Hey everyone, I hope this blog post finds you well. Recently, I wrote a short paper about trust….

The paper, Trust Factory, discusses elements of trust; specifically regarding the way organizations can interact with individuals to build trust. If you’re interested in reading the paper, you can view this link.

The paper talks about how humans tend to trust one another. But does it work the same way when it comes to trusting organizations?

A community of trust is required to survive. That’s what trust is based on.

Understanding that, what can organizations do to gain the trust of their consumers/users? I outline five key tools that allow us to trust each other: long-term relationships, transparency, intentionality, revenge and aligned incentives.

View the paper by clicking on this link.

Trustfully yours,

Dan

Have you ever had a burning curiosity or a puzzling life dilemma? Each week, many people write to my Ask Ariely column for guidance – and I’ve now created an app to help disseminate some of their questions and my advice.

If you’ve ever wondered what to eat when you’re heartbroken, how to effectively raise money for a charity, why you’re so willing to buy expensive beer, or why people tend to think God shares their beliefs, this app is for you.

Responding to people’s curiosities is one of my favorite parts of being a behavioral economist and researcher. I hope to share my enjoyment with you in this app, which features bite-sized excerpts from my latest book, Irrationally Yours, for easy reading.

The app is live now, available for Android and iOS users alike.

Happy reading,

—Dan

At the Startup Lab (my incubator at Duke University’s Center for Advanced Hindsight), we aim to empower early stage startups to build better consumer health and finance products by teaching them how to apply both the findings and methods of behavioral economics to their products and business models.

While the in-depth Startup Lab program is limited to a small group of startups that go through our rigorous application process, it would be an injustice to not share some of its lessons with the greater community. So I’ve collaborated with +Acumen to create an online course to help social entrepreneurs make an impact – by designing products that change consumer behaviors for good. But what I am most excited about is the lesson on experimentation. I am always getting questions about how startups can experiment within their small companies (with few resources, especially time), and this course provides the tools for entrepreneurs to take a systematic approach to experimentation.

Sign up for my Master Class with +Acumen on Changing Customer Behavior, now available here: http://bit.ly/2e11cOZ

This time a discussion with Erica Reischer about parenting.

Link to the podcast

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 was recently at a barbecue restaurant where the toilets were private but the sinks were out in the open, in a common space. Would moving sinks to public areas get more people to wash their hands? Would you recommend this setup for all public bathrooms?

—Brian 

Absolutely, and here’s why.

Sometimes, to show the extent of our irrationality, I will ask a large group, “In the past month, how many of you have eaten more than you think you should?” Almost everyone raises their hands. “In the past month, how many of you have exercised less than you think you should?” Again, everyone raises their hands. “In the past month, how many of you have texted while driving?” Almost everyone raises their hands.

Then I ask, “In the past month, how many of you have left the bathroom without washing your hands?” The result: almost perfect silence, no hands raised and, after a few embarrassed seconds, a bit of nervous laughter.

Obviously, they are lying—but why won’t people who have just confessed to something as reckless and stupid as texting while driving admit that they sometimes don’t wash their hands? I suspect that it is because we care pretty intensely about not being disgusting to others. As such, putting the sinks somewhere public and visible should encourage more hygienic behavior—ideally, with our friends and relatives watching over us to be extra-sure we do the right thing.

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Dear Dan,

I hear the phrase “keeping up with the Joneses” a lot. But is there good evidence that we really care about what our neighbors have or that we change our behavior accordingly?

—Michelle

Yes and yes: There is good evidence of our tendency to try to keep up with those around us. In one recent paper, the economists Sumit Agarwal, Vyacheslav Mikhed and Barry Scholnick looked at the neighbors of lottery winners and discovered that they tended to buy more cars and other clearly visible assets. These “signaling purchases,” the study suggests, were influenced by the presence of suddenly rich neighbors, but the researchers found no increase in the savings or other invisible assets of the less lucky neighbors. Depressingly, those living near lottery winners were more likely to suffer financial distress and even bankruptcy.

These results show that our decisions aren’t just influenced by what we desire but also by our social drive to keep up with those around us. So it makes sense for us to spend a bit more time thinking about who we want to befriend and live next to. If we are going to try to keep up with the Joneses, we should pick the right Joneses.

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Dear Dan,

The polling averages now show Hillary Clinton with a significant lead over Donald Trump. Will these favorable polls help or hurt her?

—Josh

The forces here point in both directions. On the one hand, you can imagine that people who support the front-runner could say something like, “My candidate is going to win anyway, so I can stay home”—which obviously hurts their candidate. On the other hand, a candidate’s popularity could well reinforce itself and create a herding effect, which would help whoever is up in the polls.

Which of these two forces is more powerful? The evidence points to the herding effect: For better or worse, we just seem to like to follow.

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,

This depressing election season has left me deeply disheartened by the current state of American politics. Do you have advice on how I can remain optimistic? Are there any politicians whom you admire?

—Alfredo 

My favorite politician, without question, is Antanas Mockus—a Colombian mathematician and philosophy professor turned unconventional pol who served some years ago as the mayor of Bogotá and made several unsuccessful runs for Colombia’s presidency. During his two terms in office (1995-97 and 2001-03), Mr. Mockus introduced lots of positive behavioral changes to his unruly, crime-ridden city. He reduced water usage, prodded Colombians to obey traffic laws and reduced violence.

Mr. Mockus rooted his unconventional, often theatrical mayoralty in a deep understanding of our social nature. One of his inventions was the 1995 Ley Zanahoria (literally, the “Carrot Law”—in Colombia, the word for the vegetable evokes nerdiness), which ordered bars and other late-night joints to close at 1 a.m., thereby cutting crime and car crashes.

