August 12, 2025 • 10 mins
My new book, The Hardiness Effect, is now available for preorder on Amazon and, if you're in Australia, you can get a 26% discount now at Booktopia.
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Episode Transcript
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Speaker 1 (00:09):
Hey, everyone, welcome to another edition of Wisdom Wednesdays. Now,
before we get into this week's Wisdom Wednesday, a couple
of announcements, one of which is pretty excact. Say, they're
both pretty exciting. One is a little bit more exciting
than the other. My new book, The Hardiness Effect is
not on seal for pre order. You can buy it
(00:31):
on Amazon or if you live in Australia you can
buy it in book toopia dot com dot au and
it's got a twenty six percent discount, which I wasn't
even a whord off. So the full title love it
is The Hardiness Effect. Grow from Stress, optimize health and
live longer. And the second announcement is that I am
(00:55):
shortly going to be changing the name of the podcast
from the Poultale Podcast to the Heartiness Lab Podcast. And
that is really to coincide with the activation of the
Hardiness Lab with my old mate, Professor Grant Schofield. And
if you're a longtime listener, you will have heard Grant
(01:15):
on the podcast probably four times I think, and we
are collaborating to research all things hardiness. And if you
really want to know what that's about, get in and
pre order the book. On book Toopia or on Amazon,
and I enough of the plugs, let's get on with
the podcast. So today I'm going to talk about something
(01:38):
that actually came across today and just remembered about it.
And it's something that happens almost every time you make
a purchase, or quite often not every time, but it's
whether you're buying popcorn at the movies, a coffee or tea,
a holiday package or a phone plan. Now you probably
think when you're making these decisions of if there's different
(02:01):
things on offer, that you're making a rational choice. But
the truth is that often you're being nudged, coaxed, and
sometimes outright who dwinked by some very clever psychological tactics.
And two of the big ones that marketers use are
the decoy effect and anchoring bias. So let's start with
(02:22):
the decoy effect. So imagine you're at the cinema and
you go to buy some popcorn and you see a
small bucket of popcorn for four bucks and a large
one for seven bucks, and you're leaning towards the small,
and then you see a medium one for six dollars fifty.
Now suddenly the large one seems like a no brainer,
(02:45):
and you walk away patting yourself on the back, thinking
that you're a savvy shopper, But you've just been played.
The medium one wasn't really there to be sold. It's
a decoy designed to make the large one look like
a bargain. And this is done with lots of different products. Now,
probably the most famous demonstration of this decoy effect was
(03:09):
actually an experiment run by the behavioral economist Dan Arley,
and I read about it in his book is brilliant
book actually, which is called Predictably Irrational. The hidden forces
that sheep are decisions and it's a book that everybody
should read. But anyway, he did this real world experiment
were he persuaded the magazine The Economist to enable him
(03:34):
to control or to set some pricing for them, and
he offered web only subscription for fifty nine bucks, then
a print only subscription for one hundred and twenty five bucks,
and a web and print subscription for one hundred and
(03:55):
twenty five bucks. Now, the print only option makes no
sense whatsoever. Why would you pay one hundred and twenty
five bucks for print only when you could get web
in print for the same price. But when he had it,
there most people went for the Web in print coumbo.
But then he run the experiment where he took it
(04:16):
away and only offered the web only and the Web
in print, and far fewer bought the Web in print,
and he showed that the decoy had done its job,
steering people towards the most profitable choice without them even
realizing it. Now, let's talk about another one that's quite similar,
is called anchoring bias, and that's our tendency to rely
(04:40):
too heavily on the first number we see when making decisions.
So let's say you're looking at you're looking at buying
a fancy watch, and the tag says was twelve hundred bucks,
now four hundred and ninety nine. Now that twelve hundred
figure might be plucked out of thinner, but it's and
I anchored in your brain as the real original value,
(05:05):
making the four hundred and ninety nine dollars one look
like a steal. And this trick works even when the
anchor is a relevant right. So studies show, and I've
actually run experiments on this in the workshop, that if
you get somebody to think about a random number, or
in these studies, you spin a wheel and there's a
(05:27):
random number that's generated, and they see that number before
they make a guess about a question or statistic. Their
guess is skewed towards the number you saw. And you
can run two different experiments, and I've run this before.
So you divide a room into three groups and they
(05:49):
get three different Those groups get different bits of paper
and they're all about guessing the length of the Mississippi River.
So one of them, it's just a piece of paper
and it says what's the length of the Mississippi River?
And what happens is the median estimate is about eight
hundred miles. This is an experiment done by Dan Canneman,
and I've actually repeated this experiment, right. So the first
(06:12):
one where you just straight out ask them the length
of it in miles, the median answers eight hundred. Then
a second group has a piece of paper and it's
two questions. Is the Mississippi River greater or less than
seventy miles long? The second question is what is the
length of the Mississippi River. The third group gets a
(06:32):
different sheet of paper. Is the Mississippi River greater or
less than two thousand miles long? And then the second
question is what is the length of the Mississippi River?
