Category: Psychology

Something New: Beat the Prisoner’s Dilemma

The prisoner’s dilemma is a classic example of a game theory problem that has been studied extensively in fields such as economics, psychology, and political science. In this scenario, two individuals, referred to as prisoners, are arrested and separately offered a deal by the police. Each prisoner is given the option to either confess to the crime they are accused of or remain silent. If both prisoners remain silent, they will each receive a one-year sentence for a lesser charge. If one prisoner confesses and the other remains silent, the confessing prisoner will be released while the silent prisoner will receive a five-year sentence. If both prisoners confess, they will both receive a three-year sentence.

The problem lies in the fact that both prisoners have conflicting interests. On the one hand, if both prisoners remain silent, they will receive the shortest sentences. However, if one prisoner confesses, they will receive a much shorter sentence while the other prisoner will receive a longer sentence. This creates a dilemma for the prisoners because each prisoner has to decide whether to remain silent and potentially receive a longer sentence or confess and potentially receive a shorter sentence.

There are several ways in which the prisoner’s dilemma can be resolved, and each approach has its own advantages and disadvantages. One way to solve the prisoner’s dilemma is through the use of game theory. Game theory is a mathematical tool used to analyze strategic interactions between individuals or groups. In the context of the prisoner’s dilemma, game theory can be used to predict the outcomes of different strategies and help the prisoners make more informed decisions.

One approach to solving the prisoner’s dilemma through game theory is the use of the Nash equilibrium. The Nash equilibrium is a solution to a game in which no player has an incentive to change their strategy once it has been chosen. In the prisoner’s dilemma, the Nash equilibrium would be for both prisoners to confess, resulting in both prisoners receiving a three-year sentence. This is because if one prisoner confesses, the other prisoner has an incentive to confess as well in order to avoid a longer sentence.

However, the Nash equilibrium is not necessarily the most desirable outcome for the prisoners. In this case, both prisoners would be better off if they both remained silent, as they would each receive a one-year sentence. To achieve this outcome, the prisoners would need to find a way to cooperate and agree to remain silent. One way to do this is through the use of communication or other forms of negotiation.

Another way to solve the prisoner’s dilemma is through the use of trust and reputation. In many cases, individuals will not cooperate in the prisoner’s dilemma because they fear that the other person will not cooperate either. However, if the prisoners have a history of cooperation, they may be more likely to trust each other and cooperate in the future. This is because the prisoners will be more likely to believe that the other person will follow through on their promise to cooperate.

Additionally, the prisoners may also be more likely to cooperate if they have a reputation for being cooperative. If one prisoner has a reputation for being trustworthy and reliable, the other prisoner may be more likely to cooperate with them in order to maintain their reputation. This is because a reputation for cooperation can be valuable in other situations as well, and individuals are often willing to cooperate in order to maintain their reputation.

There are also other ways in which the prisoner’s dilemma can be solved, such as through the use of punishment or rewards. In some cases, the prisoners may be more likely to cooperate if they know that there will be consequences for not cooperating. For example, if the prisoners are told that if one of them confesses, the other prisoner will receive a longer sentence, they may be more likely to cooperate and remain silent.

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Something New: Forer Effect and You

The Forer Effect, also known as the Barnum Effect, is a psychological phenomenon in which individuals believe that a general statement or personality assessment is specifically tailored to them, even if it is actually a vague and broad statement that could apply to anyone. This effect is often used in marketing to manipulate consumers into thinking that a product or service is specifically tailored to their needs and wants. However, the use of the Forer Effect in marketing has several problems that can harm both the consumer and the company.

One problem with the Forer Effect in marketing is that it is based on deception. Companies use vague and broad statements in order to make their products or services seem more appealing to a wider range of consumers. For example, a company may claim that their product is “perfect for busy individuals who want to stay healthy and fit,” when in reality, the product may not be any more effective than any other similar product on the market. This deceptive marketing tactic is unethical and can mislead consumers into buying products that may not actually benefit them.

Another problem with the Forer Effect in marketing is that it can lead to overconfidence in the consumer. When individuals believe that a product or service is specifically tailored to their needs, they may become overly confident in their decision to purchase it. This can lead to an unrealistic expectation of the product or service, leading to disappointment when it does not meet these expectations. This can also lead to consumers becoming more susceptible to future marketing tactics, as they may believe that any product or service that claims to be tailored to their needs will be the perfect fit for them.

The use of the Forer Effect in marketing can also contribute to the creation of a consumer culture that is focused on superficial desires rather than real needs. Many marketing tactics use generalizations and stereotypes to appeal to certain groups of people, such as the idea that all women want to be thin and attractive or that all men want to be strong and successful. These marketing tactics can create a culture in which individuals feel pressure to conform to certain societal expectations and to prioritize superficial desires over their real needs and wants.

