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Rabu, 25 Februari 2009

Bias Judgement

Adapted from Dan Ariely's Predictably Irrational
Chapter 9: The Effect of Expectations: Why the Mind Gets What It Expects


Have you ever had an argument with your friends lasting for days? Or even months or years? Or you may be involved in a serious debate with your spouse. You see there's no way out and it seems that progress is nearly possible to achieve. Don't worry. You are not alone. We human are created that way, irrationally defensive to our belief. Only angels (malaikat) do judge merely using facts. Only facts. We are too sophisticated to behave like angels.

I had an uncle, my late uncle, who taught me to eat tempoyak, a traditional seasoning made from fermented durians. It is usually used to season fish (pepes ikan). It also can be used to make merely sambal, called sambal tempoyak. One day in a reception, we were about to self-serve our lunch. Looking at an unusual dish, I asked him whether the fish was served with tempoyak. Calmly he said it's not. So I took the fish and then enjoyed my lunch. Only after I finished my dish, I was told that the fish was served with tempoyak, a kind of food I never tried before. You can guess then. Right? If my uncle told me that it was tempoyak, probably I would never taste tempoyak at all in my life.

Dan Ariely tried to figure out what really happened to me. In fact he did not write about me and tempoyak, but he experimented with his students to taste MIT brewed beer (I apologize to my fellow Moslems that I cite his experiment with alcoholic beverage to explain the point of argument - Y Pan). He provided two types of beer. The MIT brewed beer and standard commercial beer. The MIT brewed beer was actually the standard beer added with two drops of balsamic vinegar per ounce of beer.

In one experiment, he told his students that the MIT brewed beer was adulterated with the balsamic vinegar before they tasted it. The result? After tasting the MIT brewed and the standard beer, typically they disliked the MIT brewed and chose the standard beer as the champion. In another experiment the students were not informed about the balsamic vinegar. The result? OK, you are just right. Many students really liked the MIT brewed. Hey, what happened here? Like me, the students loved the unusual MIT brewed beverage only because they were not told about the balsamic vinegar. In my case it was the tempoyak.

To make sure that information given before judgement really made a difference, Dan conducted a third experiment. Now, the students were not informed about the vinegar before tasting the beer. However, after they made up their mind, choosing the MIT brewed or the standard beer, the students then were told about the vinegar. The information given after judgement did not affect their judgement as in the first case, i.e. when they were told about balsamic vinegar before tasting the beer. They still liked the MIT brewed. They even were willing to add the balsamic vinegar themselves to additional glasses of beer to enjoy.

So prior information or knowledge before a judgement really influences the judgement. The events can be exactly the same. So are the facts. Given the very same facts and events, two friends could have two very rigid, opposing arguments. Prior information sets up their expectations and beliefs. Furthermore, their judgements are effectively biased to those beliefs. To loosen this kind of irrational yet 'effective' judgement, we could dismantle our expectations for a moment and just focus on the facts. It is hard though. We also could try inviting a neutral third-party to facilitate the resolution. Well, it is still not easy.

Finally, although our irrationality could thrive conflicts, whether they are domestic, regional, national, or international, there is no reason for us to give up. We should continue to try to resolve them. Here are some examples of those conflicts to resolve.

Ralph Kimball versus Bill Inmon
Israel versus Palestine
America versus Iraq
America versus Venezuela
America versus Bolivia
Pakistan versus India
SBY versus Megawati
Islamic Parties versus Secular Parties
Partai Demokrat versus Partai Golkar
Labors versus Capitalists
Friends versus Friends
Colleagues versus Colleagues
Husbands versus Wives
Parents versus Children
Etc

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Kamis, 19 Februari 2009

Having Options Doesn't Always Mean Good

Inspired by Dan Ariely's Predictably Irrational
Chapter 8: Keeping Doors Open: Why Options Distract Us from Our Main Objective


Do you like options? Financial options? Real options? O yes, everybody loves options. Although options indeed have values, we must be aware of their costs, in some case high costs. In relation to this issue, Dan Ariely and his colleagues devised a computer game, named The Door Game. Ah, what’s that? Before answering it, I’d like to ensure that in addition to loving options, you do love computer games. If not, probably this article is not interesting for you. OK, in short, The Door Game is a game of options.

