Are we in control of our decisions? | Dan Ariely

Summary

In this engaging talk, the speaker humorously explores irrational human behavior, using visual illusions as a metaphor for cognitive biases. They delve into how our decisions are heavily influenced by factors like default choices and the presence of inferior options, which can skew our preferences. The speaker challenges the traditional economic view of humans as rational actors, advocating for a design of systems that accommodate our cognitive limitations, much like we do with physical ones.

Takeaways

• 😄 The speaker initially found writing academic papers unexciting and sought to write a more enjoyable cookbook titled 'Dining Without Crumbs: The Art of Eating Over the Sink'.
• 📚 After facing rejections for the cookbook idea, the speaker was advised to first publish academic work to gain credibility and then pursue other writing interests.
• 🔍 The experience of writing academic research turned out to be enjoyable and enlightening, with the speaker gaining insights from feedback and personal experiences shared by readers.
• 👀 The script uses visual illusions to illustrate the concept of irrational behavior, showing that even our most trusted senses can deceive us.
• 🌐 The speaker suggests that if we are prone to mistakes in something we are highly evolved to do, like seeing, we are likely to make even more errors in areas we are less evolved for, such as financial decision-making.
• 📉 The difference in organ donation rates across European countries is attributed not to cultural or religious differences, but to the way the opt-in forms are designed at the DMV.
• 🗳️ The design of a form can significantly influence decision-making, as seen in the organ donation example, where a negative framing ('Check the box if you don't want to participate') led to higher participation rates.
• 🤔 The illusion of control over our decisions is challenged by the fact that external factors, such as the design of a form or the presence of a default option, can sway our choices.
• 👨‍⚕️ Even experts, like physicians, can be influenced by the complexity of choices presented to them, as shown in the study where the addition of a second medication option led to a different treatment decision.
• 🚗 The concept of 'decoy effects' is demonstrated, where the presence of an inferior option can make another option seem more attractive, influencing people's choices.
• 💰 An example from The Economist's subscription offer shows how the inclusion and removal of an option can drastically change the popularity of other options, highlighting our susceptibility to external influences in decision-making.
• ❤️ Physical attractiveness can be influenced by comparison, where the presence of a less attractive counterpart can make someone more appealing, affecting dating choices.

Q & A

Why did the speaker initially decide to write a cookbook?

The speaker found writing academic papers unexciting and wanted to write something more enjoyable, which led to the idea of a cookbook titled 'Dining Without Crumbs: The Art of Eating Over the Sink.'

What was the speaker's experience when trying to get the cookbook published?

The speaker faced rejection from various publishers, including MIT Press, who found the idea 'cute' but not suitable for them. The speaker was advised to first publish academic work before venturing into other genres.

How did the speaker's perspective on writing change after writing a book on their research?

The speaker found the process of writing about their research enjoyable and discovered the value of feedback from readers, which led to learning and personal growth.

What is the significance of visual illusions in the context of the speaker's talk on irrational behavior?

Visual illusions serve as a metaphor for rationality, demonstrating how our intuition can deceive us in predictable and consistent ways, much like cognitive illusions in decision-making.

Why do some European countries have higher organ donation rates than others, according to the speaker?

The difference in organ donation rates is attributed to the design of forms at the DMV. Countries with higher rates use a form that presumes consent unless opted out, while countries with lower rates ask people to actively check a box to participate.

What does the speaker imply about the role of defaults in decision-making?

The speaker implies that defaults have a significant impact on decision-making, as they can influence people's choices without them realizing it, even in complex and important decisions.

What experiment did the speaker conduct to illustrate the power of inferior options in decision-making?

The speaker used an example of a weekend trip to Rome with or without coffee and compared it to a trip to Paris. The presence of an inferior option (Rome without coffee) made the superior option (Rome with coffee) more attractive.

How did the speaker's experiment with The Economist's subscription offer demonstrate the influence of irrelevant options?