So all three groups are guessing. Right. The first group,
whether you just asked them what is the length? Their
median the middle estimate is eight hundred miles. The second group,
(06:53):
where you anchor that with the question is a greater
or less than seventy miles long, they actually guess and
the median guess is three hundred miles. And then the
third group, where the anchoring question is is the Mississippi
River greater or less than two thousand miles long? Their
median answer for the length is actually fifteen hundred miles.
(07:17):
So just that showed that putting a low anchor drives
it down than what people would actually guess, and a
high anchor actually drives it up. And it is being
widely replicated. So we are often duped by this anchoring tactic. Right,
So going back to that watch that twelve hundred dollars
(07:40):
was twelve hundred dollars is just an anchor's now four
hundred and ninety nine. And multiple supermarkets in Australia have
been shown they've been prosecuted for inflating prices. They was
originally this and then they drop it down, it was
never that price. All sorts of shops do this as well.
So you might be book in some travel and a
(08:02):
travel website might show you there's a luxury suite at
a ridiculous price, and that's right next to deluxe option
that's only slightly more than the standard, And the pricey
luxury suite suite is not there to be sold at all,
it's just to make the deluxe options seem irresistible. Now,
(08:22):
the thing about both of these tactics is that they
make you feel like you're making an informed choice, but
in reality, you're making a relative choice, not an absolute one.
Your brain is comparing options in front of you, rather
than asking do I even need this? And if I do,
what's at worth to me in isolation. So here's the takeaway.
(08:45):
Next time a deal feels too good to pass up,
strip away the context. Would you still choose it if
the other options weren't there? Would you still think five
hundred bucks was cheap if you'd never seen the original
twelve hundred dollars price. And if anybody's ever been to
countries where they haggle, and you will see this over
(09:06):
and over again, whether it's Asia, Middle East, or South America.
You will see going up and you ask the price
of something, and you'll see them start with a ridiculously
high price, and then you start to haggle, but they've
actually set the anchoring. So I'd actually taught my kids
when we were traveling. When that happens, your first price
(09:27):
goes really low so that you set a counter anchor,
and then you meet somewhere in the middle. So it's
a really interesting little experiment. So remember in marketing, the
most effective way to guide you isn't to take away
your freedom of choice. It's to make you feel like
(09:47):
you're making a free choice while quietly nudging you exactly
where you want you to go. So the key here
is to be curious and skeptical. Catch you next time.
Hey, everyone, welcome to another edition of Wisdom Wednesdays. Now,
before we get into this week's Wisdom Wednesday, a couple
of announcements, one of which is pretty excact. Say, they're
both pretty exciting. One is a little bit more exciting
than the other. My new book, The Hardiness Effect is
not on seal for pre order. You can buy it
(00:31):
on Amazon or if you live in Australia you can
buy it in book toopia dot com dot au and
it's got a twenty six percent discount, which I wasn't
even a whord off. So the full title love it
is The Hardiness Effect. Grow from Stress, optimize health and
live longer. And the second announcement is that I am
(00:55):
shortly going to be changing the name of the podcast
from the Poultale Podcast to the Heartiness Lab Podcast. And
that is really to coincide with the activation of the
Hardiness Lab with my old mate, Professor Grant Schofield. And
if you're a longtime listener, you will have heard Grant
(01:15):
on the podcast probably four times I think, and we
are collaborating to research all things hardiness. And if you
really want to know what that's about, get in and
pre order the book. On book Toopia or on Amazon,
and I enough of the plugs, let's get on with
the podcast. So today I'm going to talk about something
(01:38):
that actually came across today and just remembered about it.
And it's something that happens almost every time you make
a purchase, or quite often not every time, but it's
whether you're buying popcorn at the movies, a coffee or tea,
a holiday package or a phone plan. Now you probably
think when you're making these decisions of if there's different
(02:01):
things on offer, that you're making a rational choice. But
the truth is that often you're being nudged, coaxed, and
sometimes outright who dwinked by some very clever psychological tactics.
And two of the big ones that marketers use are
the decoy effect and anchoring bias. So let's start with
(02:22):
the decoy effect. So imagine you're at the cinema and
you go to buy some popcorn and you see a
small bucket of popcorn for four bucks and a large
one for seven bucks, and you're leaning towards the small,
and then you see a medium one for six dollars fifty.
Now suddenly the large one seems like a no brainer,
(02:45):
and you walk away patting yourself on the back, thinking
that you're a savvy shopper, But you've just been played.
