Decision Making For Better Relationships | Dan Ariely

0:00When it comes to what your family eats and drinks, you know your choices matter. You're the expert because you know what fits your life. And getting it right starts with good information. That's why America's beverage companies are sharing more information about our ingredients at GoodToKnowFacts.org. No spin, no judgments, just the facts straight from the experts for more than 140 beverage ingredients. Visit GoodToKnowFacts.org. Regret is this idea that we compare what we have to an imaginary world. And if what we have in the real world is worse than what we have in the imaginary world, we feel bad about it.

0:43And if it's better, we feel good about it. So regret creates an additional bias to favor inaction compared to action. It's not that it makes us happy, but it's another bias that causes us to favor the no regret option.

1:08Welcome to the Art of Charm podcast, where we break down the science of powerful communication and winning mindsets. So you have the cheat code to succeed with people. Every episode is jam-packed with actionable steps to unlock the hidden superpowers inside of you. Level up with us each week by listening to interviews with the best in business, psychology, and relationships. We distill thousands of hours of research in the most effective tools and the latest science so you can start winning today. Let's face it, in order to be seen and heard, your communication needs to cut through the noise. And we're going to show you how.

1:40I'm AJ, successfully recovered introvert, entrepreneur, and self-development junkie. And I'm Johnny Zubak, former touring musician, promoter, rock and roller, and co-founder here at The Art of Charm. And for the last 15 years, we've trained thousands of top performers and teams from every background. We have dedicated our lives to teaching men and women all they need to know about communication, networking, and relationships. You shouldn't have to settle for anything less than extraordinary. Today, we are happy to have with us Dan Arelli. He's a James B. Duke professor of psychology and behavioral economics at Duke University.

2:18Many of you may know him from his best-selling books, Predictably Irrational, The Upside of Irrationality, The Honest Truth About Dishonesty, and many more. If you've read any of his work, then you know that Professor Ariely made it his mission to research how and why humans repeatedly and predictably make the same mistakes again and again. Thank you for joining us. Welcome to the show. Obviously, you've done a massive amount of research around decision making. What drew you to that study in the first place? It's actually a sad story, but I first started thinking about mistakes that people make when they make decisions when I was in hospital.

2:58Many years ago, I was badly injured. I was burned in almost all my body, 70%. I spent three years in hospital. And hospital is a place that you get to observe lots and lots of irrational behaviors. And there were a few things that my doctors and nurses thought was the right thing to do. And I didn't. All the way from trying to convince me that amputating my right arm is a good idea, to taking off bandages from burn patients very quickly, to limiting the amount of painkillers that we got, to lots of things like that. And when I, you know, of course, when I was in hospital, I didn't have much decision power, right?

3:40You're a patient, you're supposed to be patient. It's not an active role. But when I left the hospital, some of those things still were very salient to me. And I started doing research on this. I started studying psychology and I started looking at the question of what is the best way to remove bandages from burn patients? And I found that the intuition that doctors and nurses had, which is that the best thing to do is to rip off the bandages as quickly as possible, was not the right intuition. It turns out it didn't minimize the patient's pain. it maximized them. Beyond the particular thing about hospital, it made me think about all kinds of places where people with good intentions and well-meaning actually get things wrong in a very systematic, predictable way.

4:29And to help me start trying to help. And my goal since then has been to look at all kinds of areas of life, not just pain, but to look at places where we think we know what the answer is, But the reality is we're not doing what's best for us, for our patients, for our clients, for whatever. And then try to come up with better mechanisms for that. Yeah, we've talked a lot on the show about cognitive biases and how our intuition can often steer us astray. Obviously, in the medical profession, that has awful consequences when your intuition doesn't serve the patient. We talk about decisions. There are small decisions like what I'm going to eat for lunch.

5:11And then there are bigger decisions like, who am I going to marry? Or how am I going to sign this contract and deal with that? And in your research, have you found that we handle those types of decisions differently? Yeah, we do handle them differently. But if the question is, are we bias-free as decisions get bigger? The answer is no. And I think what we have is we have like a non-linear relationship. So I think, look, with small decisions, should I have coffee? You know, should I have this donut? We don't pay a lot of attention to it and we make mistakes. When we get to medium-sized decisions, which digital camera to get, or should I get which level of, I don't know what, the new phone, then people invest a lot of time doing research.

5:59I'm not saying that we get it better, but at least we spend a lot of time on this. And then when it comes to really big decisions, like who to marry and what house to buy, people are spending substantially less amount of research than you would think they would. So let's say if people spend three seconds deciding which donut to get, and they spend 17 hours deciding which digital camera to get and 100 hours deciding what car to get, when they move to a house, who to marry, whether to have kids or not, it doesn't increase from there. It actually goes down. And partially is that when decision becomes harder, we can't handle it.

