201. How Do We Know What People Really Want? feat. Eric Johnson

Every time we make a choice, our minds go through an elaborate process most of us never even notice. We’re influenced by subtle aspects of the way the choice is presented that often make the difference between a good decision and a bad one. 

How do we overcome the common faults in our decision-making and enable better choices in any situation? This question and more are answered in our guests latest book, ​​"The Elements of Choice: Why the Way We Decide Matters."

Eric Johnson is a faculty member at the Columbia Business School at Columbia University where he is the inaugural holder of the Norman Eig Chair of Business, and Director of the Center for Decision Sciences. His research examines the interface between Behavioral Decision Research, Economics and the decisions made by consumers, managers, and their implications for public policy, markets and marketing. 

Eric and Greg analyze choice architecture from many angles in this episode, as well as touching on menu science, the problem with alphabetizing, and the impacts of good choice architecture on education. 

Episode Quotes:

How do you know whether someone's made a good decision?

53:11: One thing you can do is create the equivalent of a flight simulator. That is, we know a cockpit has a good design because you can land at SFO, you can land at Charles de Gaulle, under different conditions if you do the right thing. Now, one thing I can do is I can say: You have three kids, they go to the doctor this number of times. Can you pick the right health insurance? So I know what you should be doing in that case. And see if you can find it. I called this the decision simulator approach. So in many domains, I may not know what you exactly want, but I can tell you what you need to find and see if you can find it. And that's super helpful.

How to overcome bias

41:16: Fluency is the way you get around present bias. You make the right behavior very easy and reduce the barriers to entry.

Is education the key to regulating choice architecture?

44:07: Education helps, but it can't be the entire solution, and it's very expensive. Not just in the kinds of places that you and I teach, but even in grammar school, if you're teaching about Choice Architecture, which I think you should, you're doing less on other subjects. So there's always:Is education the most effective way of doing things? At the same time, I think the notion of defaults is a really simple thing to teach. 

Show Links:

Recommended Resources:

• Peter Ubel episode
• Barry Schwartz episode

Guest Profile:

• Faculty Profile at Columbia Business School
• Professional Profile at TIIA Institute
• Eric Johnson on Twitter
• Eric Johnson on LinkedIn
• Eric Johnson on DLDConference

His Work:

• Eric Johnson on Google Scholar
• The Elements of Choice Website
• Neuroeconomics: Chapter 3. Computational and Process Models of Decision Making in Psychology and Behavioral Economics

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