By adding an irrelevant middle option (print subscription for the same price as both print and online), the speaker showed that it influenced people to choose the combo deal. When the middle option was removed, the preferences shifted, indicating the power of context in decision-making.

What does the speaker suggest about our understanding of our own preferences?

The speaker suggests that our preferences are not as well-defined as we might think and are susceptible to external influences such as defaults and the presence of other options.

What implications does the speaker draw from the experiment involving physical attractiveness and dating choices?

The speaker illustrates that the presence of a less attractive version of a person can make the more attractive version more desirable, suggesting that our perceptions of attractiveness are relative and can be influenced by comparisons.

What is the broader message the speaker hopes to convey about human behavior and decision-making?

The speaker advocates for a better understanding of our cognitive limitations, suggesting that if we design systems and policies with these limitations in mind, we could create a better world that accommodates human irrationality.

Outlines

00:00

😄 The Pursuit of Unconventional Writing: A Cookbook Journey

The speaker, after finding academic paper writing unfulfilling, decides to write a cookbook titled 'Dining Without Crumbs: The Art of Eating Over the Sink'. The book is intended to be a humorous and insightful look into life through the lens of the kitchen. Despite initial enthusiasm, MIT Press and others reject the idea, suggesting the author first publish academic work. Reluctantly, during a sabbatical, the author writes a book on their research, which surprisingly becomes an enjoyable and enlightening experience due to the valuable feedback received from readers. This experience leads to the speaker's deeper exploration of irrational behavior, using visual illusions as a metaphor to illustrate how our intuition can be consistently and predictably deceived, much like in cognitive illusions that are harder to detect and correct.

05:03

📊 Cognitive Illusions and Decision-Making: The Power of Defaults

The speaker presents cognitive illusions or decision-making biases using the example of organ donation rates across European countries. A significant disparity is observed, which is initially attributed to cultural or religious differences. However, the actual reason turns out to be the design of a form at the Department of Motor Vehicles (DMV). Countries with higher donation rates have a form that presumes consent unless opted out, while those with lower rates have a form that requires active checking to participate. This demonstrates how the design of choices can significantly influence decision-making, often more than the individual's actual preference or belief. The speaker emphasizes the illusion of control people have over their decisions and how external factors, such as default options, can sway choices even in matters as significant as organ donation.

10:03

🤔 The Complexity of Decisions and the Influence of Defaults

The speaker discusses a study involving physicians presented with a case of a patient needing a hip replacement. When given the option to reconsider due to an overlooked medication, most physicians choose to delay the surgery. However, when an additional medication is introduced, creating a more complex decision, the majority opt for the surgery. This illustrates the power of defaults and how complexity can sway decisions towards the path of least resistance. The speaker also uses the example of a hypothetical weekend getaway choice between Rome and Paris, and how the introduction of an inferior option can influence preferences. The principle is further demonstrated with an ad from The Economist, where the inclusion and subsequent removal of an unappealing middle option dramatically affected the popularity of the other options, showing that our preferences are not as fixed as we might think and can be easily influenced by external factors.

15:04

😂 The Role of Comparison in Attraction and Decision-Making

In the final paragraph, the speaker explores the impact of comparison on attraction and decision-making. An experiment is described where participants are shown pictures of two individuals, Tom and Jerry, and asked to choose who they would prefer to date. When an unattractive version of one of the individuals is introduced, it makes the more attractive version more popular. This effect has practical implications, such as suggesting that when going out, one might benefit from being accompanied by someone slightly less attractive. The speaker humorously points out that if invited bar-hopping, one should consider what this says about how they are perceived by others. The overarching message is that the field of behavioral economics offers a less idealized but more realistic view of human nature, and understanding our cognitive limitations could lead to better design of systems like healthcare, retirement plans, and stock markets.

