Monthly Archives: September 2015

Personal Growth

My Snooze Button is a Hindrance to Greatness

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I’m a snooze button girl. Waking up in the morning feels un-natural and my big bed with the down comforter is soooo cozy. The heaviness of my eyelids and that extra 10 minutes (or 30!) of sleep often win out over exercise in the morning.

Richard Thaler, in Misbehaving, says people have a Planner and a Do-er inside of them. The Planner sets the alarm, limits personal funds for restaurant spending, keeps the house free of junk food (chocolate!), schedules the tough conversations at work and seriously writes goals for future success.

The Do-er pushes the snooze button, blows the budget because cooking is just too much work, sneaks chocolate at the grocery checkout, avoids hard things at work, and spends free, low energy time on Facebook. Thaler argues that it is the Planner’s job to design systems so the Do-er can’t make as many impulsive decisions.

It is my Do-er that often keeps me from reaching my full potential. The solution appears to be making self-control easy; my Planner should design systems or routines for personal triumphs.

I’ve been working on my Planner. It turns out it’s a lot easier to get up to exercise if my alarm is on the other side of the room and I’m forced to choose between my comfy bed and ending the incessant beeping. It’s a small win in my world but it is a step toward major personal growth.

-Rachel

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Strategy

It’s Not Fair

Itsnotfair

A toy store is selling the last dream doll this Christmas, and 5 customers in line have expressed their desire to buy it. What would be the fair way of deciding who gets the doll? Options include: An auction to the highest bidder, a lottery or selling it to the first person in line?

From an economist’s perspective, the answer is an auction to the highest bidder. We are, after-all, trying to make a profit, and theory suggests that the person who wants the doll the most will be willing to pay the most for it. Supply will equal demand. That answer will get you an A in your business class, but is it the best way to run a business?

Of the persons who took a survey organized by Kahneman, Knetsch, and Thaler*, 75% considered an auction to be the “least fair” option. Thaler, in particular, is an economist that studies how people really behave as opposed to rational business behavior.   If you said “to the first person in line,” you agree with 68% of the people surveyed.

People seem to have deeply seeded rules of fairness. The rules may vary from place to place, but as a business owner it is important to know them. If a business makes a decision that is wise and efficient, but violates the generally accepted rules of fairness, they will lose customers.

Don’t get me wrong; it is important to know what maximizes profit. Not knowing that information will close business doors pretty fast. But every decision should also be balanced by a look at what is best for your customers and the little girls that would love to get that amazing doll for Christmas.

-Rachel

*Kahneman, Knetsch, and Thaler. Fairness and the Assumptions of Economics. Chicago: Journal of Business, 1986.

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