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Persuasion

Decoy Effect: The Sneaky Sales Trick That Turns Shoppers into Spenders

May 23, 2023 By Nagesh Belludi Leave a Comment

Imagine yourself at the movie theater, deciding whether to buy a small popcorn for $5 or a large popcorn for $8. You’re wondering if the extra popcorn is worth the extra money, so you consider the small size. Suddenly, the cashier offers you medium popcorn for $7.50, and you buy it instead of the small one.

However, the medium popcorn is a lure—a true distraction. By introducing it, the theater has made the large popcorn seem like a better value and the small popcorn seem less attractive. This is a classic marketing strategy known as the Decoy Effect, which aims to influence your decision-making.

In essence, the Decoy Effect presents you with two options and then adds a third option designed to make one of the original options more appealing. This can sway your decision-making and lead you to choose the more expensive option.

Studies have shown that framing can influence our decisions, as a well-designed decoy can shift opinions by up to 40%. One well-known example of the decoy effect in action is from The Economist, the influential weekly international news and business publication. Behavioral economist Dan Ariely’s book Predictably Irrational (2008) describes how the magazine offered a digital subscription for $59, a print subscription for $125, and a combined print and online subscription for the same price of $125. The print-only subscription was clearly a decoy, designed to make the combined subscription seem like a better value, and it worked; the presence of the decoy significantly increased the uptake of the combined subscription.

While psychologists are still debating the exact reasons for this cognitive bias, one theory suggests that the decoy provides a straightforward justification for a decision that might otherwise seem arbitrary.

Idea for Impact: If you run a business, you too can use the decoy effect to steer consumers towards certain purchasing decisions that benefit your bottom line. By strategically adding a decoy product to your offerings, you can provide perceived value for your customers while boosting your profits.

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Filed Under: Business Stories, MBA in a Nutshell, Mental Models, Sharpening Your Skills Tagged With: Biases, Creativity, Marketing, Persuasion, Psychology, Thought Process

The Longest Holdout: The Shoichi Yokoi Fallacy

May 22, 2023 By Nagesh Belludi Leave a Comment

In 1972, while hunting near the Talofofo River in Guam, two cousins from the village of Talofofo were startled by rustling sounds emanating from the tall reeds. Initially, they assumed it was an animal or a hidden child, but to their surprise, they came face to face with an elderly and disheveled man clutching a shrimp trap. This unexpected encounter took aback the hunters, and after some initial confusion, they captured the man and escorted him back to their makeshift jungle home, about an hour’s walk away. The old man pleaded with the cousins to end his life.

That fugitive turned out to be Shoichi Yokoi, a Japanese soldier. During the latter stages of World War II, Yokoi served in the supply corps of the Japanese army stationed on the island of Guam. In 1944, when General Douglas MacArthur’s troops invaded and reclaimed control of the island, Yokoi retreated into the dense jungle. There, he sought refuge in an underground cave and remained hidden for 28 years, living as a determined survivor under harsh conditions.

Yokoi sustained himself by inhabiting a tunnel-like cave he had carved amidst the thick foliage, relying on a diet of nuts, fruits, shrimp, frogs, and rats. He fashioned his clothing by skillfully weaving tree bark strips and using the moon’s phases to track time. In 1952, he chanced upon a leaflet announcing the war’s end, but he and his fellow soldiers dismissed it as enemy propaganda, choosing not to surrender. Over time, all of Yokoi’s comrades perished due to starvation or illness, or were captured.

Loyalty Without a Glance Can Shroud the Mind in Ignorance

Yokoi remained firmly convinced that his fellow soldiers would eventually come to rescue him, and he clung tenaciously to this belief. Surrender was out of the question, as he later explained, “We Japanese soldiers were taught to choose death over the shame of being taken alive.” (Additionally, stragglers like him believed that returning to Japan was impossible, fearing they would be branded as deserters and face the death penalty.)

In 1972, Yokoi finally returned to Japan, where he was hailed as a national hero. Upon his arrival in Tokyo, he famously declared, “It is with much embarrassment that I have returned alive,” echoing the indoctrination he had received before the war. For the older generation, he symbolized greatness, embodying the prewar values of diligence. However, for the younger generation, he represented an awkward reminder of outdated ideals. Being captured and surviving was deemed cowardly, as the ideal soldier made the ultimate sacrifice for the divine emperor, even at the cost of his own life.

