Summary

A fantastic overview of some of the most common psychological principles that rule our decision-making and lead us to poor results.  This book has been cited by many, and forms the basis of many of the “mental models” frequently used by people such as Charlie Munger.

A valuable read for those wishing to improve their objectivity and thinking, as it will allow you to identify the most common psychological errors we all make in daily life.

Notes

Chapter 1 - Weapons of Influence

• Adding the word “because” when asking a small favor vastly increases compliance, regardless if the reason is a good one.
• Automatic, stereotyped behaviour is prevalent in much of human action - it is often efficient, and other times necessary.
• There are several components to these “weapons” of automatic influence: they are nearly mechanical in activation, they can be exploited, and they can be easy to trigger.
• Contrast principle: if the the second item in a presentation is fairly different from the first, we will tend to see it as more different than it actually is.

Chapter 2 - Reciprocation

• Rule for reciprocation: we should try to repay, in kind, what another person has provided us.  
• Ex: if one person does us a favor, we should try to do them one in return.
• This rule holds throughout human society.
• Liking a person has no effect on whether they feel the obligation to return the favor.
• The rule also holds when the favor is unsolicited - even if unwelcome.
• The rule can be exploited as the exchange does not need to be equal - we do not like feeling indebted.
• A more subtle way to exploit it is to make a concession; the rejection-then-retreat technique.
• Rejection-then-retreat technique: make a large request, one likely to be turned down. Then, after refusal, make a smaller request, the one that you were really interested in.  The other person should view this as a concession on your part, and should feel inclined to respond with a concession of their own.
• Note: the first demand cannot be seen as unreasonable, otherwise the tactic backfires.
• Ex: door-to-door sales where a rejected salesperson asks for a referral to a friend.
• There are side effects to the rejection-then-retreat effect too:
• Responsibility: Subjects feel more responsible for the outcome of the negotiation (apparently thinking they have influenced the opponent).
• Satisfaction: Subjects were more satisfied with the final arrangement as well.  They are also willing to agree to further requests.

How to Say No:

• We should accept that most of the time, people do favours for the sake of doing favours, and enter the compliance agreement knowing we should return the favor.
• However, when we recognize that it is a compliance tactic, we should respond in kind - we are not obligated to respond to tricks with favours.
• The best solution here is to recognize each action for what it truly is, and respond accordingly.

Chapter 3 - Commitment and Consistency

• We are obsessive about appearing consistent with our previous actions, and will respond in ways to justify our previous actions when challenged.
• Ex: bettors become more confident in their chances after placing a bet.
• Personal consistency is highly valued in our culture, and automatic consistency offers us a shortcut through most of life.  It also allows us to ignore new realizations that cast our previous actions in a poor light.
• If you can get someone to commit to a small initial action, it will be much easier to get them to commit to a larger action.
• Ex: on the phone, asking how someone is produces the first action - a response - and even better if you are doing well.  It is then easier to get them chatting, and to produce action for those who aren’t doing well.
• To make a commitment effective: start small and build.
• The foot-in-the-door technique: making a little request to gain compliance with related larger requests.
• The best commitments involve actions - writing is a good one.  
• Ex: testimonial contests.
• Making a commitment public also helps with compliance, as that person wants to look consistent.
• Written commitments also require more work, and evidence shows that the more effort that goes into a commitment, the greater the influence.
• Three components of an effective commitment: active, public and effortful.
• There is a fourth component: when the person believes they have chosen to perform that action in absence of outside pressures.
• Implies we should never heavily bribe or threaten children to do the things we want them to truly believe in.
• Ie. the reason given for an action needs to be subtle, allowing the child to take personal responsibility for the behaviour.
• This can be used insidiously when lowballing: a salesperson offers an advantage so that the person makes a purchase decision, then the purchase advantage is removed, but the person has made the decision and wants to remain consistent.

How to Say No:

• The only way out is to know when such consistency is likely to lead to a bad choice:
• Hint 1: a queasy feeling inside us that we’re doing something we don’t want to do.
• Action: explain to the person what they are doing.  They will either stop, or leave you alone in confusion.

Chapter 4 - Social Proof

• Principle of social proof: we use what other people think to determine what is correct.
• ie. we tend to see an action as more appropriate when others are doing it.
• Can be used deviously when advertisers tell us a product is “fastest-growing” or “largest-selling”.
• Can be used positively when people with phobias view others doing things they are scared of (video works too, best is a large group of different people).
• In general, when we are unsure of ourselves, when the situation is unclear or ambiguous, when uncertainty reigns, we are most likely to look to and accept the actions of others as correct.
• Ex: bystanders usually don’t help because of unambiguity, not because they don’t want to.  
• To counter, make it clear there is an emergency, ask specific people for specific help.
• The principle of social proof also operates most powerfully when we view the others in the situation as similar to ourselves.
• Suicides/homocides/other public events cause copycat events.
• Ex: heavyweight prize championship fights stimulate a rise in homicides.

How to Say No:

• Two types of situation where incorrect data causes social proof to give us poor counsel:
• When social evidence has purposely been falsified (ex: laugh tracks in comedy shows).
• When we see a lot of people doing something, but ourselves are unsure and don’t have any information as to why.
• To counter: never fully trust social proof.  Rely on the objective facts, our prior experience, and our own judgement - take a quick glance around.