You are in a computer screen. There are three doors provided for you to enter, the green door, the red door, and the blue door. You can enter a door then click as many times as you want inside it to receive a series of payoffs. Each door has its own range of payoffs, but in a single click, the payoff is somewhat random within its range. This makes it difficult for you to decide whether a door is better than another only by a single click or even by a few numbers of clicks. Like in real life, you can sense which option is better, but you are never 100% sure about it.

O wait. In real life, you die at some point in time. To simulate that real life situation, The Door Game gives you only 100 clicks. After you use all 100 clicks, the game is over and you will know your final total earning.

Now, consider this strategy. You try the green door and consume three clicks, then you enter the red door and consume three clicks, and then you enter the blue door and consume three clicks too. Based on your exploration using nine clicks, you decide the green door is the best so that you stay there forever until all clicks are used. The result is that you are among the best achiever. Easy? Yes indeed.

To make the game even similar to real life, Dan Ariely changed the game a little bit. If you do not visit a door in consecutive twelve clicks, the door will disappear. It’s like you date three persons and you forget to visit a particular person for a while. The ‘forgotten’ person will turn his / her back to you. In real life, the case will get worse if the person knows that you date other two persons. So it is far better not to do it.

Now, consider this finding. Dan Ariely invited a number of respondents, the bright students of MIT, to play the game. The result of a typical respondent, say Joe, will be something like this. Joe tries to explore the three doors like you did using your brilliant strategy. When he uses a number of clicks, he will discover that one of the doors is about to disappear. To maintain his options, Joe keeps visiting the ‘dying’ doors to make them all alive. In this case, a very smart MIT student, Joe fails to find the green door as his best choice. Why? The reason behind is that we human love to have many options, even if this behavior distracts our main objective. Wow, how irrational!

Dan Ariely again changed the game a bit. He introduced reincarnation. A door not visited in twelve clicks will still disappear. The gone door, however, can be brought to live again only by a single magic click. You may imagine that your best strategy will work now. In your surprise, a typical smart student of MIT recommits what Joe did. The fact that a door is about to disappear, although it can be brought live at anytime, makes us human keep trying to save it, even if this behavior should distract us from our goal. We do it only because we love having many options. HOW IRRATIONAL!

What lesson can we learn here?

1. We love having many options (like dating many persons at once), but we should be careful. Options can distract us from our main objectives, our happiness.
2. To stay focus, we may need to let go some doors and be serious on a few doors. This wisdom is like what Covey refers as wildly important goals or like what Collins refers as the hedgehog concept (see my other articles on those authors).
3. We need to have some way to value which doors most important to us (the big doors, like our spouses, our kids, our missions, etc.).
4. If we have two similar options, we shouldn’t waste time by thinking and analyzing too much. Either option can make us happy. Wasting time hinders us from satisfying our needs.
5. We shouldn’t race from alternatives to alternatives. It just wastes our time. See number 4.
6. If we have kids, we shouldn’t try to cram them with too many various activities. Neither their hobbies nor their areas of strength can be too many.
7. If we are allowed to marry four wives, consider marrying only one if we don’t have bold reasons at all.
8. If we are the lawmakers, the legislators, we shouldn’t waste our time in small differences on alternative policies (for example whether to allow CONTRENG OR CHECKING THE BALLOT only once, i.e. the name of the candidate person, or two, i.e. the name of the party and the name of the person).
9. If we are students, we shouldn’t have two conflicting majors.
10. If we are businessmen, we shouldn’t try all kinds of business.
11. If we are old gigs unmarried to someone, we should consider to marry soon with either good candidate (in Islam you need to marry your daughters soon to good moslems who propose them).
12. If we don’t know what we are best at and we are now forty, we need to forget some of our talents. We should focus on one or two.
13. If we have two plans for our projects, we shouldn’t waste time by comparing them all the time. We should choose one and just implement it.
...
The list continues
...
And last but not least, if we are dying, like we are all now, we need to first focus on our life after death then anything else submits to that highest priority.