Yokoi’s remarkable story of surviving in the jungle captured the imagination of the Japanese people. The country was undergoing an industrial boom, and many were fascinated by his ability to endure on a meager diet and his resourcefulness in creating clothing from tree bark. Yokoi even returned his army-issued rifle to “the honorable emperor,” expressing his embarrassment at having returned alive rather than dying in service to the emperor. He regretted not having served his majesty to the fullest.

However, Yokoi never quite felt at home in modern society. Before his conscription in 1941, he had been an apprentice tailor, and now, he found himself overwhelmed by the changes that had occurred during his absence. He subsequently led a quiet life as a hermit, becoming a popular television personality and advocating for a simple way of life. He traveled across the country, delivering public lectures criticizing Japan’s “wasteful modern lifestyle” and championing values of thrift and self-reliance. He was deeply admired for his unwavering determination, his spirit of ganbaru (“enduring adversity without giving in,”) and his unwavering commitment to traditional values.

Embrace the Gifts That Doubt Can Bring. Let Enlightenment Take Flight.

Overall, Yokoi spent 27 years in isolation in the jungles of Guam, stubbornly holding onto his identity as a Japanese soldier long after the war had ended. In doing so, he squandered his life by adhering to ideals that held no significance for anyone else, sacrificing his relationships, career, and personal happiness to pursue the Japanese principle of ganbaru, or unwavering perseverance.

There reaches a point where virtue, taken to the extreme, can transform into a vice. Shoichi Yokoi personified this fallacy. We often admire the act of unwavering commitment, but we tend to lose sight of the underlying reasons behind it due to the blinding effects of rigid adherence.

Beware of blind devotion to any ideology that promotes rigid and restrictive beliefs. Do not overestimate the value of your morals beyond their practical utility, and be receptive to changing your perspective when circumstances demand it. This requires reevaluating your priorities and recognizing that what you once cherished may no longer align with your desires or aspirations. When faced with new information or situations, consider the possibility of altering your stance. There is a difference between sticking to your principles and being imprudent.

Wondering what to read next?

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  2. No One Has a Monopoly on Truth
  3. Decoy Effect: The Sneaky Sales Trick That Turns Shoppers into Spenders
  4. The “Ashtray in the Sky” Mental Model: Idiot-Proofing by Design
  5. The Power of Counterintuitive Thinking

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Attitudes, Biases, Mental Models, Persistence, Persuasion, Philosophy, Psychology, Thought Process, Wisdom

When Implementing Change, You’ll Encounter These Three Types Of People

April 6, 2023 By Nagesh Belludi Leave a Comment

'Change is like a Slinky' by Hans Finzel (ISBN 1881273687) To successfully make changes in your workplace, you’ll need to have everyone on board. But don’t try to get them all to accept change at once. Not everyone responds to change similarly; some employees will not react well to it initially.

According to Hans Finzel’s Change is Like a Slinky Paperback (2004,) you must anticipate your allies and adversaries. Determine which of these three groups each of your employees belongs to and adapt.

  1. The Innovators and Early Adopters. Some people love the challenge of change for its excitement and the opportunity to spearhead change. These employees can research the topic, develop prototypes, and act as “change ambassadors” to motivate people further down the hierarchy.
  2. The Careful Majority. Most employees will support change once they’re reasonably confident it’ll succeed. Demonstrate to skeptics what the change will represent and how it will benefit them and the company. Acknowledge concerns—both the spoken and unspoken—and the discomfort of being in unfamiliar territory while focusing on what’s within their control. Eventually, the majority will follow the early adopters’ lead.
  3. The Holdouts. A few employees may resist—and even sabotage—change because they feel uncomfortable about it, don’t believe in it, or can’t see any benefits in it for themselves. If their contentions are worth the time and energy to debate and discuss, make a fair effort to gain alignment on perspective and resolution on position, but be firm with your strategic direction. Get key organizational leaders to give these dissenters reasons and opportunities to get on board, but let them know the price if they don’t accept change.

Idea for Impact: The best managers understand that each employee has different skills, sentiments, wants and needs—and work to put each employee in a position to feel valued and contribute.

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Filed Under: Leading Teams, Managing People, Mental Models Tagged With: Assertiveness, Change Management, Goals, Great Manager, Persuasion, Workplace

Knowing When to Give Up: Establish ‘Kill Criteria’

March 27, 2023 By Nagesh Belludi Leave a Comment

'Quit When to Walk Away' by Annie Duke (ISBN 0593422996) Quit: The Power of Knowing When to Walk Away (2022) by the professional poker player and “decision scientist” Annie Duke meditates on how you could become so wedded to some predetermined goals that you don’t reassess your ever-evolving values and priorities based on new information that you may unearth along the way.

