Our minds make sense of the world by making comparisons. For instance, how do you tell if something is cheap or expensive when shopping? It’s mostly by comparing it with other products, isn’t it? And so it happens for everything in our lives: we’re constantly comparing — everything, all the time.
It’s true that making comparisons is human nature, but judging everything only through comparisons can get us to think irrationally and make bad decisions. It eventually makes us feel miserable when we realize that our choices weren’t really that good, after all.
Learn how this mind trap works and how to escape it.
Relativity in Our Daily Lives: Pens and Suits
Picture yourself in the following situation: You have two errands to run today — buying a new pen and a new suit for work.
At an office supply store, you find a nice pen for $16. You are set to buy it, but you remember the exact same pen is on sale for only $1 on a closeout 15 minutes away. Do you buy the pen for $16 or go for the $1 one?
OK, on to your second errand: Let’s go get your suit. You just found a nice suit for $500 and while waiting for the cashier, another customer tells you that you can find the same suit for $485 on a store just 15 minutes away. Do you buy your suit for $500 or drive 15 minutes for the $485 one?
Take a moment to think about your choices. What would you have done?
A similar situation was presented to a group of people in a study (by Amos Tversky and Daniel Kahneman, the same brilliant guys from another great famous framing experiment). The results? They found that most people chose to drive to buy the cheaper pen, but happily parted with $500 for the more expensive suit.
What’s going on? Can you spot the contradiction here?
A Dollar is a Dollar is a Dollar — Or Is It?
Clearly, our minds are fooling us. In both situations your choice boils down to saving $15 or 15 minutes of your time: The absolute price of the item you’re buying has no importance whatsoever (and is the red herring used in the experiment to elicit the contradictory behavior the researchers were looking for).
Whether you save $15 from buying a pen, a suit, a car or a luxury yacht, the end result is the same: $15 in your pocket. The only question that matters here should be: “Is 15 minutes of my time to save $15 worth the $15 I’m saving?”
What’s happening here is that your mind can’t decide, without external aid, if a $15 discount is a good deal: it needs something else to compare the discount to (in this case, the total price of the item).
And this is the problem: we look at things in life relatively, comparing differences, instead of looking at each thing’s value on its own.
Making comparisons and evaluating things relative to each other is a many times a useful shortcut, but as demonstrated above, in many occasions it severely hinders our ability to make wise decisions.
Relativity Traps are Everywhere
Not surprisingly, relativity kicks in not only when buying pens and suits but in almost everything in life.
Relativity, along with the bad comparisons it entails, can make you feel bad about yourself, get you in debt, and lead you to make life-changing decisions that are just plain stupid. In short, it can make your life miserable.
The examples are countless; here are just a few.
Comparing yourself with others. This is a biggie. If you assess your worth by comparing yourself with others (in any dimension you choose to use), you’re set for disappointment: there will always be people better than you in any measure you pick. I’ll further explore this theme in a subsequent article, but for now it suffices to repeat something you already know: avoid comparing yourself with others; it’s always a no-win situation.
Keeping up the Joneses. The richest person in a poor neighborhood is usually happier about his net worth than the poorest person in a rich neighborhood — regardless of how much they actually have! In light of relativity, people compare themselves with their neighbors, and don’t like the feeling they’re behind “everyone else”. This is an endless cycle: the more people have, the higher they set the bar for the people they compare themselves with.
Winning (and feeling like you lost). Isn’t it true that the silver medal usually tastes bitterer than the bronze medal? Despite the absolute value of the medals, earning the silver medal usually comes in the context of failing to win the gold one. The bronze medal, on the other hand, is earned in the context of getting any medal instead of no medal at all.
Taking advantage of “great deals”. It’s a well-known sales technique to offer customers the most expensive products first. Those overpriced items establish the context for people to see the other products as being cheaper. Oftentimes those “cheap” products are not cheap at all, but thanks to relativity, you walk away thinking you made a great deal. (Note, though, that you paid the ‘absolute’ amount of money for your product! It may be relatively cheaper but you may have parted with a great deal of your hard-earned money, anyway.)
On the flip side, people may go for the more expensive item because the difference in price to the less expensive one doesn’t look as big. People find it easy to spend $3,000 on leather seats for their new $25,000 cars (the $25,000 serves as the comparison number), but have a hard time spending the same amount on their living room sofas (that usually don’t have a clear figure to be used for comparison).
How to Overcome the Relativity Trap
Is it possible to escape the mind trap of relativity”? Dan Ariely, in his brilliant book Predictably Irrational (from which I got most of the inspiration to write this article) hints at the solution.
The way to escape thinking in terms of comparisons and relative terms, is — not surprisingly — thinking more in absolute terms: you got to escape the trap of doing local comparisons and think more broadly.