Keywords

💡Irrational behavior

Irrational behavior refers to actions that do not conform to the expected norms of logic or reason. In the video, the speaker uses this concept to explore how people's decisions are often influenced by factors beyond their rational control, such as visual illusions and cognitive biases. The script discusses various examples, such as the organ donation rates in different European countries, to illustrate how irrational behavior can manifest in everyday life.

💡Visual illusion

A visual illusion is a perceptual phenomenon where the brain misinterprets the information it receives from the eyes, leading to a false perception of reality. The video uses visual illusions as metaphors for the irrationality of human decision-making. For example, the speaker presents an illusion where two lines appear to be of different lengths when they are actually the same, demonstrating how our intuition can deceive us.

💡Cognitive illusion

Cognitive illusion pertains to errors in thinking and judgment that are not based on sensory input but on mental processes. The script discusses cognitive illusions in the context of decision-making, such as how the design of a form can influence whether someone becomes an organ donor. This concept is used to show that our decisions are not always the result of conscious, rational thought.

💡Behavioral economics

Behavioral economics is a field of study that combines insights from psychology with traditional economic theory to understand how people make decisions. The video's speaker, a proponent of this field, uses it to explain the various cognitive biases and heuristics that affect our choices. The script provides examples of how seemingly minor changes in the presentation of options can significantly alter our preferences.

💡Defaults

Defaults are preset options that require no action to be chosen. In the context of the video, the speaker discusses how defaults can have a powerful influence on decision-making. For instance, the script mentions that the way a form is designed at the DMV can affect whether people choose to become organ donors, with a default option subtly guiding their choice.

💡Decision-making

Decision-making is the cognitive process of selecting a course of action from multiple alternatives. The video's theme revolves around the irrational aspects of decision-making, highlighting how our choices are not always rational and can be swayed by factors such as visual illusions, cognitive biases, and the design of decision environments.

💡Feedback

Feedback in the video refers to the responses and information received from others, which can influence one's understanding or perspective. The speaker mentions enjoying the feedback received while writing about their research, as it provided new insights and perspectives that they may not have considered otherwise.

💡Sabbatical

A sabbatical is a period of paid leave granted to an employee to pursue non-company-related activities, often for rest, travel, or study. In the script, the speaker mentions taking a sabbatical to write a book about their research, which they initially did not want to do but eventually found enjoyable and enlightening.

💡Cognitive limitations

Cognitive limitations refer to the inherent constraints in human mental processing, such as the inability to process large amounts of information or the tendency to rely on heuristics. The video suggests that understanding and acknowledging these limitations could lead to better design in various domains, such as healthcare and finance, by accounting for how people actually make decisions.

💡Inferior option

An inferior option is a choice that is clearly less desirable than the alternatives. The video uses the concept of an inferior option to illustrate how the presence of such an option can influence decision-making, making other options appear more attractive by comparison. The script gives the example of a trip to Rome without coffee, which makes the same trip with coffee seem more appealing.

💡Physical attraction

Physical attraction is the degree to which a person finds another person's appearance appealing. The video discusses an experiment involving perceptions of physical attractiveness, showing how the presence of a less attractive counterpart can make someone more appealing. This concept is used to demonstrate how our preferences are not fixed but can be influenced by context.

Highlights

The speaker decided to write a cookbook titled 'Dining Without Crumbs: The Art of Eating Over the Sink' as a more enjoyable alternative to academic papers.

MIT Press and others rejected the cookbook idea, suggesting the speaker should first publish academic work to gain credibility for other writing ventures.

During a sabbatical, the speaker wrote a book on their research and found the process enjoyable and enlightening through feedback from readers.

Visual illusions are used as a metaphor for rationality, demonstrating how our intuition can deceive us even when we are very good at something like vision.

The speaker discusses the difficulty of overcoming visual illusions, even when proven wrong, highlighting the persistence of cognitive biases.

Cognitive illusions in decision-making are compared to visual illusions, suggesting we are prone to more mistakes in areas we are less evolved to handle, like financial decisions.