Furthermore, the Forer Effect can also lead to the overconsumption of products and services. When individuals believe that a product or service is specifically tailored to their needs, they may feel a sense of urgency to purchase it. This can lead to overconsumption and waste, as individuals may feel the need to constantly buy new products or services in order to fulfill their perceived needs. This can not only be harmful to the environment, but also to the consumer’s financial well-being.

One potential solution to these problems is for companies to be more transparent and honest in their marketing tactics. This means clearly stating the benefits and limitations of their products or services and avoiding vague and broad statements that could apply to anyone. It also means avoiding the use of generalizations and stereotypes to appeal to certain groups of people. This can not only help to prevent the Forer Effect from manipulating consumers, but it can also increase consumer trust in the company.

Another solution is for consumers to be more critical and aware of the marketing tactics that companies use. This means taking the time to research and compare products or services before making a purchase and being cautious of overly positive or vague statements. It also means being aware of societal expectations and avoiding the pressure to conform to superficial desires.

Finally, companies can also focus on creating products and services that truly meet the needs and wants of their consumers, rather than relying on manipulative marketing tactics. This means conducting market research and gathering feedback from consumers in order to understand their needs and wants and create products or services that truly benefit them.

Overall, the Forer Effect is a psychological phenomenon that can be harmful when used in marketing. It is based on deception and can easy manipulate people to make irrational decisions.

Something New: Simpson’s Paradox

Simpson’s paradox, also known as the Yule-Simpson effect, is a statistical phenomenon that occurs when the relationship between two variables appears to be reversed when analyzed separately, but is actually the opposite when analyzed together. This paradox can be confusing and can lead to incorrect conclusions being drawn.

The paradox was first identified by Edward Simpson in 1951, and is named after him. It is a common occurrence in statistical analysis, and can be seen in many different fields, including social science, economics, and medicine.

One classic example of Simpson’s paradox involves a study on the effectiveness of a new drug. In this study, the researchers found that the new drug was more effective in reducing the number of heart attacks in men than in women. However, when the data was further analyzed, it was discovered that the new drug was actually more effective in reducing the number of heart attacks in women than in men.

So, why did the initial analysis show the opposite result? The answer lies in the fact that the number of men and women in the study was not equal. There were more men in the study, and therefore, the results for men had a larger impact on the overall results.

Simpson’s paradox can also be seen in studies on education. For example, a study may find that students in a certain school district perform better on standardized tests than students in a neighboring district. However, when the data is further analyzed, it may be discovered that the students in the neighboring district come from more disadvantaged backgrounds, and therefore, their test scores may not be representative of their true abilities.

Another example of Simpson’s paradox can be seen in the hiring practices of a company. A company may find that they are more likely to hire male candidates over female candidates. However, when the data is further analyzed, it may be discovered that the male candidates were more qualified, and therefore, were more likely to be hired.

So, how can we avoid the pitfalls of Simpson’s paradox? One way is to carefully analyze the data and consider all possible factors that may be influencing the results. It is also important to consider the sample size, as small sample sizes can lead to skewed results.

Another way to avoid Simpson’s paradox is to use statistical techniques, such as stratified sampling, which involves dividing the population into different subgroups and analyzing the data within each subgroup. This can help to identify any underlying trends or patterns that may not be apparent when the data is analyzed as a whole.

Simpson’s paradox can also be avoided by using multivariate analysis, which involves considering multiple variables at once. This can help to identify any interactions or correlations between variables that may not be apparent when considering each variable individually.

Overall, Simpson’s paradox is a common occurrence in statistical analysis, and it is important to be aware of it in order to avoid drawing incorrect conclusions. By carefully analyzing the data and considering all possible factors, it is possible to avoid the pitfalls of Simpson’s paradox and draw more accurate conclusions.

Why we do what we do: Not everything is a nail – Maslow’s Hammer

At any given time you will often hear me quoting many famous quotes about anything and everything; that is how I relate to new experiences by trying to tie them to some bit of knowledge that I had already picked up. Probably my most common refrain lately is the famous Mike Tyson quote, “Everyone has a plan until they get punched in the face.” It’s true that everyone talks doing the right thing and everyone wants things to succeed, but as soon as there is some challenge to the prevailing world view or as soon as a small bump in the road exists, people often revert back to what they know best and turn back in on themselves. Unfortunately this is especially problematic in the business world as the only way to move forward is to change behaviors and tackle existing problems in new ways. Even more distressing is that as people fall back to what they are most comfortable with they turn towards their own disciplines and their own previous experience, limiting the ability for people of disparate talents and backgrounds to work together.

