Mr. Gilbert tells us how we keep making bad decisions even though we know clearly how not to. Is that what happened? (Laughter) that if dogs on leashes came more quickly to your mind, DG: Well, no, it's a great point. because it seems to me that the problem down the toilet, which you cannot have a good feeling from. "Me? what was I thinking, waiting an extra month for 60 dollars? And as the Israeli mother said, It was very easy to remember seeing dogs, imagine that the nine tickets are all owned than I'm charging you to play. And a mall blows up, Poverty! Because you know When this couple wins the lottery, off into the future a year. with R in the third than the first place. because they were scared — and driving on highways, and is there some way that we could counteract that? (Applause). We have no significant predators, Why? "Oh, my God, these people are so warm. Is that because in the past, in the ancient past, we just didn't understand things like disease I lost." Dan Gilbert: Why we make bad decisions Daniel Gilbert is the Edgar Pierce Professor of Psychology at Harvard University. Assuming you wanted to go to Hawaii, would you buy this package? and forgive me, but in raw numbers these are very tiny accidents. with the Department of Homeland Security, which generally believes Watch, share and create lessons with TED-Ed, Talks from independently organized local events, Short books to feed your craving for ideas, Inspiration delivered straight to your inbox, Take part in our events: TED, TEDGlobal and more, Find and attend local, independently organized events, Recommend speakers, Audacious Projects, Fellows and more, Rules and resources to help you plan a local TEDx event, Bring TED to the non-English speaking world, Join or support innovators from around the globe, TED Conferences, past, present, and future, Details about TED's world-changing initiatives, Updates from TED and highlights from our global community. what will you look like, how much hair will you have, make this seem like a fantastic event, but let's not play down Open Translation Project. and they always think now is better than later: It's money. I think in general you're battling a very fundamental human tendency, It doesn't know what you saved it on. Most people don't want the most expensive, And I'm going to show you one or two of them. you discover that somewhere along the way you've lost the ticket. Now, you have exactly the same problem when you shop for a stereo. Surely that causes people to overestimate the likelihood is to get people to imagine the future more vividly. And most people say, "OK, I'll play.". when, with one trip across town, they can get it for half off. Well, look, you didn't need a psychologist to tell you that a 30-second interview with each loser but in fact, it's not very simple in everyday life. much more vividly than the far future. Just in case you’re not getting it. And there's a good reason to be, spare you the undue burden of money. When was the last time that you picked up a newspaper is that by the time aging is about to kill you it looks like cancer most of you would say, sure, I'll take that bet. these are estimates of number of deaths per year So, this is an example of how this idea that we vastly underestimate them. This TED talk, “Why We Make Bad Decisions,” by Dan Gilbert, is part of a series related to biases and irrationality in decision making, curated by the Center for Health Decision Science.These biases are widespread and can lead to errors of judgment. It's not interesting because it's so common. This is an error, and I can prove it to you by showing these big, boxy, monoliths, and these little, sleek speakers, You also have a 20-dollar bill. These are small-scale accidents, and we should be wondering to the cost that it used to have — 20 dollars — and you say it's a bad deal. And I want you to see that two things are true. Here's another nice example. and you entirely violate the décor of your house. And so you tour France with them, One, the farther away they are, the smaller they look; or Ed McMahon shows up at your door with this giant check — how much the subjects think they're going to enjoy the potato chips. but when you go to spend that money you won't be making that comparison. We are the only species on this planet These guys can tell us. or of flipping a heads. So in 1992, this fellow, George Bush, for those of us who were Most people say, no, I'm going to schlep across town Would you drive to get it? and then a third, hard, problem. People don't think that way. and overestimated the value of our present pleasures. Why you should listen. there would ever be, there might be more and more buses of 30 people — is a box of Godiva chocolates, and for others is a can of Spam. I lost." But as it turns out, this is not a very easy idea to apply every time they interview a winner, the 100 million losers the things that normally cause species to become extinct "What else can I do with my money," comparing this investment and it's awfully easy to say to yourself, Ring, Rang, Rung, at least when I was there, and I was 150 feet from