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Minggu, 15 Februari 2009

Ownership or Stewardship

Inspired by Dan Ariely's Predictably Irrational
Chapter 7: The High Price of Ownership: Why We Overvalue What We Have


Have you ever heard of “loving is not necessarily owning” wise saying? If you were raised in Indonesia, you may often sing it along… Mencintaimu tak mesti memiliki hiks hiks… Its high wisdom spreads a safety net for the misfortunes, men and women, including boys and girls, since they don’t always get what they want, even what they want most. Nonetheless, the society needs the concept of ownership. Together with rule of law, governance, and social virtues, ownership has founded the civilized world.

I do not believe in a utopia world where people do not need to earn and own money and use it to transact with others, like in Star Trek. Only in heaven are people happy without money and economic transactions. The abundance nature of heaven makes people do anything, probably including work activities, only because they just love doing it. Private ownership does not matter anymore. What matters is the relationship with beloved people, the pious, angels, and ultimately God. But that is a story in the hereafter. Here, in the real world, we do care about owning things. It’s just the way God created us.

So we do need owning things. Actually we do own things. A big house. Another big house. Fancy cars. Firms. Stocks. Money. They all often define us and our happiness. Even a beautiful wife and children are considered as our belongings. In my opinion, people cannot posses other people. They are only in relationships with us. Now, we start smelling something fishy about ownership. We often feel owning something that is out of proportion. Possessive attitude towards wife and children is just an example. Another in the case of public servants is the one toward office facilities mandated by People. Another in the context of information management is the one toward corporate information and knowledge. In the last example, corporate information ownership by individuals results in information hoarding, making it hard to share.

From the above discussion, we can conclude that outrageous ownership can be very costly. Well, we can say there is nothing wrong or right about the ownership itself. Our attitude towards ownership is the suspect. Consequently, WE as the responsible agents have to introspect ourselves. How? Yes, it is a valid question. How do we control our attitude towards ownership? Although important to ask, probably it is not the first question ought to ask. We do need to know where we can slip and how. Only after that are we able to devise a controlling mechanism against outrageous ownership. Dan Ariely in his Predictably Irrational discloses his research findings in this field.

Here is the research…

At Duke University, basketball is most like a religious experience. Since the stadium is relatively small, the intimate atmosphere inside it can go high to the roof. Besides, the small size limits the number of maniac fans in each event. This makes tickets very hard to get, especially for a national championship game. Through a complicated procedure, a fan should put his best effort to earn the ticket. In spite of the hard work, there is still a chance not to get it. With his colleague Ziv Carmon, Dan saw an opportunity to experiment with this near-havoc situation. On the one hand, he called 100 fans not having the ticket and said something like, “Hi William, we probably are able to sell ticket for tonight. How much would you be willing to pay for one?” In general the offers to those fans were valued about $170.

On the other hand, he went to fans having the ticket and said something like, “Hi Joe, we know you have the ticket for tonight, but we also know that you probably need to focus on your backlog assignments. We may be able to sell your ticket. What’s your minimum price?” In general, those who owned a ticket valued it about $2,400. Wow, $2,400 versus $170, about 14 times factor. Think about it. It’s like the old saying says. “One man’s ceiling is another man’s floor!” The one offers $170 for having the ticket considered $170 quite a lot of money. He considered also what else he could do with the money. Unlike William, Joe argued that Duke basketball was a huge part of his life. The experience would be a defining memory that he could pass to his children and grandchildren. From a rational perspective, both the ticket holders and the non-ticket holders should have thought of the game in exactly the same way, but in fact just owning the ticket made Joe value it very very significantly more than William. Note that both Joe and William similarly worked very hard to get the ticket.

Here is Dan’s explanation…

First irrationality, we generally fall in love with what we already have. When you want to sell your old VW bus, you start to value the memory with it out of proportion. Second, we focus on what we may lose, rather than what we may gain alternatively. In the case of that VW bus, now we start to think what we may lose, i.e. the use of the bus with all of the memories, than what we may gain, i.e. money to buy something else we need. Third, we assume that other people will see the transaction from the same perspective as we do. We strangely expect the buyer to share our feeling about the VW bus. In the same token, you want the buyer to see what good with the bus as you see it. Indeed, it is easy for him or her to notice the stain in the corner of the dashboard.

