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This stuff is so much fun, I just can’t stop writing about it. Stop me when you’ve had enough…

Attribution Error

When explaining the reasons for our own behavior, we tend to offer situation-based explanations. We’ll excuse our bad behavior by blaming the circumstances. (“I was forced into it.”)

When explaining the behavior of others, we are biased towards personality-based explanations. (“He did it because he’s a jerk.”)

This bias evaporates when we know and like the person we’re observing. For example, when we see someone driving badly, our first instinct is “what an idiot!” But if we then realize the driver is a friend, we make excuses for him. “Oh it’s Dave! His kids must be acting up in the back seat.”

In sum, we’ll make excuses for ourselves and our friends. But we’ll assume the worst of strangers.

Bandwagon Effect

People will do or believe something simply because lots of other people do or believe it. The more widespread a fad or trend becomes, the higher the probability that a given individual will participate… even if the trend is logically undesirable.

Remember the mid-90’s, when everyone — including Arnold Schwarzenegger, Demi Moore and Bill Clinton — started smoking cigars?

Consider also the popularity of tattoos and piercings. [Oops, did I write that? Note to self to remove this before publication.]

You can use the Bandwagon Effect in your marketing. Just convince customers your product is “catching on like wildfire”, and they’ll be more likely to buy.

Loss Aversion

We hate having things taken away from us; we overvalue what we’ve got. If gaining something (e.g. winning $100) feels good, losing the same thing feels much worse.

In one study*, tickets for a big basketball game were awarded by lottery. The gap in ticket valuation between losers and winners was astonishing. On average:

  • Those who didn’t win tickets valued them at $170
  • Winners would sell them for $2,400

How can you use Loss Aversion as a marketing tactic, you ask? Here are just a few examples:

  • Free trials. Once customers have your product, they won’t want to give it up.
  • Always place expiry dates on coupons. And make the expiry date prominent, don’t bury it in fine print. When customers see the coupon is about to expire, they’ll cash it in rather than lose it.
  • Your customers will be much more motivated to avoid a 10% price increase than they will be to receive a 10% discount.


Next Thursday, I’ll cover some more psychological biases. Unless of course there’s an revolt among readers with tattoos and piercings.

* Ariely, Dan & Ziv Cameron (2000). “Gestalt Characteristics of Experiences: The Defining Features of Summarized Events.” Journal of Behavioral Decision Making. 13, 191-201.