Quitting isn’t bad, especially if you’re blindly heading toward a “fixed object goal” that’s perhaps no longer serving your values—even hurting you in some way you didn’t anticipate.

A Mental Model to Help You Cut Your Losses

Duke suggests instituting “kill criteria” in advance. Before a pursuit, ask yourself: what signals you could see in the future would tell you it’s time to quit or change course?

Before entering a marathon, for example, you could decide if the medical tent counsels that you’re hitting your physical limitations, you’d quit trying to push yourself and walk out.

In other words, every goal needs a resolute “unless” for every task, investment, and relationship. E.g., if you’re miserable at your job, you could give it three more months and pre-select some indicators that would tell you if things haven’t improved even after you’ve increased your efforts.

Idea for Impact: Know when to give up. Grit is great—but only for carrying on for hard things that are worthwhile. Beware of tunnel vision; don’t get so narrowly focused on a specific goal and overlook other opportunities or priorities.

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Filed Under: Mental Models, Project Management Tagged With: Biases, Conflict, Critical Thinking, Decision-Making, Discipline, Mental Models, Persuasion, Thought Process

Managerial Lessons from the Show Business: Summary of Leadership from the Director’s Chair

March 13, 2023 By Nagesh Belludi Leave a Comment

'Notes on Directing' by Frank Hauser (ISBN 0972425500) Notes on Directing: 130 Lessons in Leadership from the Director’s Chair (2008) explores the parallels between directing the stage and managing projects. The shared themes include ad hoc teams, one-off goals, tight time frames, limited budgets, nebulous chains of command, shared objectives, etc.

Compiled by writer Russell Reich from the notes of British stage director Frank Hauser, this tome contains 130 meditations on casting actors, rehearsing, stage-setting, supervising the production units, and handling critics.

Organized temporally from a director’s initial encounter with the play’s script to its final production, this slim volume is so much more—it’s not just for stage directors.

  • #7: “Learn to love a play you don’t particularly like. You may be asked—or may choose—to direct a play that, for any number of reasons, you don’t think is very good. In such cases it is better to focus and build on the play’s virtues than attempt to repair its inherent problems.” Idea for Impact: Focus on virtues and strengths, not weaknesses. Spend more of their time reinforcing the good performers than dealing with untrainable performers—i.e., you can never remediate grievous weaknesses. Position the person somewhere else where her talents are a better match.
  • #33: “Every scene is a chase scene. Character A wants something from Character B who doesn’t want to give it.” Idea for Impact: Productive relationships with balance and joy call for continuous concession and managing one another’s expectations. Work hard to ensure that all sides feel contented with a negotiated compromise.
  • #73: “Know your actors. Some like a lot of attention; others want to be left alone. Some like written notes; some spoken. Get to know them. It doesn’t have to take long. It’s a good investment that will pay enormous benefits later.” Idea for Impact: Embrace individualized management. No two employees are alike—their temperaments, qualifications, experiences, and backgrounds shape them into thoroughly unique people who’re persuaded, challenged, and inspired in different ways. So why treat them all the same way?

Recommendation: Read Notes on Directing. It’s a worthwhile meditation in managing people, projects, and yourself. Anyone who must get things done through people will find insightful meditations on getting to the core of the narrative, handling people with diplomacy and nuance, and navigating conflict.

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Filed Under: Effective Communication, Leading Teams, Managing People Tagged With: Artists, Assertiveness, Conflict, Getting Along, Negotiation, Persuasion, Relationships, Social Skills

Confirm Key Decisions in Writing

March 9, 2023 By Nagesh Belludi 1 Comment

All human dealings are subject to intended and (largely) unintended misunderstandings and misinterpretations. In fact, when an agreement is distasteful, it’s easy to misunderstand.

Confirm oral agreements, instructions, and understandings in writing at the first chance you get. Don’t rely on just memory.

After meetings, email all the participants recording what was discussed. That way, if there’s ever a debate about what was discussed in the meeting, there is a written record to review. Do this even for phone calls if what was discussed is important. A helpful template:

I am confirming the agreement we reached at our meeting this afternoon. We decided on the following provisions: A, B, and C. Let me know as soon as possible if this information is not accurate so we can finalize this part of our negotiations. Call me to discuss any necessary changes if this doesn’t reflect your understanding.

Idea for Impact: “If it wasn’t written down, it wasn’t said.” Documenting critical decisions—your interpretation of it at least—helps avoid future fracas. If you don’t receive a written protest or correction, your account of the meeting stands accepted.