There are other peculiar aspects of ownership explained by Dan Ariely in the book. First, the more work we put into something, the more ownership we feel for it. Right? O yes, that’s why we resist the change in our firm or office since we just love and own what we usually do. Second, we begin to feel ownership even before we really own something. This peculiarity is indeed used by an online auction to boost the price. Someone who keeps bidding higher feels that the thing is already her or his belonging, so that s/he needs to ensure her or his ownership. A trial promotion is another deliberate use of this peculiarity. There are more examples in the book you may need to read.

Here is my own conclusion…

We just need to be cautious that we can start feeling ownership of something before we really own it. And when we feel owning something, we can feel more ownership. Well, if we are able to be humble and recognize our irrationality, probably it is easy for us to be aware. Many things to which we claim ownership are probably not our belonging. Furthermore, it is easier for us to give away. Knowledge we know. Information we hoard. A position we hold. Money we save in the bank. Stocks we are afraid of when the market is bearish. A chance we have in a heavy traffic road. Time we enjoy ourselves. Of course, we do not have to give away all of our belonging, but if the time comes, we shall surrender to the Death and God. At this point, I would like to suggest that stewardship is the best replacement of ownership.

We do own our money, assets, stocks, houses, cars, etc, but we own them appropriately and we are the stewards of those things so that they are beneficial for us and others.

We do not own our wives (husbands) and children. We are the stewards responsible for their well-being.

We do not own our positions. We are the stewards of the office we serve.

We do not own information and knowledge we know. We are just the stewards of it. So share it.

We do not own our time. We are the stewards of free time given to us.

We do not own our lives, because God has all, including our lives.

We are to God and we are to God returning.

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Rabu, 11 Februari 2009

Delaying and Flexibility

Inspired by Dan Ariely's Predictably Irrational
Chapter 6: The Problem of Procrastination and Self-Control: Why We Can't Make Ourselves Do What We Want to Do


Last Saturday, I flew home from Medan, feeling very mixed. It was not only because of the bad weather lately in this lovely country, but also because of the flight delay that we - the passengers - had to bear. We should have taken off since 1.45 pm, but we needed to be very patient waiting for boarding. And when we actually were aboard, buckled up in those compact seats, the pilot once again had to apologize that he had to wait for the signal from the tower for about ten minutes. Unfortunately when we were ready to take off, the pilot again had to apologize. The reason then was the sickness of one of the passengers so that we all had to go back to terminal. Ouch...

The story does not end there. Actually we had to tolerate other unfortunate consecutive delays. In total, the delay was about two hours. In this typical case, we usually have to restrain ourselves from being blown up. In other cases of delays, however, we are so flexible that delays are somewhat liked very much, especially when we ourselves are the ones responsible for the delays. In the morning, we usually snooze the alarm, set at a promised time the night before. In the weekend, delaying and then giving up exercise, we enjoy sitting all day watching TV. Every month, we usually delay the payment of our credit up to the last time possible. The list can go forever (Anda mungkin berkata: ‘ah itu kan lo aja’ atau ‘kita? lo aja kali’ - Y Pan).

OK, if you are not convinced that we - including you - are so happy to delay things, please consider what Dan Ariely found in his research on procrastination. He experimented with his three groups of classes at MIT. In the first class, he said to the students, “You will have three papers this semester. You are free to choose the deadlines of each.”

“Is it Ok to submit all of them in the last day of the semester?” asked one of Dan’s students. The answer was a yes if they really taught it as the best strategy. Dan informed them that papers submitted earlier than the promised dates were not to receive any extra point. So, each student had a contract with the professor something like the following.

Paper 1’s deadline is week bla bla bla.
Paper 2’s deadline is week bla bla bla bla.
Paper 3’s deadline is week bla bla bla bla bla.

Again remember, the last day of the semester was allowed to be the papers’ entire deadlines. Each day of delays will then be penalized.

