleen

Not having to worry about email while you’re on vacation sounds wonderful, and this policy will probably boost employees’ well-being—though, of course, some will still wonder what they might have missed.

That said, the Daimler approach seems pretty extreme, and it deals with the symptoms rather than the root problem. In my experience, email stresses people out constantly, not just during vacations. We get too much email every day of the year; we spend too much time responding to it and worrying about it. Email correspondence in many corporations is so out of hand that it leaves almost no time for any actual work.

If the bosses at Daimler really care about their employees’ welfare, why not tackle the inefficiencies of this communication channel—and work to reduce their overall email load? How about announcing that no email is allowed between 9 and 11 a.m. and again between 1 and 3 p.m.? Or what if they limited people to just 10 emails a day? (Does anyone really have more than 10 important things to say in a day?)

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Dear Dan,

I’ve read a lot about the placebo effect. Does that mean it won’t work on me?

—Marco

It turns out that placebos operate to some degree outside of our awareness—which means that even when we know a particular medication is a placebo, we can still benefit from it. So don’t worry about knowing too much. Just take two placebos and call me in the morning.

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See the original article in the Wall Street Journal here.

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.

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See the original article in the Wall Street Journal here.