Inclass Experiments #3 : Biases & Irrationality

Inclass Experiments #3 : Biases & IrrationalityTo start off a class about social psychology or management I believe the best way is to dive right in and demonstrate to the students just how fragile our mind is with some very basic optical illusions and irrationality biases. It’s remarkable how easy these things are to demonstrate in class and the effect on the audience is usually very strong.

 

Take a look at the following presentation together with the inclass exercise sheet I distributed to the students (two versions).

 

It includes two parts, the first some very basic optical illusions. You can find thousands of those online. The second part was a series of biases and heuristics I mainly adopted from Max Bazerman’s book on Judgment and Decision Making where he reports the classic experiments.

Part two includes the following experiments:

  • Decoy Effect (from Dan Ariely‘s book) – the Economist newspaper subscription options. A decoy affects the attractiveness of the other two option.
  • Availability Heuristic Bias – Compare two groups of companies, people tend to lean towards the well known option.
  • Representative Heuristic Bias – People disregard the information about the situation (MBA) and assume a shy student that writes poetry did an undergrad in Chinese studies, though probability is very low.
  • Ease of Recall Bias – People assume higher occurrences of things that appear more on the news.
  • Retrievability Bias – Similar to ease of recall, only with regard to self abilities to retrieve.
  • Prospect Theory – Framing Effects : People take higher risks under framing of loss than under framing of gain.
  • Escalation of Commitment : People irrationally escalate their commitment in a hopeless situation. Fun demonstration through bidding in class.

 

The class presentation

 

The class handouts (includes two versions)

 

This last part, amazingly, shows that the results of what we did in class were all very strong effects in the predicted direction. When I ran it all and it worked out I thought it was  too good to be true, but there you have it… classic indeed.

 

Try those out in class, maybe even open your first course session with those, and you’ll have a blast.