A study by Johnson and Goldstein is mentioned, showing significant differences in organ donation rates across European countries, seemingly unrelated to cultural or religious similarities.

The impact of default settings on forms at the DMV greatly influences organ donation rates, with countries using an opt-out system having higher participation.

The speaker argues that many decisions we believe are our own are actually heavily influenced by the choices designed by others, such as the form designer at the DMV.

A study by Redelmeier and Shafir demonstrates that even medical experts' decisions can be swayed by the complexity of choices presented to them.

The addition of an inferior option in a choice set can make a previously less popular option more attractive by comparison, as seen with a hypothetical Rome trip example.

The Economist's subscription offer is highlighted as a real-world example of the decoy effect, where an obviously inferior option makes another option seem like a better deal.

An experiment with MIT students showed that removing an unwanted middle option from a choice set can significantly shift preferences to what was previously the least popular option.

The speaker discusses the susceptibility of our preferences to external influences, such as defaults and presented options, indicating we do not know our preferences as well as we think.

An experiment on physical attraction showed that the presence of a less attractive version of a person can make the more attractive version more desirable.

The speaker concludes by advocating for the understanding of cognitive limitations in design, drawing a parallel to how we accommodate physical limitations in the built environment.

Behavioral economics offers a more realistic view of human nature and decision-making, suggesting that acknowledging our cognitive biases could lead to better design of systems like healthcare and retirement.

Transcripts

I'll tell you a little bit about irrational behavior.

Not yours, of course -- other people's.

(Laughter)

So after being at MIT for a few years,

I realized that writing academic papers is not that exciting.

You know, I don't know how many of those you read,

but it's not fun to read and often not fun to write --

even worse to write.

So I decided to try and write something more fun.

And I came up with an idea that I would write a cookbook.

And the title for my cookbook was going to be,

"Dining Without Crumbs: The Art of Eating Over the Sink."

(Laughter)

And it was going to be a look at life through the kitchen.

I was quite excited about this.

I was going to talk a little bit about research,

a little bit about the kitchen.

We do so much in the kitchen, I thought this would be interesting.

I wrote a couple of chapters, and took it to MIT Press and they said,

"Cute, but not for us. Go and find somebody else."

I tried other people, and everybody said the same thing,

"Cute. Not for us."

Until somebody said,

"Look, if you're serious about this,

you have to write about your research first; you have to publish something,

then you'll get the opportunity to write something else.

If you really want to do it, you have to do it."

I said, "I don't want to write about my research.

I do it all day long,

I want to write something a bit more free, less constrained."

And this person was very forceful and said,

"Look, that's the only way you'll ever do it."

So I said, "Okay, if I have to do it --"

I had a sabbatical.

I said, "I'll write about my research, if there's no other way.

And then I'll get to do my cookbook."

So, I wrote a book on my research.

And it turned out to be quite fun in two ways.

First of all, I enjoyed writing.

But the more interesting thing was that I started learning from people.

It's a fantastic time to write,

because there's so much feedback you can get from people.

People write to me about their personal experience,

and about their examples, and where they disagree,

and their nuances.

And even being here -- I mean, the last few days,

I've known heights of obsessive behavior

I never thought about.

(Laughter)

Which I think is just fascinating.

I will tell you a little bit about irrational behavior,

and I want to start by giving you some examples of visual illusion

as a metaphor for rationality.

So think about these two tables.

And you must have seen this illusion.

If I asked you what's longer, the vertical line on the table on the left,

or the horizontal line on the table on the right,

which one seems longer?

Can anybody see anything but the left one being longer?

No, right? It's impossible.

But the nice thing about visual illusion is we can easily demonstrate mistakes.

So I can put some lines on; it doesn't help.

I can animate the lines.

And to the extent you believe I didn't shrink the lines,

which I didn't, I've proven to you that your eyes were deceiving you.

Now, the interesting thing about this is when I take the lines away,

it's as if you haven't learned anything in the last minute.

(Laughter)

You can't look at this and say, "Now I see reality as it is."

