Choosing not to choose

Irrationality is a hot topic these days. We know for example that choice is paradoxical and that bad logic can reap big rewards.

Using a game with a cleverly chosen visual metaphor, MIT behavioral economist Dan Ariely, the author of a new book, Predictably Irrational, recently made the point that foreclosing options can also work to our advantage. New York Times:

  In the M.I.T. experiments, the students should have known better. They played a computer game that paid real cash to look for money behind three doors on the screen. (You can play it yourself, without pay, at tierneylab.blogs.nytimes.com.) After they opened a door by clicking on it, each subsequent click earned a little money, with the sum varying each time.

  As each player went through the 100 allotted clicks, he could switch rooms to search for higher payoffs, but each switch used up a click to open the new door. The best strategy was to quickly check out the three rooms and settle in the one with the highest rewards.

  Even after students got the hang of the game by practicing it, they were flummoxed when a new visual feature was introduced. If they stayed out of any room, its door would start shrinking and eventually disappear.

  They should have ignored those disappearing doors, but the students couldn’t. They wasted so many clicks rushing back to reopen doors that their earnings dropped 15 percent. Even when the penalties for switching grew stiffer — besides losing a click, the players had to pay a cash fee — the students kept losing money by frantically keeping all their doors open.

In the article, Ariely compares the economics of closing doors to the institution of marriage. In both, there's value in announcing the end of choice.

Wayne

Wikipedia: behavioral economics