One of the things that defines people is the concept of viewing the world through their own experiences, and the most powerful experiences that we have in the modern world is our professions. Be it marketing, or engineering, management or data, we all view the world through the lens of the things we do and the challenges that we face day to day. We view the challenge of improving numbers by looking to “dialogue with our customers” or “increase efficiency through data analysis” or by “building better tools and a better user experience”. All of these in isolation seem like and often are very good ideas except when they cloud our ability to prioritize and to focus on a single outcome. Each day in the business world is really a Sisyphean climb to the top and each time that boulder rolls back on us we run back to that which we are most comfortable with. This is especially dangerous when we do not even have true accountability for the tie between those concepts and the functional bottom line outcome that we need to generate.

Abraham Maslow is famous for many things, from his hierarchy of needs to his many contributions to modern psychology. What he is often not associated with is a quote that almost everyone is familiar with, “if all you have is a hammer, everything looks like a nail.” We are all carrying hammers in the form of our world views and our professional disciplines. The key is to accept that there are many things outside of what we accept as “true” about the way to do things and about how to tackle problems. Even more when we do get evidence that does not directly correlate with our existing world view we can not dismiss it or try to understand it through that same tired lens.

Optimization at its core is the act of adding accountability to these world views and about challenging assumptions. It is about taking the existing practices of the entire organization and standing them on their end, shaking them, and finding all the holes and least effective parts. It does this not maliciously but as a mutual benefit to everyone to add a different point of view on the functions and actions that they are taking. This is why the discipline of testing is about everything but test ideas. It is about building rational rules of action and building out alternative hypothesis. This is why you focus on efficiency and multiple options and not just on what won and not about what won elsewhere or about some great idea someone had. It is why it is about patterns and not about some artificial reasoning why something won. You serve the organization a great discipline when all you do is regurgitate the nail back to someone so that they can then hit it with the same tired hammer. Optimization is the act of putting any idea and discipline through a system that allows for it to get better and for everyone to learn and to get better results.

At the same time, it is important to understand that everyone else is viewing the world through a very different lens. They are trying to tie their past experiences with new actions and new results. A marketer has always thought in terms of a dialogue with a certain user or a certain persona. That mental model has gotten where they are today. When you come in and show that there might be more effective ways to look at those same users or the the concept of personalization most likely will not work the way they envision, you are creating a very powerful form of cognitive dissonance and you are forcing people outside of that hammer that they so readily wield. Too much and you will cause major push back and possibly form an ongoing barrier to success. Too little push and you are just confirming their biases and not providing any assistance.

The key in this and in all actions is to be firm on discipline but flexible on tactics. Work with the concepts and push them past their existing barriers. This is why it is so vital to not focus on test ideas when building out a successful test. Talk about what people were already focusing on and how best you can test out that concept against many others. You want to do personalization, great, here is how we take what you were doing and serve that and other concepts to everyone. If you are right, we get to see that and if you are wrong then we found something that is better. In reality there is no downside to performance when we tackle a problem that way. It is about reaching the ends, not about the means that get you there.

Another key to this is to get people to vote on what they think will win for each test. If you do this enough and with enough varied options and you will be amazed at just how bad people are at guessing the right answer. In the last 9 tests that I have done we have averaged 8 options for each test, with some variants coming from the team, some from myself, but a large many simply expressions of the various directions that are feasible. I have asked a large team to pick there favorite and second favorite. In those 9 tests, we have had exactly 1 second place vote for all of the winners combined, and the only reason that the option got that vote was because my very talented designer picked up on the pattern and voted her least favorite. The shock of where we are versus where people thought we would be and the impact to the bottom line (over 200% improvement) has helped open doors to new ways of tackling problems, and it has done so organically.

In both tactics you are giving people the chance to tie their world view in with the results and letting them have a stake in the outcome. You are welcoming that hammer they wield but helping them see that there are many different nails to hit.

Keep in mind however that you are just as guilty as they are. Spend too much time in the world of optimization and you will start to feel like no one has any idea what they are doing and that all ideas are going to fail. It is even more important for you to challenge yourself and for you to go beyond your comfort zone in where you let testing going. Make sure you include ideas from others as much as possible, even if you are sure they are not going to work. Make sure you tie optimization in on actions that you feel might not comfortable or worth your time. Remember that the smarter someone is, the more likely they are to be impacted by biases and that you serve no good to the organization or yourself if you are not more vigilant against your own biases then you are against others.