Bounded by available information

If you had to pick out an office space, and the only information available to you was  whether the office was 18 sq meters or 20 sq meters in size, would this number influence your choice?

As one can imagine, this difference in size is hardly noticeable once the office is in use. It lies within the boundary of a perceptible change. And yet, when such an option was presented to the professors at the University of Chicago Booth School of Business there was a mad scramble for rooms that were slightly larger, despite size them not offering any meaningful advantage. In the process, the professors abandoned several other important factors such as the offices with the nicest views or how many elevators served their floor.

The reason this happened is because the professors selected their preferences based on a spreadsheet which mentioned only the room size. In the absence of any other information, their minds were programmed to focus on a number that was available, even if it wasn’t particularly significant. As Richard Thaler points out in the book where he mentions this anecdote, –  if there is a number, people will use it.

As people who design real world choices (choice architects in behaviour science parlance), we ought to be thoughtful about the information we list out:

  • The numbers mentioned should indicate a significant difference. People are likely to use insignificant differences in numbers like room size or megapixels in a camera (14 MP vs. 16 MP) to make their decisions.
  • The choice of number should make comparison easy. While selecting pizzas, I would also like to know the area of the pizza rather than just the diameter. A 12-inch-pizza isn’t 20% larger than a 10-inch-pizza. It is 44% larger.
  • By mentioning a board that says “Fruits in Season” next to certain fruits, supermarkets can nudge consumers to make more commercially and environmentally sound decisions.

Inspiration: Misbehaving – Richard Thaler

2 thoughts on “Bounded by available information

  1. Well there is a subjective experience of the world which cannot be conveyed by numbers. Numbers are abstract. While it is useful to put numbers on subjective experiences, we should also find other means of communicating them. For example, helping people visualize the size of the room to show them what it would look like.
    As we make “progress” there is tendency to assume the “measurability” of even highly subjective experiences. Being able to measure something does not necessarily equate to understanding.

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    1. Absolutely – and traditional economics based on the rational agent model for no good reasons other than measurability is a great example. Its ironical that a fringe field in economics has to be called “behavioral economics”, given that the rest of the economics world has thrown human behaviour out of the window.

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