The recent death of Amy Winehouse should make us pause and consider the question of personal and shared responsibility.  Was she solely responsible for her tragic outcome? Or was it somewhat the fault of the people around her?  How do we want to think about the state of mind of a drug addict?  And what does that say about their ability to make good decisions and hence their responsibility?

I am almost sure that if I were a jury member being presented with a case of a drug addict who committed a crime while in a highly emotional state of drug craving — that I would equate this state of mind to temporary insanity, and would find this to be a mitigating circumstance.

And if being in a state of drug craving can be considered a mitigating circumstance, shouldn’t this tell us that we should not expect too much personal responsibility from people who are in this state of mind?  And shouldn’t the people around them (particularly the ones working with / for them) take control?  There is a very nice saying that “friends don’t let friends drink and drive,” and I suspect that this rings even truer of drug cravings.

—

P.S. To clarify, my point here is not that Amy Winehouse is not to blame for her decisions, or that her friends are. Rather, I think that we need to back down from our chronic obsession with personal responsibility and realize that there are times when it is necessary to step in to help people who are not in a state to make the right decisions for themselves. Who knows, maybe the next Amy Winehouse’s daddy will try a little harder to keep her in rehab when she won’t go, go, go.

Here I discuss Chapter 4 from Upside of Irrationality, The Not-Invented-Here Bias: Why “My” Ideas Are Better than “Yours”.

I just posted a fun new study (should take about 5 min). If you are willing to take it, please look on the right under “Participate” and press on the “Right Now. Take a quick anonymous survey” link. 

Here I discuss Chapter 3 from Upside of Irrationality, The IKEA Effect: Why We Overvalue What We Make.

Here I discuss Chapter 2 from Upside of Irrationality, The Meaning of Labor: What Legos Can Teach Us about the Joy of Work.

By Amit and Dan Ariely

For the past few weeks, my 8-year old son Amit and I have been observing birds, paying attention to their individual and particular behavior.  We noticed that some of the birds we observed were different in their physical characteristics like color, shape and size, and that these traits varied with their behavior. This made us wonder about the possible evolutionary links between the appearance of the birds on one hand and their respective behavior on the other.

The first difference that stood out to us was between the small and large red birds. Although the larger ones were about twice as big, their ability to fly was about the same — but what was very different about the two kinds was that the larger red birds were much more aggressive and caused more damage when they attacked. Of course, the evolutionary reason for this difference in aggression seems straightforward; as the subtype of birds gets larger, they need more food, and with this increased requirement, aggression becomes an important survival skill.

The yellow subtype of birds were slightly more of a challenge to figure out. Other than being yellow, their general characteristics were similar to the red birds — but Amit and I couldn’t help but notice their tendency to suddenly fly at much higher speeds relative to the red birds. We speculated that the evolutionary reason for this difference must be that the red birds, by virtue of their threatening color, are less appealing to predators, and as a consequence they never needed to develop enhanced speed to escape. In contrast, the yellow birds practically invite predators to dine with their appealing color. With this clear disadvantage the yellow birds are forced to rely on an alternative survival mechanism, in this case the valuable skill of speed.

Another interesting feature of the yellow bird is that it is sharper, perhaps because it is a species connected with the woodpecker family.  The yellow birds’ sharpness might also help it further when it needs to break down a structure or cut through wood – which again is most likely connected to their need to compensate for their color disadvantage.

The blue birds were fascinating in their ability to self-replicate, and in all of the cases we observed they produced exactly three offspring. We wondered why the blue birds evolved to produce offspring at such speed and timely consistency, and we determined that the evolutionary reason for this must be that because the blue birds are small and relatively slow, they had to develop a skill for efficient reproduction, thereby hedging their bets and increasing the potential to pass on their genes.

The white birds were even more puzzling. On multiple occasions, we watched them drop their eggs while still in flight, naturally crushing the egg. Initially this seemed to be a counter-evolutionary strategy, but once we inspected the discarded eggs we realized that these eggs were abnormal, and it was probably the white bird’s strategy for dealing with eggs that have a low potential for survival. One additional observation in support of this hypothesis is that the white birds seemed to be much healthier, lighter and happier after the eggs were discarded.

Of course there were many other birds as well, including one particularly interesting black bird, and Amit and I are thinking of continuing to pursue this bird-project for a while. In fact, we are already getting somewhat addicted to it, and we just learned that there are plenty more birds to observe in Rio.

But what really baffles us is this: why are these birds SO angry?

Amit and Dan

Here I discuss Chapter 1 from Upside of Irrationality, Paying More for Less: Why Big Bonuses Don’t Always Work.

August 26-28th, 2011

Introducing Startup-Onomics

Startup-Onomics is about infusing behavioral economics into the core DNA of new companies.

Through interactive lectures in the morning and 1:1 working sessions with famous industry experts in the afternoon, you’ll walk away with the scientific tools to better understand your customers and build products that meet their needs.

These techniques are proven to increase site conversion rates, create effective pricing strategy, improve customer and employee retention and overall help users change the ‘hard-to-change’ behavior.

What is behavioral economics?

As business owners, we want to design products that are useful, we want customers (lots of them), and we want to create a motivating work environment. But it’s not that easy. In fact, most of the time that stuff takes a lot of hard work and a lot of trial and error.

Good news. There is a science called Behavioral Economics.  This attempts to understand people’s day to day decisions (where do I get my morning coffee?) and people’s big decisions (How much should I save for retirement?).

Understanding HOW your users make decisions and WHY they make them is powerful. With this knowledge, companies can build more effective products, governments can create impactful policies and new ideas can gain faster traction.

For more details see:

http://startup-onomics.com/

The Irrationality of Organizational Escalation: The Danger of Spider-man & Overcommitment 

By Henry Han-yu Shen

Spider-man: Turn Off the Dark is an upcoming rock musical featuring music and lyrics from U2’s Bono and The Edge and originally directed by Julie Taymor, best known for the hit musical The Lion King.

This musical is also the most expensive Broadway production in history, with a record-setting initial project budget of $52 million. The show’s opening has been repeatedly delayed while the production cost continues to accrue, currently totaling a whopping 70 million dollars. The final estimated budget approaches 100 million dollars, with no guarantee of profit return and below-average reviews.

Spider-man’s situation exemplifies a classic case of organizational failure.  Marked by producers’ continuously irrational contributions of monetary support to a seemingly hopeless project. In many ways this case is similar to the failed Shoreham Nuclear Power Plant program as analyzed by Ross and Staw (1993). The Shoreham project also experienced an escalation of project cost – from an initial $75 million to the final cost of $5 billion – and it a classical example of how organizations become increasingly committed to losing courses of action over time.

We can draw several parallels by comparing the Spider-man Broadway production to organizational escalation. We can see that economic data alone cannot easily deter organizational leaders from withdrawing from a full-scale course of action, especially in cases involving something that is highly subjective in its value (such as a Broadway production). When we consider that the cost of production for Spider-man continues to rise, the initial psychological over-commitment of the producers can become even stronger. Such forces appear to have come into play, trapping the producers into a losing situation while they continue to throw money into the project.  It is important for future producers, or any organizational leaders, to keep in mind the existence and properties of these different types of escalating determinants in order to avoid clouded judgment and behavior when making decisions.