Behaviouronomics

In February this year, when it became clear that Covid19 was not just another seasonal flu to lose steam on its own and people started stocking masks, the world health organization (WHO) declared that masks were required only for health workers. Very soon WHO changed their opinion and said that those who were sick and had symptoms should don the mask and others don’t need the mask. And within a few weeks, WHO changed their statement again, recommending that everyone should wear masks.

This frequently changing stance invited a lot of flak from the people. Some even accused WHO of consciously misleading people to safeguard the interest of certain special people.

In our culture, we hold people accountable for being consistent in their opinions and actions. Especially from politicians, corporate executives and other leading figures.
[Read more…] about Behaviouronomics: How to Actually Change Your Mind

On October 12, 1980 Steve Titus, a restaurant manager in Seattle, was pulled over by a police officer. Titus was on his way home with his girlfriend.

The officer informed him that his car resembled a car that was driven earlier in the evening by a man who raped a female hitchhiker. So they took Titus’ picture and put it in a photo lineup which was later shown to the victim. She pointed to Titus’ photo and said, “That one’s the closest.”

Based on this, Titus was put on trial. In the court, the rape victim confirmed, “I’m absolutely positive that’s the man.” That was enough to convict him. The judge pronounced him guilty and sent him to prison.
[Read more…] about Behaviouronomics: Memory Bias

On March 24, in his address to the nation, when our Prime Minister Mr. Narendra Modi announced the 21-day nationwide lockdown, he drew the country’s attention to an alarming fact about the spread of coronavirus.

He informed us that it took more than two months for the number of coronavirus cases to go from zero to one lakh. But it took two weeks for the next one lakh cases. And then the subsequent one lakh cases came in less than one week.
[Read more…] about Behaviouronomics: Exponential Myopia

In 1987, an investment banker named Steven Rothstein bought a special pass called AAirpass which gave him lifetime privilege of booking first-class American Airlines tickets from anywhere to anywhere in the world for free. The pass wasn’t cheap. It cost him a quarter of a million dollars. But Rothstein was so happy with the deal that in 1989 he paid an additional $1,50,000 to buy a companion pass which allowed another person to accompany Steven in first-class.

One interesting fact about Steven’s companion pass was a clause that he added in his contract about his wife. The agreement stated: “If spouse is the companion, the spouse will be allowed to travel separately from Holder, provided that the spouse travels on the flight immediately prior to or just after the flight taken by Holder.” Steven reasoned that in the unlikely event of a crash, at least one of them would be alive for their three children. It looks like Steven took the idea of risk mitigation too far.
[Read more…] about Behaviouronomics: Selection Bias

Mark Twain famously said — It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

The video below may be a little disturbing for some but it has a very important lesson which can save you not just from financial ruins but also from life-threatening situations.
[Read more…] about Behaviouronomics: Normalcy Bias