Mr. Mockus worked formally and informally to cultivate honorable civic behavior—praising good-humored citizens who played by the rules and didn’t cut corners. By popularizing this standard and asking citizens of Bogotá to call each other out when they saw unseemly behavior, he invited his city’s residents to end vicious cycles and reinforce virtuous ones. He led the way in establishing better, stronger social norms.

Mr. Mockus also had an unconventional way of saving water. As a World Bank report noted, he was once shown “in a TV ad taking a shower with his wife”—demonstrating how to get clean with less water while having more fun.

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Dear Dan,

As the school year comes to an end, I am starting to think about summer activities for my children—ages 10 and 13, both relatively good at music and interested in theater and dance. Would sending them to a camp for the performing arts be a good way for them to spend the summer?

—Vanessa 

First, kudos to you for being so thoughtful about your kids’ summer plans. One of the most interesting (and depressing) lessons we have learned about education is that, without summer enrichment programs, kids tend to forget a great deal while school is out.

Here’s the real question about your choice: Would your children be better off improving their skills in activities that already engage them (music, acting and dance), or would they be better served by learning skills that they haven’t yet cultivated?

Since your kids are very young and their tastes and talents haven’t yet matured and stabilized, I would suggest using the summer as an opportunity to expand their horizons by getting them to try things that they usually don’t get to explore. Maybe send them to a camp that focuses on creative writing, science or hiking.

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Dear Dan,

For a few years now, I’ve been trying desperately to overcome my addiction to pornography, without much success. Are there any techniques that can help to break such stubborn bad habits?

—Zain 

One thing we know about addiction is that staying in the same environment makes it very hard to quit. When we remain in the same spaces where we have engaged in addictive behavior, the environmental cues substantially increase our cravings—making it very hard to resist our desires. It is important for heroin addicts, for instance, to change where they live and the people whom they associate with.

With your pornography addiction, changing the environment is more complex—but try to replace your phone and computer so that you can have new devices that won’t evoke memories of your past behavior. Good luck.

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,

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,

For some time now, I’ve been proposing different experiments at my company—experiments with the prices we charge, what we pay employees and the way we treat customers who call to complain. But the experimental approach that seems so successful for science bumps into substantial resistance within my company. Any ideas about how to make experiments more palatable in the business world?

—Darren 

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Dear Dan,

I’m a philosophy professor, teaching metaphysics and philosophy of language. What’s the best policy for penalizing students who hand in coursework late, with an eye on preparing them for the world of work?

—Andrew 

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Dear Dan,

I’m a server in a New York City restaurant in New York, and I want diners to trust my recommendations and leave me larger tips. Any advice?

—Robert 

As soon as you hand them the menu, tell them that you strongly recommend they avoid the branzino special (or any other very expensive dish). By demonstrating that you’re willing to steer them away from a pricey entrée, they’re more likely to think that you truly care about them, trust your advice and tip you more.

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,

Recently, our babysitter asked to borrow my car—then had a minor accident that cost about $1,000 to fix. Should I charge her for the repairs?

—Neta 

You shouldn’t, for two reasons. To view this problem through a more general mindset, let’s assume that the culprit wasn’t your babysitter and that the object in question wasn’t your car—instead, let’s imagine you’d loaned your neighbor your electric drill and it broke while he hanging a picture. He might offer to pay for the drill, but if he didn’t, would you ask him to pay for it? Probably not. You’d understand that wear and tear happens, that the breakage probably wasn’t your neighbor’s fault and that the drill would have broken anyway. In contrast, when someone has a car accident, we’re quick to blame them—but from time to time, accidents just happen through no fault of the driver’s. Maybe this is a good opportunity to accept the accident as part of wear and tear on the car.

Another reason why you shouldn’t ask the babysitter to pay: They’re your babysitter, and while they might be a very trustworthy teenager, you were the one who decided to lend them your car. Best to own up to that responsibility.

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Dear Dan,

I’m planning to hire a professional clothing stylist to study my body type and style and advise me on which clothes to keep and which to give away. I’m considering two options: first, asking her to take all the clothes she doesn’t approve of out of my closet, and second, to first take everything out and then put back the things she thinks pass muster. Which approach would you recommend?

—Maria 

You’re right to suspect that the two methods will probably result in different outcomes. The reason is the “status quo bias”—the tendency to leave things as they are. If you start with all the clothes in the closet, the effort required to keep items there is lower than the effort required to take them out, which means that fewer clothes will end up being given away. On the other hand, if you start with all your clothes out of the closet, the lower-effort course involves leaving clothes where they are, which means more things will end up being given away.

But you’re unlikely to apply the status quo bias evenly to your whole wardrobe: The clothes that are clearly great will probably stay with you regardless of your method, and the clothes that are just awful will probably be given away either way too. The difference will come from the “Goldilocks clothes”—the ones that rest somewhere between those two clear categories. The real question is how many of these Goldilocks clothes you want to keep.

Two more points: If you don’t fully trust the stylist, you might start with the “all clothes in” approach, take fewer risks and keep more of the Goldilocks clothes. Also, some clothes will have sentimental value even if someone else thinks they look awful on you – so keep these. After all, we dress for ourselves, not just for other people.

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Dear Dan,

What is the best example of human irrationality?

—Bill 

I must admit I’ve never understood why the most important medical center in the world, the Mayo Clinic, is conveniently located in balmy Rochester, Minn. I’ve benefited enormously from their care—but it’s a long trip.

See the original article in the Wall Street Journal here.