the mall So I'm telling you something you already knew: So, would you like to have an extra 100,000 dollars when you're 65 This is just a graph showing the results that I just suggested think potato chips are going to be quite tasty; of your undivided attention just to watch them say, than rising wages, even when the total amount of wages is higher makes not a damn bit of difference to your gustatory experience. You go to the stereo store, you see two sets of speakers — Reflecting on these biases may be of use to decision makers in all disciplines. We all make decisions every day; we want to know what the right thing is to do — in domains from the financial to the gastronomic to the professional to the romantic. their normal, their true, relations are preserved. no matter what you're saving it on. more people than that were killed Would you buy it? So let me give you one very easy problem, a second very easy problem In this funny, information-packed talk, psychologist Dan Ariely explores why we make bad decisions even when we know we shouldn't -- and discusses a couple tricks that could get us to do the right thing (even if it's for the wrong reason). and that's what I want to talk to you about today. Well, by and large people are enormously impatient. Which would you prefer? The dealer near your house sells this particular stereo for 200 dollars, It's not making headlines, it's not making news, it's not flashy. We have time for some questions for Dan Gilbert. You all know what the likelihood is of pulling the ace of spades as an awful deal that was once a horrible deal. OK? over waiting a month, but not if that decision is far in the future. Because it used to cost 700, and there's no way I'm paying 1,500 This is what we call a one-item IQ test, OK? as spectacular as they possibly can. is wafting over the seat, you think, Learn more about the There's 10 tickets in this lottery. it won't matter what it used to be sitting on the shelf next to. For example, when Americans are asked to estimate the odds We see this on TV; we read about it in the paper. that which is new and novel is activated. Members of the audience, Here are the results of what I just showed you. not so easy to remember pigs. the fact that newspapers sell when people see something in it How much is this Big Mac worth? That's not a bad rule of thumb, except when it is. Namely, those who are looking at Spam And economists — forgive me, for those of you who play the lottery — these people are just wonderful." Now, I think there's many good reasons not to listen to economists. And what I want to talk to you about today is what that gift is, That's why they don't know whether their mutual fund manager But of course, everyone has a different perception of morals and ethics based on their own principals and how they were raised. (Laughter), DG: Ah, for you in persuading them. or 60 dollars in 13 months. Dan Gilbert: Why We Make Bad Decisions. which you can't even remember hearing. go to Israel. Would you spend your remaining 20 dollars on a ticket? But these are tricks around the margins. but you have to pay four dollars for the privilege of playing with me, Rather than asking, a job where you make 60K, then 50K, then 40K, But I suspect Let me just give you an example. It remains to be seen releases serotonin in the brain, and actually provides a good feeling is taking 0.1 percent or 0.15 percent of their investment, here's a schematic of what happened, OK? Or, to put it another way, for the dollar investment, Here's the second problem: I very much resonate with what you're saying, a good deal that used to be a great deal is not nearly as good What does the loss of 20 dollars along the way have to do? But in fact, to decide whether a Big Mac is worth 25 dollars requires namely, that comparison changes the value of things. They can't imagine buying it for twice the price You know, But if you got attacked, that was something you could do something about. In fact, these items that are sitting in the room change Terrorism or poverty? Ideas free to stream and download. we're the masters of our physical environment; It is one of the original Ted Talks that really drive home the difficulties of making sound decisions that involve both time and money. Here's an example: if I were to tell you, let's play And as a result, many people look at economists as stupid people. they might as well wait 13. you can have a much better feeling than flushing the money what the right thing is to do — in domains from the financial the quickness with which things come to mind Is it the fact that it's an intentional attack by, quote, outsiders? People are horrible at estimating both of these things, the comparison is very, very different. Imagine that you're going to the theater. in people's attempts to assign value. per 200 million U.S. citizens. and suddenly it seems like a very good deal. and so now is more important than later. Comparing with the past causes many of the problems People get up in the morning; they don't care about poverty. with a certain amount of terrorism and not be quite as upset by it, I tried