Right? It's impossible to overcome this sense that this is indeed longer.

Our intuition is really fooling us

in a repeatable, predictable, consistent way.

and there is almost nothing we can do about it,

aside from taking a ruler and starting to measure it.

Here's another one. It's one of my favorite illusions.

What color is the top arrow pointing to?

Audience: Brown. Dan Ariely: Brown. Thank you.

The bottom one? Yellow.

Turns out they're identical.

Can anybody see them as identical?

Very, very hard.

I can cover the rest of the cube up.

If I cover the rest of the cube, you can see that they are identical.

If you don't believe me, you can get the slide later

and do some arts and crafts and see that they're identical.

But again, it's the same story, that if we take the background away,

the illusion comes back.

There is no way for us not to see this illusion.

I guess maybe if you're colorblind, I don't think you can see that.

I want you to think about illusion as a metaphor.

Vision is one of the best things we do.

We have a huge part of our brain dedicated to vision --

bigger than dedicated to anything else.

We use our vision more hours of the day than anything else.

We're evolutionarily designed to use vision.

And if we have these predictable repeatable mistakes in vision,

which we're so good at,

what are the chances we won't make even more mistakes

in something we're not as good at, for example, financial decision-making.

(Laughter)

Something we don't have an evolutionary reason to do,

we don't have a specialized part of the brain for,

and we don't do that many hours of the day.

The argument is in those cases,

it might be that we actually make many more mistakes.

And worse -- not having an easy way to see them,

because in visual illusions, we can easily demonstrate the mistakes;

in cognitive illusion it's much, much harder

to demonstrate the mistakes to people.

So I want to show you some cognitive illusions,

or decision-making illusions, in the same way.

And this is one of my favorite plots in social sciences.

It's from a paper by Johnson and Goldstein.

It basically shows the percentage of people who indicated

they would be interested in donating their organs.

These are different countries in Europe.

You basically see two types of countries:

countries on the right, that seem to be giving a lot;

and countries on the left that seem to giving very little,

or much less.

The question is, why?

Why do some countries give a lot and some countries give a little?

When you ask people this question,

they usually think that it has to be about culture.

How much do you care about people?

Giving organs to somebody else

is probably about how much you care about society, how linked you are.

Or maybe it's about religion.

But if you look at this plot,

you can see that countries that we think about as very similar,

actually exhibit very different behavior.

For example, Sweden is all the way on the right,

and Denmark, which we think is culturally very similar,

is all the way on the left.

Germany is on the left, and Austria is on the right.

The Netherlands is on the left, and Belgium is on the right.

And finally, depending on your particular version

of European similarity,

you can think about the U.K. and France as either similar culturally or not,

but it turns out that with organ donation, they are very different.

By the way, the Netherlands is an interesting story.

You see, the Netherlands is kind of the biggest of the small group.

It turns out that they got to 28 percent

after mailing every household in the country a letter,

begging people to join this organ donation program.

You know the expression, "Begging only gets you so far."

It's 28 percent in organ donation.

(Laughter)

But whatever the countries on the right are doing,

they're doing a much better job than begging.

So what are they doing?

Turns out the secret has to do with a form at the DMV.

And here is the story.

The countries on the left have a form at the DMV

that looks something like this.

"Check the box below if you want to participate in the organ donor program."

And what happens?

People don't check, and they don't join.

The countries on the right, the ones that give a lot,

have a slightly different form.

It says, "Check the box below if you don't want to participate ..."

Interestingly enough, when people get this,

they again don't check, but now they join.

(Laughter)

Now, think about what this means.

You know, we wake up in the morning and we feel we make decisions.

We wake up in the morning and we open the closet;

we feel that we decide what to wear.

we open the refrigerator and we feel that we decide what to eat.

What this is actually saying,

is that many of these decisions are not residing within us.

They are residing in the person who is designing that form.

When you walk into the DMV,

the person who designed the form will have a huge influence

on what you'll end up doing.

