Two behavioral economics experiments imply we can obtain better financial outcomes just by thinking about money a little less.
When we’ve got pesetas and pounds tumbling around in our cabesas like so much loose change in a parking meter, we have a tendency to act like jerks. And when we act like jerks, people will go out of their way to make us pay for it.
So my suggestion: Read this, and then ignore money stuff the rest of the day. It’ll pay off big-time.
There’s an idea called “priming” that plays an important role in negotiations, marketing, consumer choice and a bunch of other stuff. The essential notion is that your behavior and choices can be predictably influenced by exposure to words, images or ideas in the period just before you do or decide something.
If I say “Steve Martin,” right now, you’re probably less likely to think of his timeless scenes as Ruprecht in Dirty Rotten Scoundrels than you are to flash to a scene involving Navin Johnson’s “special purpose” in The Jerk. You know, because I just wrote “Jerk” a few lines ago.
And now that you’re thinking about Steve Martin that’ll probably influence you in some subtle ways, whether just in thoughts or in deciding not to travel to Chicago for Thanksgiving in the back of a pickup truck with John Candy.
But priming goes beyond that. Certain ideas or priming topics can act in ways that cause unexpected behavior. Money’s a prime culprit in this regard. (Stupid puns.)
Experiments in which people are primed to have their minds on their money and their money on their minds are less likely to help others, less charitable, less sociable, more selfish and much more likely to act like a jerk or rotten scoundrel than, say, one of your three best amigos.
And acting like an unfair jerk is an outstanding way to get others to dislike you and to want to punish you – including by going out of their way (and paying lots of money) just to make you worse off, as the second experiment shows.
(Note: Certain studies relating to priming have suffered from a lack of replicability, thereby drawing into question the statistical value and credibility of the published results. Danny Kahneman himself addressed these issues but nonetheless seems to remain of the opinion (along with others) that the priming effect does occur. In his book Thinking, Fast and Slow, Kahneman discusses priming as part of a modeling of the human mind’s approach to solving problems, and the priming effect is consistent with other psychological effects observed in human behavior that are not subject to replicability questions in the research. Thus, despite statistical questionability of some priming research, it is my personal opinion that the effect is not artificial. I perceive that priming is regularly encountered and can be profoundly impactful on the basis of my own experience and observations in everyday life. This sort of anecdotal evidence hardly contributes much to the debate, but I mention it here as basis for why I respect the notion regardless of some controversy relating the research.)
(Further note: The link above to Kahneman’s book is an Amazon affiliate link. And this note is a disclosure of that. If you click the link and buy something, I get money. But anybody with a pulse already knew that. Suck it, FTC.)
Okay, so the second experiment doesn’t strictly relate to the “Dictator Game,” but a derivative of that game known as the “Ultimatum Game.” (*Dictator’s just a way more fun word to work with, and the Ultimatum Game relies upon, arguably, sequential dictatorship, so it’s not like totally wrong.)
The Ultimatum Game involves two participants, Alpha and Beta. Both Alpha and Beta play the game only once and are made fully aware of the rules prior to beginning.
To start, Alpha will be given a sum of money, say $100. And then Alpha will decide how to divide that sum between himself and Beta. Beta will be told how Alpha has decided to split the money and has a choice: Either accept the division and leave both parties with the proposed split; or reject the offer and leave both parties with $0.
Now, if you’re a fully rational dude, and you’re playing the Alpha role, your best move is to take the whole $100. After all, it maximizes your take, leaves Beta no worse off, and Beta can’t do any better by rejecting, so Beta will have no self-interested motivation to reject the offer. And fully rational Beta, accordingly, is expected to not reject any offer, $0 or otherwise. (Or, if that rubs you the wrong way, I think we can all agree Beta should certainly accept any offer above $0, such as $1. Now both are better off. Beta clearly has no reason to reject $1 or more since doing so would make him worse off than accepting.)
But experiment results show two unusual characteristics. First, most Alphas choose to divide the money much more charitably than a rational bro would. Many divide the sum in half. And second, those Alphas who divide the sum to decidedly favor themselves, say a 70/30 split, face substantially higher risk of rejection and walking away empty-handed than those splitting 50/50.
Betas punish bad, or “unfair,” or jerk-like behavior. And they’ll do so even if it costs them. Think of it this way: A Beta (who can be just about anybody at any time in your life) may be willing to pay something like $30 (or perhaps lots more) just for the sick pleasure of making your day suck if they think you’re being a douche.
If your behavior puts the dic(k) in dictator, you run the risk of getting, well, dicked over.
What’s a pretty great way to guarantee you’re more likely to act like a jerk?
Thinking about money.
What’s a pretty outstanding way of alienating people to make them want to dick you over?
Acting like a jerk.
Don’t want to be a jerk who gets dicked over by people?
Stop thinking about money so much.
Or, at a minimum, try to act like you’re at least attempting to be fair and nice and un-jerk-like. Doing so will make others less likely to want to punish you or flip you the Bowfinger, and more likely to give you stuff you like. You know, such as money.
Which is a pretty groovy way of getting more for less: More money with less thinking about money.
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