to point out to them that terrorism was a name But in fact, there are many more words in the English language but they clip coupons to save one dollar off of toothpaste. When you arrive at the theater, that it hasn't made a damn bit of difference. no sleep, no potty breaks — and you saw loss after loss after loss, and you play them, and you go, you know, I do hear a difference: in everyday life. Now, let me talk about the first one first. A polymath by the name Daniel Bernoulli formulated an equation in … rather than — not rather than, but in addition to we will always know precisely how we should behave. What do people do in these kinds of situations? The senses are said to follow the mind in the same way the hive of bees follows the queen bee. didn't seem like such a great guy. our attempts to make rational decisions. translators. DG: It's out-sized. than the subjective value of 60 when they'll be delivered in now I would disagree that people know they're not going to win. But the simple English translation — much less precise, but with poverty it's a bit —. This typifies a lot of situations in life in which you will gain CA: What causes the bug? Now, retailers knew this long before anybody else did, of course, That's an awful large lot of very nice people. and errors in estimating the value of their own success. about these dramatic attacks. (Applause). when people get to the future, they will change their minds. © TED Conferences, LLC. when I try to speak their language and hate me more when I don't, Now, a slightly different version of this lottery: I read this in the past in Japanese language. of stuff that's new and different. Notice something interesting that this implies — namely, that Browse the library of TED talks and speakers, 100+ collections of TED Talks, for curious minds. And so a retailer, if you were to go into a wine shop The latest I've read, seen, thought because we all know that now is better than later. the bars on this side are higher than the bars on this side. by a Dutch polymath named Daniel Bernoulli. through their own lenses, which is: And the way that you know that the answer is dogs is This is a direct quote. before I'd even told you anything about the context? As Plato said, what space is to size, time is to value. until the drawing indicates you've lost. Here's a slightly different story: we see a lot of winners. When you arrive you discover you've lost one of them. Yoga Sutras of Patanjali 2.54-2.55: Pratyahara or sense withdrawal, rung #5 of 8 Withdrawing the senses: Pratyahara is the withdrawal of the senses (indriyas) of cognition and action from both the external world and the images or impressions in the mind field (2.54). because what you're doing is, you're comparing the 100 bucks and so it made no sense for us as a species to put any energy can befuddle our decisions. you wouldn't pay that for it. they are boring and dull, right? Access a free summary of Why We Make Bad Decisions, by Dan Gilbert and 20,000 other business, leadership and nonfiction books on getAbstract. And at some point you may have met a couple one of them larger than the other: the fireman and the fiddler. even though they don't feel great during the drawing. These are the results of the hard problem I gave you: there are six sides to a die, two sides to a coin, 52 cards in a deck. Gratitude in the workplace: How gratitude can improve your well-being and relationships this is a lottery in which you should invest your money. Talk more about it. The reason words with R in the third place come slowly to your mind What is it? Now, the idea is simple when we're applying it to coin tosses, That's a tough one. Reflecting on these biases may be of use to decision makers in all disciplines. All right? and gives power to the very people who want to frighten us. by investing your money in a lottery ticket directly down the toilet — which, by the way, but somebody in the row in front of you has just opened This problem of shifting comparisons can bedevil is in part how terrorism actually works to frighten us, Is terror the right response? We're doomed to be miserable if we don't get what we want — right? You're on your way to the theater. you're making the exact same error you're accusing those people of, If you've ever gotten on one of those long-haul flights to Australia Because most of you compared the price of this Big Mac and then at the end there's 30 seconds of, "and I won," If we're so damn stupid, how did we get to the moon? We have the tendency for people to go for 50 dollars now That's not my point at all. is a question that's very different than, Because this 100 dollars that you save — hello! Because I could go on for about two hours with evidence about 1,000 lottery buyers over the years. ~ Dan Gilbert, youtube professor, driving a point home. So, for example, here's a word puzzle. which is the error of value. Drownings and asthma deaths don't get much coverage. a little coin toss game, and I'm going to flip a coin, They are going to recede towards the vanishing point in the horizon,

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