Going back to our example of buying the pen and the suit: Resist the temptation of looking at the $15 savings relatively to the item’s total price (the immediate, most salient comparison). Escape that local comparison and put the savings into a broader context instead. Ask yourself ‘What can I do with the $15 saved?‘ and see how that can better inform your choices.
Maybe you will buy a book? Save the money? Donate it to charity? Moreover, ask yourself: “Is $15 worth a drive downtown and 15 minutes of my time?” In short, see beyond the immediate situation.
In 15 minutes, maybe you can go back to work and earn more than $15? Or maybe a 15-minute break is what you need right now? Regardless of which way you decide, remember: this has nothing to do with the price of the pen or the suit, but with what you are actually saving (time? money? hassle?) means to you in a broader context.
This was an easy example, but if you think about it, you can apply it to just about everything in your life. How about stop comparing yourself with others and assess how you feel about your life broadly — on your own terms? How about focusing on the value of your silver medal instead of the other guy’s gold medal?
Think outside your immediate context, escape easy comparisons and start seeing things in a broader perspective. When you think about life this way, everything can be seen under a new — much more positive — light.
Try it: make notes of some of your important decisions (and some of the not-so important ones) then write down your impressions from a relative as well as an absolute perspective. Are your decisions better one way or another? Why? How?
While simple in theory, thinking in absolutes is not the way we’re wired to think, so doing it always takes a great deal of conscious effort and practice. But it’s absolutely worth it.
I’ve been experiencing a sense of this absoluteness with my time for the last four weeks. I resigned from a job where I was asked to do incomplete work, it was the tip of a frustrating iceberg… I’ve simply had enough of working for number crunchers insisting on quantity vs quality. I’m now creating my own business from home and when I compare results with the number crunching environments, statistically I’m failing.. HOWEVER I’m doing complete work, and making strong connections with solid results. I’m also tidying up jobs that have really been annoying me, things I’ve only half heartedly done and completing them or deleting them. Absoluting(?!) A solid shift is happening, I’m aware of what’s going on in my mind and, I’m a lot more confident with the actions I take. In saying that, I’m reading the context of this article to see how what I’m saying fits… hhhmmmm… when actions are absolute, there’s a power available and a shift in being happens. I can absolutely say that!
Hi Dale,
Relying only on numbers-based metrics for comparisons more than we should is a common trap we all fall into… No wonder: numbers are easy to compare!
Glad to know you’re managing to successfully shift away from a comparison mindset — thanks for sharing!
Another excellent article! Thanks!
Glad you liked it! Thanks for stopping by!
Hey Luciano,
Great stuff here
. I personally have experienced this myself, especially in the area of competing with the others. I coined the term the competitive and comparative disadvantage. It became obvious to me the day I was sitting in the library at my parent’s house and saw my sister’s medical school oath on the wall. I thought to myself for a slight moment “she’s better and more accomplished.” But the thing is comparing against other people is really nothing more than ego at work.
It doesn’t work to our advantage because of one thing that will always be true. There’s always going to be somebody slightly better and slightly worse. Even if you are the best in the world at what you do, somebody will always be gunning for your position. So, rather than go through life trying to compare and compete, we’re best suited to just live in the present and focus on our own abilities rather than those of all the people around us.
Another alternative to escape comparing yourself with others (other than seeing things in absolute terms) is using a different reference point for comparison: your former self.
I plan to expand this topic on a new article that will be specifically about comparing ourselves with others.
Thanks for you comment, Srinivas!
Thank you for another brillant article! Yo put me to think about common and normal things in a different way. Excelent ideas with great development.
One good source for this kind of discussion in the book:
Making great decisions in business and life
Henderson, D
Hooper, Ch
Chicago Park Press.
Fier, have you been spying on my Amazon wish list???
Yes, that book looks seriously cool. I’m eager to see if it beats Smart Choices, though (my all-time favorite book on decision making).
Thanks for sharing the recommendation!
Nice article, I’ve read about a similar case study which was tested on a large group of people:
Case 1: You’re planning to go to a concert and buy a ticket of $15 in advance. You also take $15 of cash money with you. Once arrived you notice you lost the concert ticket (worth $15), do you buy a new ticket or not?
Case 2: You set of to the same concert but you didn’t buy the ticket in advance. In your wallet you have $30. Once arrived you notice you lost $15 from your wallet. Do you still buy the concert ticket at the door (for $15)?
What’s interesting about this is that in both cases you lost $15, be it in form of a concert ticket or cash money. But the study showed that most people won’t buy a second ticket in case1. Mostly because they “wouldn’t pay twice for the same thing”. In case2 however almost everyone bought a ticket.
Everyone who took part in the study looked at things from a relative perspective and said (in case 2) the lost $15 cash didn’t matter since they still needed to buy a ticket. Whereas in Case1 they already had a ticket, but lost it on the way.
Cheers.
Thanks Wouter — I love that example!