Now, it's also very hard to intuit these results.

Think about it for yourself.

How many of you believe

that if you went to renew your license tomorrow,

and you went to the DMV,

and you encountered one of these forms,

that it would actually change your own behavior?

Very hard to think that it would influence us.

We can say, "Oh, these funny Europeans, of course it would influence them."

But when it comes to us,

we have such a feeling that we're in the driver's seat,

such a feeling that we're in control and we are making the decision,

that it's very hard to even accept the idea

that we actually have an illusion of making a decision,

rather than an actual decision.

Now, you might say,

"These are decisions we don't care about."

In fact, by definition, these are decisions

about something that will happen to us after we die.

How could we care about something less

than about something that happens after we die?

So a standard economist, somebody who believes in rationality,

would say, "You know what?

The cost of lifting the pencil and marking a "V" is higher

than the possible benefit of the decision,

so that's why we get this effect."

(Laughter)

But, in fact, it's not because it's easy.

It's not because it's trivial. It's not because we don't care.

It's the opposite. It's because we care.

It's difficult and it's complex.

And it's so complex that we don't know what to do.

And because we have no idea what to do,

we just pick whatever it was that was chosen for us.

I'll give you one more example.

This is from a paper by Redelmeier and Shafir.

And they said, "Would this effect also happens to experts?

People who are well-paid, experts in their decisions,

and who make a lot of them?"

And they took a group of physicians.

They presented to them a case study of a patient.

They said, "Here is a patient. He is a 67-year-old farmer.

He's been suffering from right hip pain for a while."

And then, they said to the physicians,

"You decided a few weeks ago

that nothing is working for this patient.

All these medications, nothing seems to be working.

So you refer the patient for hip replacement therapy.

Hip replacement. Okay?"

So the patient is on a path to have his hip replaced.

Then they said to half of the physicians,

"Yesterday, you reviewed the patient's case,

and you realized that you forgot to try one medication.

You did not try ibuprofen.

What do you do? Do you pull the patient back and try ibuprofen?

Or do you let him go and have hip replacement?"

Well, the good news is that most physicians in this case

decided to pull the patient and try ibuprofen.

Very good for the physicians.

To the other group of physicians, they said,

"Yesterday when you reviewed the case, you discovered there were two medications

you didn't try out yet -- ibuprofen and piroxicam."

You have two medications you didn't try out yet.

What do you do? You let him go, or you pull him back?

And if you pull him back, do you try ibuprofen or piroxicam? Which one?"

Now, think of it:

This decision makes it as easy to let the patient continue with hip replacement,

but pulling him back, all of the sudden it becomes more complex.

There is one more decision.

What happens now?

The majority of the physicians now choose to let the patient go

for a hip replacement.

I hope this worries you, by the way --

(Laughter)

when you go to see your physician.

The thing is that no physician would ever say,

"Piroxicam, ibuprofen, hip replacement. Let's go for hip replacement."

But the moment you set this as the default,

it has a huge power over whatever people end up doing.

I'll give you a couple of more examples on irrational decision-making.

Imagine I give you a choice:

Do you want to go for a weekend to Rome, all expenses paid --

hotel, transportation, food, a continental breakfast, everything --

or a weekend in Paris?

Now, weekend in Paris, weekend in Rome -- these are different things.

They have different food, different culture, different art.

Imagine I added a choice to the set that nobody wanted.

Imagine I said, "A weekend in Rome,

a weekend in Paris,

or having your car stolen?"

(Laughter)

It's a funny idea, because why would having your car stolen,

in this set, influence anything?

(Laughter)

But what if the option to have your car stolen was not exactly like this?

What if it was a trip to Rome, all expenses paid,

transportation, breakfast,

but it doesn't include coffee in the morning?

If you want coffee, you have to pay for it yourself, it's two euros 50.

(Laughter)

Now in some ways,

given that you can have Rome with coffee,

why would you possibly want Rome without coffee?

