How many doors do you have open?

One of the gift cards that I got for Christmas was a gift card to Barnes & Noble.  I’m a big fan of books, my only probably is that I’m behind.  I always want to read more and have a huge list of books that I want to read.  I’m also one of those people that reads one book at a time.  I never understand how people are reading 3 or 4 books at a time, I think it would just confuse me.

One of the books I got with my gift card is Predictably Irrational by Dan Ariely.  So far the book is definitely interesting.  Dan has done a lot of research in the area of behavioral economics.  I couldn’t help but tell you about a chapter called “keeping doors open”.

The reason that this chapter really jumped out at me is how it relates to the post I wrote last month about people dabbling and pretending in business.  During this chapter, Dan is looking into why people have trouble committing to one thing and instead opt to keep as many options, or doors, open even to the point it becomes detrimental to their ultimate goal.  Dan set up a series of experiments with a professor at Yale (at the time the book was written) named Jiwoong Shin, to help get a better understanding of this.

They set up a simple money experiment with three doors that involved finding the door with the biggest payoff and clicking in it as many times as possible.  In the first set up of the experiment, people would just given the three doors and their goal was to collect as much money as possible with 100 clicks.  What they found out was that people would explore each room with a few clicks and the one that rewarded them the best they would spend the rest of their clicks on just as you might expect.

Then they changed things.  The next time around the set up the experiment so that as people clicked on one door the other two doors would slowly disappear.  This meant that if one door wasn’t clicked on for a little while it would be gone.  What they found out was that people started off the same way sampling each door.  As the other doors started to disappear people became focused more on keeping the doors there instead of their ultimate goal of making the most money.

With the third variation of the experiment, instead of making the doors disappear completely, it could be brought back at any time with a click.  You might think that this would make people feel more comfortable still having the door there but in fact people acted as if the door was going to be gone.  People couldn’t stand loosing a door.

Might this help to explain why people dabble or why they make big mistakes?  It shows that human behavior is to avoid loss at the detriment to their overall goal.  In fact, people will run for door to door even if it means more stress and wear and tear on their emotions, their job and their family.  Dan’s first experiment showed that people had no problem figuring out which opportunity was the best but they couldn’t commit to the best opportunities at the risk of loser the other opportunities.  This meant that even when people knew a door was less valuable they weren’t comfortable loosing it.  Might you be better off closing or giving up a few doors?  You just might become more successful.

Or maybe this might help explain the divorce rate in the US?  I think my ex-wife had a door problem.

Tagged as: behavioral economics, experiment, opportunities, predictably irrational