6:45It's just very, very tough. And maybe the best example again is medical. So when men are being told that they have prostate cancer and there's no particular hurry to figure out what to do, the majority decide within the same meeting how to handle this. And if they happen to meet a radiologist, they have radiation. If they happen to meet a surgeon, they have surgery. When decisions get bigger, it is so difficult and overwhelming that we don't spend enough time on this. So it's not exactly that we approach those things in the same way, but it's also not the case that with big decisions, we necessarily attack them in a bias-free way.

7:32So obviously, when we talk about massive decisions like that, I'm sure there's a level of indecision that creeps in as well. In your research, in handling and trying to become more decisive, and hopefully make better decisions, how have you found that we deal with the indecision that comes along with these options that we're presented with? the decisions we make, like allocating our portfolio, deciding who to marry, making all of those decisions, stay with us for a very long time, even when they're no longer the right decisions for us. I'll tell you maybe a not so nice story. I have a friend, a very good friend, and he came to me a few years ago and he said, look, I've been married for eight years, seven of them we've been fighting and I don't know if to continue this relationship or not and I said look I don't know what to tell you right the pros and the cons there were no kids but I said but here is one thing I said in your decision you're thinking about one branch is do nothing and one branch is taking action.

8:50And that creates a bias because we are biased over the no action. So I said, to get yourself to think about it in a more neutral way, imagine that you're not married. Imagine that you met this woman last night for the first time. And imagine that now you have a decision whether you want to marry her or whether you want to never see her again. And make the financial decision the same. If you decide to marry her, you'll have more money. If you decide to never see her again, you have to give her half of whatever you have. I mean, make it the same way, but don't think of it as a decision that says one branch is do nothing and just continue to fight.

9:36And one is an action of getting a divorce. Think of both of them as on equal footing. They're both much happier married to other people today. But if you think about that approach of saying, I don't want to think about the forks in the road as having, do I do nothing or do I do something? But I want them to say, if I had both of those options on equal footing, which one would I pick? That's a really good starting point. So there's some games like this that we can play with ourselves to convince ourselves whether we're making the decision for the right reasons or not. And there's certainly a cost to that indecision that we struggle to calculate.

10:20Absolutely. For a lot of our clients that work with us in our bootcamp program, they come to us and we're going to talk about these two norms in a bit, but they come to us struggling with indecision in a lot of areas of their life. And when we ask them, well, do you understand the cost of that indecision of staying in that relationship, let's say, or staying down that road or staying in that career? It's very hard for us to wrap our head around and do that calculation. We will often look at the opposite calculation of like, what's the payoff if I make the decision? But indecision has a cost. Indecision has a cost.

10:53It's a little harder to see it. There's another thing. So I met an expert, somebody who was in the Air Force for a very long time, and he told me that he was helping his pilots. He said, every second, make a decision. Are you staying the course or changing? Think about every second. Like, don't take it for granted. Another thing that really helps procrastination or indecision is regret. So when do we regret? Well, what is regret? Regret is this idea that we compare what we have to an imaginary world. And if what we have in the real world is worse than what we have in the imaginary world, we feel bad about it.

11:43And if it's better, we feel good about it. So for example, when would you feel worse? if you missed your flight by two minutes or by two hours? Two minutes, obviously, right? And why? Because you run to the gate, you see the plane pulling away, you see seat 2B, and you say, I could have been there. And if the person in line in front of me understood what no liquids is, if the TSA pre-actually works, I mean, you come up with all kinds of things that you say, I could have been there. And because of that, you compare your state of not making it to a hypothetical state of making it and you feel bad in comparison.

12:24If you're late by two hours, you don't come with a counterfactual. You don't say if only. There's not if only I would have been there with a two hour delay. Or another example. Imagine you drive to work and back every day. Work and back, work and back, work and back. One day on the way back, a tree falls on your car, destroys it completely, the insurance only pays 75%, you are left with some loss. How bad do you feel and for how long? Okay, that's case one. Case two, working back, working back every day. One day you decide to go home on the scenic route. You take the scenic route. On that particular day, a tree falls on your car, destroys it.

13:12The insurance company pays only 75%. Now you're more upset and for longer. why? Because in the first case, you did what you did every day. You didn't do anything different. And you can't imagine if only today I took the scenic route, right? You can't think this way. You're saying, I just did whatever I do every day, right? It just happened. I mean, you're upset, but there's nothing you can do. If you took the scenic route, now you can say, if only. If only I didn't take, why did I have to take the scenic route today? I knew it was not a good, And that's regret. Now, think about the forks in the road.

13:57When you do nothing, you can't go back and say, on March 22nd, I made a mistake. If you did nothing, there's not a particular day you made a mistake. Like you never made an action, but you can't go back to a particular moment. For regret, what you need is a moment you can go back to and hit your head and say, I should have known better. If you take an action, you can regret it. If you don't take an action, very hard to regret it because you don't know what the counterfactual is. Right? So let's say you decide to get a divorce. And let's say it was a mistake. You can say, oh, on that day, March 22nd, I should have known.

