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Here are ordinary people making incredibly stupid decisions on behalf of their children. I trust this is not staged and I hope many parents walked away from this.
Decision making is often viewed as a rational process, particularly in traditional economics. I fail to find any rationality in this particular setting.
What goes through these people’s head remains a mystery to me. Take a look.
Traditionally, decision making in organizations is considered to be entirely rational. Pros and cons are carefully looked at and compared by perceptive minds, probabilities of outcomes and expected values are painstakingly calculated, and, the one and the only perfect decision is made.
Nothing can be further from the truth.
Recently, I spoke in front of 130 professionals on the subject of decision making and business cases. To illustrate the key principles of behavioral economics, I conducted a survey with two groups of 10 participants. Both groups were asked the same question, which went like this: “You are shopping with a friend. You are about to buy an item when your friend tells you that she saw it in a store within a 10 minute walk and it was $7 less than what you are about to pay. Will you go to that store now to take advantage of the lower price?”
The first group was told that they were shopping for a $25 pen. Eight out ot ten said they would take the 10-minute walk. The second group was shopping for a $450 suit. Only two out of ten said they would go.
But the question has nothing to do with the cost of the item, it is really about the cost of your time. Is a 10-minute walk worth $7 or not?
In fact, even most basic of our brain’s functions can be fooled. Take a look at this wicked visual illusion, for example.