Why Amazon doesn't need manners to win you over

 A mildly interesting facet of behavioural economics was on display over this weekend when Amazon launched a sale.  A food product that I wished to buy had a condition attached: only 3 units per customer (Amazon did not say, please.  Manners were never their strong point).  That’s artificial scarcity, isn’t it?

Here’s what research on shopping behaviour tells us: when there is a limit (like the one above), shoppers tend to buy more - that’s right, more - than when there isn’t one.  That phrase - limit of three - acts as an anchor in our (generally muddled) heads.

Which, of course, brings me to my gurus Dan Kanhemann and Amos Tversky and a story.  They once rigged a wheel of fortune.  It was marked from 0 to 100, but they had it built so that it would stop only at 10 and 65.  They then got students of the Univ of Oregon as participants in this experiment.  The wheel would be spun and the students would write down the number on which the wheel stopped, which, of course, was either 10 or 65.

This was followed by two questions:

• Is the percentage of African nations among UN members larger or smaller than the number you just wrote?

• What is your best guess of the percentage of African nations at the UN?

You can guess what the students did, right?  

Those who saw 10 estimated that 25% of African nations were represented at the UN.  Those who saw 65?  

Their guess was around 45%. 

Anchoring is a pervasive bias.  The Decision Lab has this to say:

The anchoring bias is a cognitive bias that causes us to rely heavily on the first piece of information we are given about a topic. When we are setting plans or making estimates about something, we interpret newer information from the reference point of our anchor instead of seeing it objectively. This can skew our judgement and prevent us from updating our plans or predictions as much as we should.

https://thedecisionlab.com/biases/anchoring-bias

Here’s just one example of this bias ( in taking investment decisions) and why we need to learn about it and our propensity to be influenced by it:

https://www.financialexpress.com/money/equity-investing-how-to-avoid-anchoring-bias-when-investing-2223428/

…and a great piece on how to deal with it:

https://hbr.org/2022/08/dont-let-anchoring-bias-weigh-down-your-judgment

Are your gut bacteria asking for Vaseline?

This post is remarkable, isn't it? 

 
Can you guess which bias - a bias in each one of us (which we may not want to admit) - gets triggered by posts such as these?

Some options for you to pick from:
- The Confirmation Bias
- The Sunk Cost Bias
- The Survivorship Bias
- The Halo Effect
- The Conformity Bias
- None of the above (now I sound like an exam paper, albeit one that hasn't leaked out) 
If none of the above, then what is it?

Happy Tuesday and keep that frown upside down 🙂
Scroll down for the answer......…

No, some more down.......

Yuppp, some more down.......

Well, it is the Survivorship bias that might be triggered by posts like these: someone lived to be 96, after eating vaseline every day, so.....
...so should I do that too?

It's a false correlation, of course.  If it were true and endorsed by medical science, all of us would have vaseline stocked in the kitchen, alongside Chawanprash.  

Ok, so what if - just if - there is a correlation?

Nope, even if there were to be correlation, it does not mean causation - that one causes the other: One person has vaseline, lives long, does not mean it's the mandatory dietary reco for a long life.  He could have lived long because he brushed his teeth with pumpkin paste or walked on walnuts or (as is more likely) had a good set of genes (moral: choose your parents wisely).

Back to Survivorship Bias:  
Have you been getting carried away by it and justifying it to yourself (and others)?  Learning more about this can save you a lot of money (and time and other equally useful stuff).  

Lives too, as Abraham Wald will tell you.

To learn more about survivorship bias, here's the place to go to:
https://thedecisionlab.com/biases/survivorship-bias
And don't miss the story of Abraham Wald in this article, if you haven't heard it before - it's just brilliant!