'Anchoring' and Making Better Decisions
April 18, 2011
By: Clark Dean

As human beings, we have a natural tendency to behave irrationally. We make flash decisions. We trust our gut. But we typically don’t do the math. We either over-estimate or under estimate the risks inherent in our considered alternatives, and we rarely assess the actual worth of the things we buy … or lease.

I must admit, I have long been fascinated by study of behavioral economics and the important role that psychological factors play in market movements and pricing decisions. But I understand I may be in the minority here. The fact remains that … like it or not … this discipline bears enormous relevance to the personal and professional worlds we navigate every day. In my opinion, no one has made this often mind bending field more accessible than Duke Behavioral Economist, Dan Ariely. Earlier this year, on Studley’s annual Winter Trip, I had the great pleasure of getting to know Dan and learning more about how he uses focused experiments to test his hypotheses on various aspects of decision making. One experiment he shared really stood out. ...

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