Featured post

Winning a Jackpot: How do you decide?

Situation: Imagine you are participating in a game show and after going through qualifying and elimination rounds, you have reached the finals.  The game-show host presents you three options A, B & C and you have to select one of the options which are the respective doors. One of the doors leads to a jackpot (say a Mercedes) and the other doors to an insignificant prize, say a tennis ball through each door. Now let us say you have selected option A. You are curious and excited to see if you have hit the jackpot. The host asks you to be patient, opens the door C and what you see is a tennis ball. Now he asks you whether you would still stick with option A or switch to option B? What would you choose and why?

When this question was put on different platforms like linkedin, what’sapp it was observed that 95% of the respondents voted for A. Now read on:

Analysis: Generally people tend to stick to option A, the reason being they would not like to regret their decision. If A is selected leading to a jackpot, then he would be happy; however if otherwise, then he  blames  the circumstances or his fate. But at least he has the consolation that he was firm in his decision. However if he were to choose B, and were to lose; he would regret his decision and also for not being firm in his decision making process.

Let us see how this situation can be seen from a statistical probability basis. Generally people make decisions through their self-interest and do not look at a situation objectively. For example we tend to discount the impact of the environment on our decisions. When a person selects option A, the  probability of success is 1 in 3. However when door C has been opened with a tennis ball, the probability of B has increased to 50%. Assume instead of 3 options you were given 100 options. And now 98 doors are opened without any jackpot. Would you still bat for A? Now you will appreciate that at the beginning of the game the probability of winning A was 1% but after the events have unfolded B has risen to 50%. So in a single event even though A and B has equal chances, over the long term it makes sense to switch over considering the environmental factors.

What happens if the game of ABC is played 100 times. or 100 people play this game simultaneously? Now you will understand that the human mind is not programmed to think in a statistical manner. During most of programs our clients ask us to train their executives to think out-of the box. But sadly they  are hardwired to think otherwise.

Most people tend to overestimate fatalities and death in aeroplane crashes more than car accidents even though statistically air travel is much safer than car travel. One of the main reasons people tend to assign higher risk to air travel is due to wide publicity in media to such rare events.

A survey was carried out in the US after the 9/11 disaster. More people died in the three months  on  roads than those killed in the aircrafts during  the twin tower tragedy.  People tend to fear dread risk of low-occurrence and high consequence events such as the twin tower attack. ( Dread Risk : September 11 and fatal traffic accidents, by G. Gigerenzer) .There are two types of risks,  actual risk and dread risk, the latter is more out of anxiety quite often overestimated than the actual risk. This in part may answer why people would still go on playing option A.

Another reason for dread risk is an illusion of control. A person driving a car feels more in control of the situation than while flying in an aircraft driven by someone else. Most of our unconscious processes control our thoughts and behaviour, which in turn creates an illusion of self- I or the soul. It also makes us feel that I exist, I am in control and thus I can make my own decisions. But the truth is otherwise. Most of the events in life are beyond our control; there is no self.  And to create that illusion we tell stories, we fabricate them saying how intelligent we are.

The above problem is called as a Monty Hall problem ascribed to the presenter of the famous game show in USA,  Let’s Make a Deal. Monty Hall Problem states that there are two errors people make while taking decisions:

  1. They ignore the influence the external environment makes on their decision making and
  2. How their perceptions are shaped by the external environment. In fact we feel we are making decisions in a neutral environment and our decision making is rational. We feel we are safe when we are in control of our destiny. Rituals and routine give us more control of the situation. However truth is otherwise, Dan Ariely, author of Upside of Irrationality says we are poor in risk analysis and are irrational animals.

Rajan Parulekar|rajan@paradigm-info.com|98450 14098

Featured post

Difference between Convincing & Con-Vincing

Soumyajeet Mohanty ran Edu Solutions,  an educational consultancy service in Bhubaneswar Odisha. Initially he started Sunrise Coaching Solutions providing tuition to engineering students. As the venture did not yield much returns, he ‘moved up the value chain’ by providing  ( fake) admissions to students wishing to get into medical colleges. Continue reading

Featured post

On Human Nature – Case of Irom Sharmila

Irom Sharmila has called off her hunger protest against AFSPA. She went through pain, misery and deprivation for 16 long years. There were hundreds of people who have been killed in the encounters with army. What was Sharmila’s demand? It was to repeal the AFSPA act or to modify some of its provisions. Continue reading

Do Sales Incentives necessarily Improve the Margins?

One of our clients in Pune had invited me to diagnose the problem of their poor margins. When I asked the VP-Sales he said,” We are facing this problem for the last three years, so last year we have launched an attractive incentive scheme, but still it is not producing results.”

Most of the sales managers intuitively feel that incentives lead to higher margins.  However the research carried out by Edward Deci and Richard Ryan at the University of Rochester and Adam Grant at Wharton say that the effectiveness of motivation varies with the task.  There are two types of tasks:  Algorithmic and Heuristic tasks. Continue reading

Volition & Motivation: The Gap between Doing and Knowing

Most of us feel that attending a motivational program will help people achieve the individual and organizational goals. Kurt Lewin and Narziss Ach have made pioneering contribution in the field of motivation. Lewin was known for his field theory as well freezing and unfreezing  concepts in changing the human behaviour and believed that motivation and volition are the same. Narziss Ach  treated motivation and volition differently.

Volition happens at three levels: Continue reading

A Tale of Two Key-Note Addresses

“We are having our Annual Sales Conference and we would like you to deliver a Key Note address for our Pan-India Sales Team on Value Selling.” said Ramesh, the HR Manager of an IT company over phone.

“Thanks, but how did you know about me? “ I asked. “We make our own referral checks in the market before deciding on the speaker.” said Ramesh. Continue reading

Root Causes of Employee Disengagement

A number of surveys show that the majority of employees are disengaged from their work.  Factors that lead to the alienation of the modern executive  are: viewing life as  a means to an end ,  no respect for quality, abstractification and commodification. Continue reading