Chapter 5 - Liking

• As a rule, we most prefer to say yes to the requests of someone we know and like.
• The clearest illustration of exploitation of the rule: the Tupperware party.
• Other compliance professionals have used the mention of a friend’s name effectively.
• Halo effect: when one positive characteristic of a person dominates the way that person is viewed by others.
• We automatically assign good-looking individuals with favourable traits such as talent, kindness, honesty, and intelligence.
• This is present in politics, judicial processes, discipline in schools, and more.
• Another influence is similarity - we like people who are similar to us.
• This seems to hold whether similarity is in area of opinions, personality traits, background or lifestyle.
• Dress is a good way to exploit this; claiming backgrounds and interests similar to ours is another.
• Being complimented also quickly increases compliance.
• School desecration alone doesn’t work, as we tend to group with others like us, and continued exposure to a person or object under unpleasant conditions (like those found in the classroom/school) leads to less liking.
• The key is to changing from viewing others as opponents to viewing them as allies.
• The “jigsaw classroom” is a good idea here.  It requires students to each learn a portion of the material - a piece of the puzzle - and then teach the others.
• In early tests, it’s been shown to increase self-esteem, test scores, and liking for school.
• Association with both good and bad things will cause us to like or dislike someone.
• People become fonder of the people and things they experience while eating.
• Sports is another example of this - hometown fans feel associated with their teams.

How to Say No:

• Our vigilance should be directed not towards the things that may produce undue liking for a compliance practitioner, but we should recognize when we feel ourselves liking the practitioner more than we should under the circumstances.
• Our proper response is to concentrate exclusively on the merits of the deal and make a decision based on considerations related only to the latter.

Chapter 6 - Authority

• Conforming to the dictates of authority figures has almost always held advantage for us, and so we often defer to them, even under extreme circumstances (Milgram’s experiment giving electrical shocks).
• We are often as vulnerable to symbols of authority as to the actual substance.
• Titles are one example:
• Studies have shown prestigious titles lead to height distortions.
• Clothes are another example, and just as easily faked.
• A uniform is another example of this; well-tailored suits are a modern equivalent.
• Trappings in general - clothes, jewelry, cars, and other status symbols receive deference.

How to Say No:

• Heightened awareness of these factors can help us combat these factors.
• Generally, however, authority figures do actually offer good direction.  
• The trick is to recognize when authority followings should be followed or ignored.
• Posing two questions can help:
• “Is this authority truly an expert?” - focuses attention on credentials and relevance of those credentials to topic at hand.
• “How truthful can we expect the expert to be here?” - we should be careful of their incentives.
• A little compliance tactic to beware of: arguing to a degree against one’s own interests.  A small shortcoming may be mentioned to establish basic truthfulness on minor issues, to make their overall pitch more believable.

Chapter 7 - Scarcity

• Scarcity principle: opportunities seem more valuable to us when their availability is limited.
• The idea of potential loss plays a large role in human decision making - we are more motivated by the thought of losing something than the thought of gaining something of equal value.
• The “limited-number” tactic is a commonly used one by compliance professionals.
• The most extreme example is denying someone the opportunity to buy - then offering to check on another option “assuming this is the model you want if I can get it in this color at this price”.
• Related to the limited-number technique is the “deadline” tactic, in which some official time limit is placed on the customer’s opportunity to get what the compliance professional is offering.
• A variant on the deadline tactic is the “right now” tactic when face-to-face - customers are told they will face a higher price or won’t be able to buy if they don’t purchase right now.
• Scarcity principle operates on two things: we use it as a shortcut to determine items of value, and we hate losing freedoms we already have.
• Ex: couples suffering parental interference fall more deeply in love, and when interference cooled, so did the relationship.
• Ex: our response to banning of information is a greater desire to receive that information and a more favourable attitude toward it.
• Telling customers of a limited supply, and claiming that was exclusive information - a double scarcity tactic - resulted in the highest sales.
• Newly experienced scarcity is more powerful than constant scarcity.
• Parenting lesson: be consistent in your rules and discipline.
• Being in competition for scarce resources has powerfully motivating properties.
• Ex: the lover who sees another competitor.
• Ex: the prospective home-buyer who hears someone else is looking.

How to Say No:

• We react emotionally to scarcity, and it becomes difficult to think properly.
• We should therefore look for this reaction as an indicator of the scarcity principle at work.
• We should then calm ourselves and proceed with care.
• Then we should consider if we want it for the social, economic, or psychological benefits - in which case it may make sense to purchase it.  But if we want it for its utility value, we should remember it won’t be better to eat, drive, drink, hear, etc. if it’s more scarce.
• If we find ourselves beset by scarcity pressures in a compliance situation, we should:
• Recognize the emotional arousal as a signal to calm ourselves and gain a rational perspective.
• Then we should ask ourselves why we want the item under consideration (scarce cookies don’t taste better).

Epilogue:

• Isolated information leads us to mistakes.
• We should target our counter-aggression at compliance professionals who falsify, counterfeit, or misrepresent evidence to cue our shortcut responses.
• Failing to combat exploiters will lead to us being unable to use our typical shortcuts, and make coping efficiently with daily life impossible.  We must not let that happen.