Wondering what to read next?

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Filed Under: Effective Communication, Managing People, Mental Models Tagged With: Assertiveness, Conflict, Conversations, Critical Thinking, Leadership Lessons, Negotiation, Persuasion, Problem Solving

Trust is Misunderstood

February 24, 2023 By Nagesh Belludi Leave a Comment

Trust isn’t just about “them” out there; it’s also about you. Trust is different things for different people.

Trust is a skill and way of operating that concerns choices and judgments, and opportunities and risks. Trust doesn’t transpire like an on-off switch. It’s something you create and nurture. The less trust between the two sides, the more challenging it is to get anything done.

And the hard part isn’t creating trust; it’s sustaining it. Trust isn’t won once but must be re-won constantly—often by affirming the positive and not allowing the win to become more important than how it’s achieved.

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  5. Ditch Deadlines That Deceive

Filed Under: Managing People Tagged With: Character, Conflict, Getting Along, Likeability, Persuasion, Relationships

The Greatest Trick a Marketer Can Pull

February 21, 2023 By Nagesh Belludi Leave a Comment

The greatest trick a marketer can pull is making you think it’s not marketing.

Take Southwest Airlines, for example, which has consumers persuaded that it’s got the lowest fares. That was true in the ’70s when the airline spurred demand by keeping costs down and offering low fares. But being able to preserve that “lost cost-airline” aura into its sixth decade is commendable, especially with its bloated cost structures.

How about Hallmark, which contrived no end of commercially driven, proclaimed ‘holidays’ (sweetest day? clergy appreciation day?) to guilt people into buying overpriced greeting cards for no discernible reason? Emotional inflation at its finest: “While we’re honored that people so closely link the Hallmark name with celebrations and special occasions, we can’t take credit for creating holidays.”

Wondering what to read next?

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  2. The Wisdom of the Well-Timed Imperfection: The ‘Pratfall Effect’ and Authenticity
  3. The Mere Exposure Effect: Why We Fall for the Most Persistent
  4. Labubu Proves That Modern Luxury Is No Longer an Object, It’s a Story
  5. We Trust What We Can See: James Dyson Builds for That Instinct

Filed Under: Business Stories, Mental Models Tagged With: Biases, Creativity, Marketing, Persuasion

Why Your Partner May Be Lying

January 30, 2023 By Nagesh Belludi Leave a Comment

Honesty builds trust and intimacy. When one partner conceals information or has secrets, it erodes a trusting relationship.

One non-obvious reason people lie to their partners is that they don’t feel safe telling the truth. Their head goes into a defensive mode, thinking merely about the short-term benefits. They fear rejection or disapproval. If such are the consequences of telling the truth, they believe it’s expedient to sidestep it, especially if they expect they’re unlikely to be caught.

If you reckon your partner is lying, first seek to figure out the reason behind the lie. Reflect on the last time your partner lied to you. How would you have responded if they’d spoken the truth? Would you have reacted with anger—even yelling or starting a fight?

When your partner lies, focus first on the one aspect you have total control over: your reactions. Have a “trust chat” with your partner. With no suggestion of judgment or shaming them, reveal your concerns and talk to them about honesty, trust, and secrecy.

Nudge your partner to be more candid with you. Let your partner know you’d always prefer to know the truth, regardless of the situation. Then, when your partner speaks the truth, thank them for being forthright and telling you the truth, even when they know that the revelation may leave you disappointed or angry.

Idea for Impact: Negative reactions like criticism, contempt, sarcasm, or aggression can make your partner more likely to hide the truth, causing a relationship to embitter even further.

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Filed Under: Managing People Tagged With: Conflict, Conversations, Getting Along, Negotiation, Persuasion, Relationships

How to … Plan in a Time of Uncertainty

January 25, 2023 By Nagesh Belludi Leave a Comment

In periods of uncertainty and ambiguity, move away from annual plans and focus on the next three months. Reflect on the unpredictability of the future and stay on your toes by forging plans for unexpected scenarios so you won’t be caught flat-footed when that time comes.

Establish “trigger points” and “accelerate, maintain, or terminate criteria” in advance and keep an eye on key indicators to “wait and see” or “stay the course” should one of your planned-for scenarios materialize.

Idea for Impact: When the horizon is much shorter, operate with agility and allocate your resources in real time.

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Filed Under: Leadership, MBA in a Nutshell, Mental Models Tagged With: Adversity, Conflict, Decision-Making, Persuasion, Problem Solving, Risk

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About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

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