In The Paradox of Choice, Barry Schwartz asks an interesting pair of questions:
Imagine that you have decided to see a concert where admission is $20 a ticket. As you enter the concert hall, you discover that you have lost a $20 bill. Would you still pay $20 for a ticket to the concert?
Schwartz says that almost ninety percent of respondents say yes. Now the second question:
Imagine that you have decided to see a concert and already purchased a $20 ticket. As you enter the concert hall, you discover that you have lost the ticket. The seat was not marked and the ticket cannot be recovered. Would you pay $20 for another ticket?
In this situation, less that 50 percent of respondents say yes.
From a “bottom line” perspective, $40 is $40, but that is not how most people think about such a situation. This is because we not only account for where our money goes in Quicken, but also in our minds. We have psychological accounts in which we categorize how much money is appropriate to spend on a concert. We can justify buying a ticket even after we’ve lost a $20 bill because we’re still only spending $20 on a concert. Once we buy the ticket, we’ve invested $20 in the concert experience and we’re unwilling to invest more.
Schwartz’s point is that we play some funky games in our head that end up having a bigger impact on our day to day choices than we realize.
Can you think of a time when you’ve engaged in similar psychological shenanigans?
Telling Stories, Asking Questions, Learning Lessons
Connect with Wade