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December 9, 2011 / Simon Thorne

I hope I don’t regret this blog…

I was watching the Million Pound Drop on Channel 4 last night and noticed a few things. The Million Pound Drop is fairly basic game in which participants answer 8 questions in order to win £1million pounds, but has a few things that make it entertaining TV and an excellent example to use for this weeks topic; Regret. Last night I noticed after almost every answer, the two contestants would look at each other, as if to say “We should have put more money on that” and “I knew that was the answer”. As I touched on last week, hindsight can be a curse. One particularly interesting moment was during the last few seconds of one question in which a large amount of money was moved from one answer to another. The money was moved from the correct answer, and his face dropped dramatically when the answer was wrong. Why was this wrong answer more regretful than any other wrong answer given? I would put this down to a near miss. There was money on other answers which were also wrong, but the fact that they had moved from the correct answer to the wrong answer in the last few seconds just made it all the worse. The near miss is similar to that a silver medalist will feel, the bronze medalist is likely to be much happier because the silver medalist can only imagine how close they were to gold. Near misses can cause regret.

So close, yet so far.

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December 2, 2011 / Simon Thorne

I can predict everything that happened last week – The Hindsight Bias

Aren’t my predictive powers remarkable? Now when people ask me about events, I can say, “I knew that would happen”.  This is common for me, when I go to a football match, after the game, everybody knew what the result would be, based on how the teams had been playing, manager interviews and what ever the players had been ‘tweeting’ about the week before. This all creates a coherent story as to why the game ended the way it did. But what else could we have prevented? Many people knew that the financial crisis of 2008 would happen, and line up to get on talk shows to illustrate what should have been done to prevent it. When actually, they didn’t know, they may have thought it would happen, but they only know because it actually did happen. Could we have prevented 9/11? On the 10th of July, 2001, the Central Intelligence Agency (CIA) obtained information that al-Qaeda were plotting an attack on the USA. Surely when this information came in it should have been fast-tracked all the way to the president? But no it went to the head of national security, where it was noted and filed away. Did the United States government not care? We are quick to assume that the government was negligent with this information, but that is only because we know what eventually happened. At the time, the CIA would have had no idea how important this information was, therefore did what they always did, filed it, and carried on obtaining information.

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November 24, 2011 / Simon Thorne

“One mans death is a tragedy, a million deaths is a statistic.”

Heartbreaking isn’t it? John isn’t the only child affected though; every day 5000 children will die from lack of clean water. That’s 35,000 children a week! Roughly 2 million children a year will die from dirty water and bad sanitation. This number doesn’t include the countless children who will become sick, the affect this will have on the children’s parents. Water is not the only thing that will affect people in the poorest regions of the world. Malaria is also a huge killer. Between 300 and 700 million people will contract malaria in a year, and in the regions where medical care is poor, millions of those will die. Are you uninterested yet? After all, what can you do? Donating a few pounds a month is hardly going to make a difference is it? More interestingly, what were your feelings after the initial video? My bet would be that you were feeling a lot more charitable after the initial advert. Read more…

November 18, 2011 / Simon Thorne

Creation Can Negate Objectivity – The IKEA effect

Last week we had our results from our first round of blogging.  Although my results were good, I wanted better. Not only did I want better, I thought I deserved better. Why? After all the grades I received were of a high standard, and based on my grades from undergraduate I should be over the moon with what I had achieved. Earlier in my blogging I talked about the bias ownership causes. Maybe this is what left me wanting more, but thinking about it, there is probably more to it than that. Not only am I dealing with ownership bias, I am suffering from something Ariely terms the “the IKEA effect”. As I created this blog, does this cloud be objectivity? Not only does this affect my judgment, but also it has been used to revolutionize the home baking industry. The combination of ownership an the IKEA effect can go a long way to explaining why people over value their homes so much, especially when they have been customized to suit themselves. We will also be taking a look at how marketers can capitalize on the IKEA effect to draw in customers.

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November 11, 2011 / Simon Thorne

Incentives for Bankers – The Bonus Outrage

In 2008 the world ended. Ok, not quite but it sure felt like it was about to. The financial crisis of 2008 left many angry (angry may be an understatement). People had trusted the banks with their money and the banks hadn’t acted in their best interest. Following government bailouts and a helping hand from the taxpayer, the banks landed on their feet (sort of). But what was it that left the public feeling so outraged? Mainly it was that the people responsible for the crisis were to be rewarded, with 6 and 7 figure bonuses.

Why? Read more…

October 27, 2011 / Simon Thorne

You get what you pay for.

We are often under the illusion that the more we pay for something, the better it will be. This isn’t always the case, albeit I’ll take Tesco’s Finest over Tesco’s Value any day. I’ve also been scorn by the big price tag too; I’ve had more than 1 pair of £50 jeans that have fallen apart while my bargain bucket pair is still going strong. But what other affect does price have? Is expensive medication more effective than the cheaper alternative? Is the more expensive wine better than the rest?

How good would these wines be?

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October 20, 2011 / Simon Thorne

Mine is better than yours.

What to write, what to write…? Well it’s my blog, I can write about whatever I want. It is my blog after all. You can buy it from me if you want, but I suspect that I may value it more than you do. Why is that? Why does ownership over something distort our valuations? Lets talk about ownership. We tend to value our own belonging more than other peoples. Why is that? Why does owning something immediately raise our perceived valuation of it? But first, when does something become ours?

Paco Underhill, author of Why we buy champions the use of accessible merchandise displays. This is so the consumer can interact with the product, touch it, smell it, maneuver it. During this exchange with a product, the consumer will imagine, say wearing it, using it or whatever would be required. They will have a mental image of where it’ll be stored at home, when it will be used. This sort of store design allows the consumer to fall in love with something and begin to take possession over it. Peck & Shu investigated the effect touch has on perceived ownership. Before any money has exchanged hands, people begin to perceive an object as being their own.

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