The medium one wasn't really there to be sold. It's
a decoy designed to make the large one look like
a bargain. And this is done with lots of different products. Now,
probably the most famous demonstration of this decoy effect was
(03:09):
actually an experiment run by the behavioral economist Dan Arley,
and I read about it in his book is brilliant
book actually, which is called Predictably Irrational. The hidden forces
that sheep are decisions and it's a book that everybody
should read. But anyway, he did this real world experiment
were he persuaded the magazine The Economist to enable him
(03:34):
to control or to set some pricing for them, and
he offered web only subscription for fifty nine bucks, then
a print only subscription for one hundred and twenty five bucks,
and a web and print subscription for one hundred and
(03:55):
twenty five bucks. Now, the print only option makes no
sense whatsoever. Why would you pay one hundred and twenty
five bucks for print only when you could get web
in print for the same price. But when he had it,
there most people went for the Web in print coumbo.
But then he run the experiment where he took it
(04:16):
away and only offered the web only and the Web
in print, and far fewer bought the Web in print,
and he showed that the decoy had done its job,
steering people towards the most profitable choice without them even
realizing it. Now, let's talk about another one that's quite similar,
is called anchoring bias, and that's our tendency to rely
(04:40):
too heavily on the first number we see when making decisions.
So let's say you're looking at you're looking at buying
a fancy watch, and the tag says was twelve hundred bucks,
now four hundred and ninety nine. Now that twelve hundred
figure might be plucked out of thinner, but it's and
I anchored in your brain as the real original value,
(05:05):
making the four hundred and ninety nine dollars one look
like a steal. And this trick works even when the
anchor is a relevant right. So studies show, and I've
actually run experiments on this in the workshop, that if
you get somebody to think about a random number, or
in these studies, you spin a wheel and there's a
(05:27):
random number that's generated, and they see that number before
they make a guess about a question or statistic. Their
guess is skewed towards the number you saw. And you
can run two different experiments, and I've run this before.
So you divide a room into three groups and they
(05:49):
get three different Those groups get different bits of paper
and they're all about guessing the length of the Mississippi River.
So one of them, it's just a piece of paper
and it says what's the length of the Mississippi River?
And what happens is the median estimate is about eight
hundred miles. This is an experiment done by Dan Canneman,
and I've actually repeated this experiment, right. So the first
(06:12):
one where you just straight out ask them the length
of it in miles, the median answers eight hundred. Then
a second group has a piece of paper and it's
two questions. Is the Mississippi River greater or less than
seventy miles long? The second question is what is the
length of the Mississippi River. The third group gets a
(06:32):
different sheet of paper. Is the Mississippi River greater or
less than two thousand miles long? And then the second
question is what is the length of the Mississippi River?
So all three groups are guessing. Right. The first group,
whether you just asked them what is the length? Their
median the middle estimate is eight hundred miles. The second group,
(06:53):
where you anchor that with the question is a greater
or less than seventy miles long, they actually guess and
the median guess is three hundred miles. And then the
third group, where the anchoring question is is the Mississippi
River greater or less than two thousand miles long? Their
median answer for the length is actually fifteen hundred miles.
(07:17):
So just that showed that putting a low anchor drives
it down than what people would actually guess, and a
high anchor actually drives it up. And it is being
widely replicated. So we are often duped by this anchoring tactic. Right,
So going back to that watch that twelve hundred dollars
(07:40):
was twelve hundred dollars is just an anchor's now four
hundred and ninety nine. And multiple supermarkets in Australia have
been shown they've been prosecuted for inflating prices. They was
originally this and then they drop it down, it was
never that price. All sorts of shops do this as well.
So you might be book in some travel and a
(08:02):
travel website might show you there's a luxury suite at
a ridiculous price, and that's right next to deluxe option
that's only slightly more than the standard, And the pricey
luxury suite suite is not there to be sold at all,
it's just to make the deluxe options seem irresistible. Now,
(08:22):
the thing about both of these tactics is that they
make you feel like you're making an informed choice, but
in reality, you're making a relative choice, not an absolute one.
Your brain is comparing options in front of you, rather
than asking do I even need this? And if I do,
what's at worth to me in isolation. So here's the takeaway.
(08:45):
Next time a deal feels too good to pass up,
strip away the context. Would you still choose it if
the other options weren't there? Would you still think five
hundred bucks was cheap if you'd never seen the original
twelve hundred dollars price. And if anybody's ever been to
countries where they haggle, and you will see this over
(09:06):
and over again, whether it's Asia, Middle East, or South America.
You will see going up and you ask the price
of something, and you'll see them start with a ridiculously
high price, and then you start to haggle, but they've
actually set the anchoring. So I'd actually taught my kids
when we were traveling. When that happens, your first price
(09:27):
goes really low so that you set a counter anchor,
and then you meet somewhere in the middle. So it's
a really interesting little experiment. So remember in marketing, the
most effective way to guide you isn't to take away
your freedom of choice. It's to make you feel like
(09:47):
you're making a free choice while quietly nudging you exactly
where you want you to go. So the key here
is to be curious and skeptical. Catch you next time.
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