It will be useful for everyone to know about tricks that human psychic can use. If you stop acting automatically, you will be able to avoid unnecessary exes. Students are going to like this article the most.
According to a classical theory of economics, people ach rationally and make decisions that are the most suitable for them. Still, behavioral economists do not agree with this statement. They think that human psychic special features can’t be ignored here, no matter who that person is: a worker, an author, a journalist, a student etc.
Human mind works according to its own laws, which can doubtfully be called rational and logical from the economical point of view. So today we are going to discuss traps put by one’s own mind. Try to avoid them when possible.
1. Fear of Loss
People are much more afraid of losing something, than glad of obtaining something new.
Try to imagine what news can impress you more: you have got a mark automatically, or you lack points to pass the exam? Experiments confirm that people feel loss stronger.
It is not an accident: there is a message appearing on websites of any online course – “Only 10 places remaining”. People are afraid to lose a possibility and make an impulsive purchase.
2. Status Quo
This effect is partly connected to the previous one: you feel psychologically comfortable when things remain unchanged. The point is, any change is a stress, even a positive one.
People prefer staying with what they have rather than changing something.
Answer a simple question: how often do you change your mobile operator? Old operator’s prices grow up with time and more attractive propositions for new clients appear on the market. But people continue preferring expensive, but usual, old operator.
They can explain it with the absence of will to deal with various connection issues. But numerous psychological experiments proved, that the real reason of such behavior is a fear of getting into a stressful situation, even if there is a reward expecting in the end.
3. Barnum Effect
Remember, when did you read horoscope for the last time? Even if you do not believe in these predictions, haven’t you thought for a second that they partly describe your life? If yes, then you’ve experienced Barnum effect.
The point is, most people are likely to perceive common and vague descriptions as characteristics of their own personality and life.
As you might already understand, this effect is widely used by astrologists, fortune tellers and other “prophets”. The trouble is, all the phrases from horoscopes can be used to describe every person with no exceptions: “you are responsible, but you can make mistakes sometimes”, “you like to have fun”, “good news expects you”. The more positive are descriptions, the more coincidences people find.
4. Money Illusion
People are likely to perceive nominal, not real value of money. In other words, big sums attract them, while purchasing power of currency is much more important (how much goods can be bought with a unit of currency).
When a chief says about a salary increase, a worker is glad they earn more. But they doubtfully think about the inflation that “eats” all the additional funds. They can buy less goods with their new salary then they used to buy during the previous year. The worker’s financial status haven’t changed somehow.
But the fact of a higher salary is very important for people, thus nominally they became richer.
5. Anchoring Effect
This is how people are likely to estimate numbers according to the starting proximity. They mark the cost of anything basing on a price claimed by a seller, and don’t try thinking if the price is fair on their own.
This effect shows itself up especially well in stressful situations.
A student decides to rent a room, renter sets up a price. A student starts trading based on that price, despite it can be two times higher from a fair one objectively. But student’s mind cheats on them, and they psychologically hold that anchor.
6. Endowment Effect
People tend to estimate what they own in another way. And it is not that important if they actually own a thing, the point is to feel like an owner.
You probably experienced that effect during your life if you had come to a market at least once. Sellers there convince you to hold things in hands, to put it on, etc.
It is enough for a person to feel like an owner, and he or she becomes ready to buy it.
Still, there is an exception for this rule: experienced collectors. They are interested in getting the highest profit, ready for exchanges and they are more rational in choosing things to purchase.
7. Sunk Costs Trap
Another feature of human mind: lack of will to refuse something that brings only exes and to go on moving forward. They feel it psychologically difficult to accept their losses, so they continue to invest funds and energy into unprofitable papers, or go on building a house because there were so much money and energy spent already.
Trap of sunk costs shows up in regular life and in business as well. There is a good example of “General Motors” company: chiefs thought that Americans will buy copies of Japanese cars actively. Despite the fact, that sales told the opposite, they continued to produce unprofitable goods for years! Only new people who came to rule the company changed the situation at last.
8. Expectation Effect
The more people wait for something, the more they want it. The fact of expectation, the intrigue adds value to the product in their eyes and makes them spend more money.
Good example: presentations of new iPhones. Fans expect them every time. Still, this effect has the other side: its power weakens with time. New models of iPhone are expected less. If earlier people stood in queues for several days before the release, then nowadays they are calm enough about these events.