A Number in Mind

Choiceology with Katy Milkman

Charles Schwab

Behavioral Economics, Society & Culture, Social Sciences, Decision Making, Charles Schwab, Business, Science, Investing, Dan Heath, Katy Milkman

4.8 • 1.4K Ratings

🗓️ 23 April 2018

⏱️ 28 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

When you set out to buy something—a car, for example, or a laptop or some small gadget for your kitchen—you analyze the features and the style and the utility of the thing, and then you make a choice. But it turns out that there’s a psychological force that can influence what you’re willing to pay. On this episode of Choiceology with Dan Heath, we examine a bias that affects how you perceive gains and losses, how you negotiate deals and the way you think about value. The episode begins with legendary sports agent Leigh Steinberg. He describes his dramatic first attempt at negotiating a high-stakes contract for a client joining the National Football League. You’ll hear an experiment based on Daniel Kahneman and Amos Tversky ’s early studies that demonstrate the bias in real time. And lawyer, mediator and conflict resolution expert John Curtis explains how everyone—from people selling their homes to police informants going into witness protection—can fall prey to this psychological trap.

Transcript

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0:00.0	I'm Dan Heath and this is Choiceology.
0:10.0	Now for all the amazing things this machine does, it should sell for $300. But you won't pay that.
0:16.2	You won't pay $250. You won't pay $200. You won't even pay $150. No, ladies and gentlemen, for this machine a $150. No ladies and gentlemen for this machine a $300 value you'll only pay three easy
0:28.5	monthly payments of $39.99.
0:32.4	Maybe you've been there.
0:33.0	It's late a night, you can't sleep,
0:36.0	your flipping channels on the TV, and you end up being sucked into a commercial about
0:40.0	spray on hair or a blanket with a head hole.
0:45.0	How did this happen?
0:47.0	And why does that blanket seem like such a good deal right now?
0:52.0	We're going to look at a simple trick that many late night infomercials use to take advantage of a common bias.
0:58.0	And while it might not seem that important to you while you're reading the return policy on your new sauna pants. It has a real impact on how you
1:06.0	tackle some of life's big decisions. Sit, hot, hot, hot, hot. This is Choiceology, an original podcast from Charles Schwab.
1:21.0	It's a show that reveals the hidden psychological forces that influence
1:24.8	the way you make decisions, from choosing a new microwave to selling your old Harley.
1:30.8	And we don't just reveal these forces. We give you ideas on how to minimize their impact
1:36.0	so you can avoid costly mistakes. What's in a day? What?
1:43.0	Oh,
1:45.0	Oh, Oh, Oh,
1:46.0	N
1:45.0	Oh, My name is Lee Steinberg. I'm CEO of Steinberg. I'm CEO of Steinberg Sports and Entertainment.
2:04.0	Lee Steinberg is a sports agent.
	...

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