14:42I should have known. Why did I ask for this divorce? If you don't get a divorce and it was a mistake, you can't go back to a particular day. You say, I lived my whole life miserable, right? But you can't connect it to any particular day. So regret creates an additional bias to favor inaction compared to action. It's not that it makes us happy, but it's another bias that causes us to favor the no regret option. And the no regret option is the option with the inaction, that we don't do anything. And for those of us who are stuck in that constant feeling of regret and worried about regret of future decisions that leads to indecision, what kind of thought experiments do you have in mind to help us make that decision?

15:34Because the cost is still time. And a lot of us aren't calculating that time spent in indecision, spent on the same track, because we haven't reached that fork. Yeah. So one thing we need to do is we need to start taking this time into account. And it's not easy to do, but we have to do it. We have to start taking time into account and say, time is clicking. How much value would I get from this digital camera if I actually had something to use rather than wait for another one? Or how much happier would my life be? And we need to quantify that. Not easy to do. One approach that I think is a practical advice helps is to ask people to give themselves a deadline and say, look, every day you're spending time making a decision has some returns.

16:30But those days have diminishing returns. At some point, the value of the thousandth day that you think about this is not going to be very valuable. And how many days do you really need to spend making that decision? Give me this number and let's pick that that's your deadline. And by that day, you have to make a decision. And if you haven't made a decision by that day, decide to make the change. And why am I saying that? Like you could say, if you haven't made a decision by that day, flip a coin. Right? Just, it doesn't matter. But the truth is that because we are so much more connected to the path of least resistance to the do nothing, if by that day, let's say we decide by, you know, August 13th, you need to do something.

17:23If by that day you haven't decided and they look equally appealing to you, most likely you should make a change. Why? Because not making a change right now is weighing too much in your mind compared to the other options. So most likely it's the better option. You're less likely to regret it later. And one other thing is, look, if we live our lives by trying not to regret anything, that's going to be a life not worth living. I think we need to change our focus from outcome to process. right? If you took all the information into account and you made a good decision, there's a chance it will turn out badly.

18:15The world is random, right? You can look at all the restaurants and pick the best one. And eventually there was rain or the fish was bad, or, you know, something happened. You can't look at the outcome of every decision and hit yourself over the head and regret it. What we need to do is to focus on the decision-making process. If I looked at all the options, I thought about it, I tried to eliminate the bias, I did the best I could for the decision-making process, don't regret it. You did the right process. The fact that the outcome happened differently just happens. So that's another thing we need to do, by the way, for ourselves and also for rewarding, for example, employees.

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19:44Special forces operators use it. Fortune 500 executives swear by it. Because for nearly two decades, it works. Implementation sessions, group coaching, and a money-back guarantee that puts our reputation on the line. The X-Factor Accelerator, because soft skills shouldn't be your toughest challenge. Head over to unlockyourxfactor.com to apply to join today. Accelerate relationship building to make an impact at unlockyourxfactor.com. And talking about the cost analysis, for myself, indecision is a pet peeve of mine. I hate it in myself. And I hate seeing it from those around me because it just bugs me out.

20:27It gives me gives me anxiety from watching somebody in indecision or myself. And nothing speaks to this to me more so and aggravating myself more so than packing for a large, a long trip, like something over a week. And so I'll usually start throwing some things in. And then I'm, well, what about this? And what about that? And what's the weather like? And And am I going to go out to a nice evening? Do I need to bring something a little bit more special? And I can allow this to go on for days. But fortunately for myself, there is a cutoff because you got to go to the airport. And eventually at some point, I will just say enough is enough.

21:14But leading up to that, I'll be aggravated. I'll be frustrated. I'll be snippy, moody. I'll be cursing about leaving. And I love traveling. But all this emotional theater is playing out. But having that due date of that's it. Whatever's in here is in here. Whatever is it I'm going to buy. And to go along with this, as I was saying, nothing speaks to me more than that example right there. Yeah, putting a firm deadline. I travel a lot. And my rule is nothing but a carry on. Yeah. And that constraints really help. Because, you know, the amount of decisions you can make on top, like, you know, I'm not going to describe to you my laundry procedures.

22:12But it does help having constraints. I agree. help you focus on the essentials and leave the rest out of the question. And you don't even get to debate them. So it sounds like your friends come to you a lot when they're struggling with their decision making. How has your research influenced your own decision making patterns? So very much. You know, one thing is, another thing about my friends, if you start studying decision-making, your friends always think that you're doing an experiment on them. So no matter what happens, right? People come to dinner, they always think like, you know, what's the catch here?