It's like having your car stolen. It's an inferior option.

But guess what happened?

The moment you add Rome without coffee,

Rome with coffee becomes more popular, and people choose it.

The fact that you have Rome without coffee

makes Rome with coffee look superior,

and not just to Rome without coffee -- even superior to Paris.

(Laughter)

Here are two examples of this principle.

This was an ad in The Economist a few years ago

that gave us three choices:

an online subscription for 59 dollars,

a print subscription for 125 dollars,

or you could get both for 125.

(Laughter)

Now I looked at this, and I called up The Economist,

and I tried to figure out what they were thinking.

And they passed me from one person to another to another,

until eventually I got to the person who was in charge of the website,

and I called them up, and they went to check what was going on.

The next thing I know, the ad is gone, no explanation.

So I decided to do the experiment

that I would have loved The Economist to do with me.

I took this and I gave it to 100 MIT students.

I said, "What would you choose?"

These are the market shares -- most people wanted the combo deal.

Thankfully, nobody wanted the dominant option.

That means our students can read.

(Laughter)

But now, if you have an option that nobody wants,

you can take it off, right?

So I printed another version of this,

where I eliminated the middle option.

I gave it to another 100 students. Here is what happened:

Now the most popular option became the least popular,

and the least popular became the most popular.

What was happening was the option that was useless,

in the middle, was useless in the sense that nobody wanted it.

But it wasn't useless in the sense that it helped people figure out

what they wanted.

In fact, relative to the option in the middle,

which was get only the print for 125,

the print and web for 125 looked like a fantastic deal.

And as a consequence, people chose it.

The general idea here, by the way,

is that we actually don't know our preferences that well.

And because we don't know our preferences that well,

we're susceptible to all of these influences from the external forces:

the defaults, the particular options that are presented to us, and so on.

One more example of this.

People believe that when we deal with physical attraction,

we see somebody, and we know immediately whether we like them or not,

if we're attracted or not.

This is why we have these four-minute dates.

So I decided to do this experiment with people.

I'll show you images here, no real people, but the experiment was with people.

I showed some people a picture of Tom, and a picture of Jerry.

and I said, "Who do you want to date?

Tom or Jerry?"

But for half the people, I added an ugly version of Jerry.

I took Photoshop and I made Jerry slightly less attractive.

(Laughter)

For the other people, I added an ugly version of Tom.

And the question was, will ugly Jerry and ugly Tom

help their respective, more attractive brothers?

The answer was absolutely yes.

When ugly Jerry was around, Jerry was popular.

When ugly Tom was around, Tom was popular.

(Laughter)

This of course has two very clear implications

for life in general.

If you ever go bar-hopping, who do you want to take with you?

(Laughter)

You want a slightly uglier version of yourself.

(Laughter)

Similar, but slightly uglier.

(Laughter)

The second point, or course, is that if somebody invites you to bar hop,

you know what they think about you.

(Laughter)

Now you get it.

What is the general point?

The general point is that,

when we think about economics, we have this beautiful view of human nature.

"What a piece of work is a man! How noble in reason!"

We have this view of ourselves, of others.

The behavioral economics perspective is slightly less "generous" to people;

in fact, in medical terms,

that's our view.

(Laughter)

But there is a silver lining.

The silver lining is, I think,

kind of the reason that behavioral economics is interesting and exciting.

Are we Superman, or are we Homer Simpson?

When it comes to building the physical world,

we kind of understand our limitations.

We build steps.

And we build these things that not everybody can use, obviously.

(Laughter)

We understand our limitations,

and we build around them.

But for some reason, when it comes to the mental world,

when we design things like healthcare and retirement and stock markets,

we somehow forget the idea that we are limited.

I think that if we understood our cognitive limitations

in the same way we understand our physical limitations,

even though they don't stare us in the face the same way,

we could design a better world, and that, I think,

is the hope of this thing.

Thank you very much.

(Applause)