That’s it for the first class. For the second class, Dan Ariely gave a complete flexibility to the students. They were allowed to submit the three papers whenever they liked but not after the last day of the semester. For the third class, Dan Ariely dictated the deadlines. Paper 1 was on week 4th. Paper 2 was on week 8th. Paper 3 was on week 12th. Now, this is the best part of the research. Who do you think the worst performers?

The best performers were the third class who had to bear a dictatorship, and then the first who had some flexibility, and then the worst the second class who were given full flexibility, full freedom. Even without applying penalty for every delay, Dan found that the students of the third class really prepared well and wrote superior papers than do others.

Dan Ariely explains in his book, Predictably Irrational, the ones who are forced to do something in advance have more chance to succeed. The beauty of the finding is that it is not only applied to the scenario set in the research above, but also to many real life scenarios: waking-up, exercise, credit card payment, health check up, studying, project, work, spending-vs-saving, personal finance, and any other value proposition activity.

For more advices from the expert, please read the book. Do not stop here. Reading a summary of a book is good, but reading the book itself is the best. But I guess you will just take an easy way. Aren't you Irrational? YOU BET!

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Minggu, 08 Februari 2009

A Monster in Each of Us

Inspired by Dan Ariely's Predictably Irrational
Chapter 5: The Influence of Arousal - Why Hot is Much Hotter Then We Realize


I always see myself as a good person. I'm sure you see yourself good too. Right? I believe in the goodness inside me and you. Almost all the time, I behave as normal as do average people. Oh, wait... There's once when I cannot control myself. Oh, no, it's not once. It is two or three or more. Now, I remember when my ego was hurt by my wife, I went wild and crazy. I broke the alarm clock in our bedroom and slamed the door. She turned in tears. Our little kids too. O my loved ones, please forgive my misconduct. O God, please pour your very goodnes into my heart.

So, there is a good personality inside me, while there is also a wicked one. Is it right to assume that other people, like you perhaps, also have those two split personalities? Probably YES. Having asked and answered that, however, I feel that there's a good chance that you are better than me, although the monster inside you is still there but latent. The religion deals with the possibility that there is a monster inside us. The holy book mentions that God gives both goodness and wickedness to every soul, but the ones who choose the right path will be handsomely rewarded.

As I mention earlier, my personal life shows that I can be Dr Jekyll in one time, but easily can turn into Mr Hyde in another. The religion dictates it, while many social phenomena publicly reported in the media bold the statement. Moreover, a scientific research conducted by Dan Ariely proves it. Here is the research. A respondent, a normal single male, was questioned about his sexual preferences. In the cool state, he answered normatively. There was no sign at all whether he had an abnormal sexual behavior. Dan changed the environment of the survey a little bit and invited the same respondents, including the good guy.

The second phase of the survey entailed a conditioning before the survey questions were answered. The good guy had to stimulate himself by masturbating while looking at the you-know pictures. He had to maintain this hot state and start answering the survey. The result? He seemed to forget his values. He was more willing to behave like a monster. For example, while rejecting - in the cool state - the idea of having sex with an animal, then he - in the hot state - was more willing to commit such a misconduct. Another example, while rejecting - in the cool state - the idea of having sex with a very old woman, then he was more willing to do so. Furthermore, sexual abuses were more tolerated. Hey, what happened here?

Apparently, if Mr Hyde takes over, Dr Jekyll can do nothing. Dr Jekyll does not know Mr Hyde is inside him, let alone his promise to think rationally at all time. So, what can Dr Jekyll do? Nothing, but Dan Ariely believes there is still hope for each of us, another Dr Jekyll. First, we need to know there is a monster inside. Second, we need to keep in our mind that we cannot what-so-ever control the monster if he already takes over. Third,we can make our best effort to prevent the monster coming by avoiding some circumstances. We can also set a mechanistic device to put the monster away when he is about to come. For example, we as a society can make a new smart car that can stop the heart-beat music when the sound reaches a height of irresponsibility (hehe, thanks to Obama).

OK, OK. Now what else can we do? If you do not mind, please consider this virtue. It is easier to prevent a problematic, high-risk, or abusive sex while in the cool rational state. After all, "the most expensive sex is free sex," said Woody Allen!

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