23:00What's going on? Is this wine really this wine? Or is it changed the label? And, you know, so on. I would say that there are kind of three types of decisions. There's the little decisions. and the big decisions and the repeated decisions or habitual decisions. And on the little decisions, I don't think I've changed that much, right? It's a lot of effort to change all the little decisions. I do notice things, right? So I go and I say, oh, isn't it fun that they're putting a really expensive item on the menu? So I notice those things. But often they work on me just as well, right? It's a little bit like visual illusions.

23:41If you notice visual illusion, it doesn't mean you're not susceptible to them. You can see them. So that's one category. The category of big decisions, those I think I'm better on. And I think I'm better on that because I understand a little bit better all the biases that would come into them. I think about them more carefully and I think about what would maximize my well-being. Right? So buying a house is an example. So when you buy a house, there's some standard decisions, mistakes that happen to people. So one is what is called anchoring. Anchoring is the idea that your previous decision influences your next decision.

24:26So if you bought an expensive house, you're likely to buy an expensive house again. So imagine that you have two people who are moving to Pittsburgh. One of them is moving from LA, very expensive housing market. One of them is moving from some small town in Texas where the housing market is very cheap. What will happen? And let's imagine those people have the same level of wealth and so on. What would happen to those people is that the LA person, everything will look so cheap to them and they'll buy a very big house. The Texas person, everything would look crazy expensive for them and so on, even though they have the same financial resources.

25:11So for example, when I moved to Durham from Boston, everything looked very cheap to me, but I knew about this bias and I could try to overcome it. I would try to say, okay, let's not focus on pricing. Let's think about what do I want from a quality of life. Or another example with housing. We know that if people live close to a grocery store, they actually are healthier. because if you live far away from a grocery store and you make your trip to the grocery store only once in a while, you buy less fresh fruit and vegetables and you eat more frozen meals and that's very unhealthy. If you live in a short distance to a grocery store, you end up eating much, much more healthy.

25:57So you can see how even understanding what influences our decision can make your decision better. So that's on that side. And then we have the middle decision, which we said, what about repeated decisions? And repeated decisions could be little decisions, but they show up a lot. And here too, I think knowing something about decision-making can be very helpful. So for example, if you think about the temptation of overeating, right? The temptation of having a muffin in breakfast or stuff like that. If it's a one-time thing, you might fail. But if you think about it as what habits do I want to create?

26:42Now you can say, let me work on this habit. Let me strengthen the habit. Let me create a process from it and so on. And now you can take away bad habits and create good habits. So just as an example for myself, I basically move to a habit of no breakfast. Right? Very tempting to eat a croissant with your morning coffee. You spend some time in Europe, you think that's the right thing to do. Not the most healthy thing in the world. I changed that. But not just did I change it, I did something else. I actually love espressos. And what I do is I use the morning espresso to create another activity in the office.

27:39So my usual ritual is I come in, I make my espresso, I get to my desk, and I start working on something thoughtful. I don't open email. I don't open a browser. I work on something that I actually want to make progress on today. And that ends up being an incredibly useful thing. Because if you say, you know, how many hours of productive work do we get a day? We all have to admit not enough. A lot of our days hijacked by all kinds of things, including social media. But if you basically start the day, so I not only just drink coffee and not have something, I use that coffee as a reward for something else that I want to do.

28:28One other thing I do in the morning, I have this standing desk that can go up and down. I don't know if it's really healthy or how healthy it is, but here is something I found. Again, a tribute to my own laziness is that if I come in the morning and the desk is in the down position, I sit. If it's in the up position, I stand. So what I do is when I leave the office, I put it in the up position, right? I say, right now, I'm going to set it up for the morning person to come up and set the right decision environment. And at least I start standing up. Later, I change it. I don't think I need to stand all day, but it's a better rule.

29:11So for habitual decisions, I think very carefully about the environment and about temptation and what habit do I want and how they build on each other. And I try very much to create a system around that. Yeah, I think everyone focuses on motivation, willpower, and they don't realize that creating habits are actually more helpful to eliminate those decisions entirely. So the morning coffee, you now don't have to go scrambling through the kitchen to figure out what you're going to cook for breakfast. The coffee is now tied to something pleasurable for you and you avoid the meal altogether. But imagine every morning having to get up and say, well, am I going to have an orange today?

29:55Or that croissant looks good. Even that little decision saps your willpower and ultimately leads to you overeating. Well, we were having a laugh about this because in doing the research, I was starting to think about all the decisions that I'm making through the day. And we were definitely talking about decision fatigue. but it dawned on me that in my morning ritual, I'm not really making a decision till after my shower. So there's alarm goes off at five. There is get dressed to go to gym. Those clothes are already laid out. I have a cup of coffee and then it's to the gym. And then at the gym, I'm told what to do for an hour, whether it's by my trainer or the workout that I'm doing.