That’s a great way of showing how different situations that have the exact same outcome ($15 and no tickets left on the wallet) can lead to diametrically opposite decisions — awesome!
I don’t see what is irrational about choosing a 94% discount and not a 3% discount given the cost of 15 minutes to go to another store to get it. The $15 isn’t “the same”–context matters here. This is the opposite context of a salesman framing the price in terms of some other high-priced luxury good!
For instance if you could purchase 100 $16 pens at a 94% discount, you could sell them for $5 and make a $400 profit. Purchasing suits at a 3% discount would probably not be enough margin to resell them at a significant profit. Sometimes people think that high-priced items can be purchased and sold with little margin since the ticket price is so high, but this is generally not true due to other hidden costs. Much real estate speculation fails because of this false notion (“if only I can buy a house at 3% under market value and sell it for market rate, I could make a ton of money!” etc.).
Even if you have no plans to resell pens or suits, if in general you act on a rule that chooses significant deals when you’ve already decided to buy something (and haven’t been manipulated by false constraints like comparison to luxury goods), you will in the long term make more rational purchasing decisions that save a greater percentage of money without a huge cost in time.
Similarly, there is no inherent danger in comparing one’s self to others. It is comparing yourself to others who are far better and judging one’s self as hopelessly behind that is problematic.
Comparing one’s situation to those much worse off can is a common recipe for gratitude, as you explained with the example of the richest person in a poor neighborhood (alternatively, it can be a recipe for feeling unworthy of such abundance). Since there is always someone worse off, we can always feel like we have plenty (spending time living in a third world country often gives such a perspective). Similarly, comparing one’s self to others who are far better at what you do can be a source of inspiration. Even competitive jealousy such as a silver medal winner to a gold medal winner, can be a source of motivation to achieve greater excellence. It could of course also be a trap that keeps someone pushing so hard that they hurt themselves through over-training, or create enormous life imbalance, destroying relationships etc. In order to be rational, context is key!
An interesting question to me is what is the structure of such comparisons? How does one person see third world poverty and feel gratitude for what he has and another feels unworthy for being born in the developed world? How does one person see excellence in his field and feels despair and another feels inspired? And in what contexts should we feel gratitude or unworthiness, despair or inspiration?
Hey Duff, glad to have you around!
I wholeheartedly agree that context matters!
In the scenario presented, however, saving $15 is saving $15 — regardless if it came from a 94% discount or a 3% discount. If only we could store percentages in our bank account, that would be a whole different story!
In the example you mention of buying 100 pens, notice how the deal is only great because you’re raising its absolute value: it’s now a $400 discount. So, even if profit margin is enormous in percentage, what makes or breaks the deal is, in the end, the absolute value (the $400 you get from scaling the deal). Otherwise what you have the same $15 for 1 pen (even the discount being as huge as 94%)
Regarding the point that comparing yourself with others might actually do good (competitive jealously for the gold medal being a source of motivation, for example), I agree. Comparing yourself can be a source of joy and positive change, but working only on comparisons is a path full of pitfalls — that’s the message I wanted to pass.
Even though comparing ourselves is inevitable, I believe it’s always useful to step back and seeing things from a broader perspective.
Your questions at the end are very intriguing and interesting. I wish I had some answers. Understanding why people that face the same comparison but act in radically different ways is probably the Holy Grail of emotional mastery.
I always enjoy your comments, Duff! Thanks for sharing your viewpoints!
You’re probably right about the absolute/relative money thing, but it’s still bugging me. I’m going to think more about that….
Keep up the interesting writing!
Another mentally liberating post, Luciano! I love it.
A good friend of mine evaluates his purchasing decisions on the subjective level of ‘post-purchase dissonance’ or ‘post purchase assonance’ he feels. (I have subsequently informed him that ‘assonance’ isn’t a word, but he remains undeterred!).
His idea is that you should evaluate each purchase decision beforehand by anticipating in your imagination how you will feel about your purchase immediately after purchasing it, a day later, and a week later.
You will either feel dissonance (the ‘aw, crap, this wasn’t worth the price’ feeling) or the opposite (the ‘I’m glad I bought this item – totally worth it’ feeling) by imagining your life in the post-purchase experience. It helps you make a pre-purchase decision … or that’s the idea.
I find that works for me to a certain extent, but your approach seems much more rational and objective. I will DEFINITELY be looking at my purchases through the Relativity Trap lens for the next while and look forward to some new perspectives.
Once again you’ve demonstrated why this blog is my #1 go-to for a brain stretch!
Hey Rod,
Thanks for your compliments — glad you enjoyed the post!
I like the concept of post-purchase dissonance (or “assonance”). I’m sure it’s useful. Gonna try to remember it next time I buy something!
My bet is that it requires a lot of practice to master it (just as it happens with the approach I describe).After all, it’s hard to suspend our natural instincts of comparing everything; I’m sure the same is true for detaching projecting ourselves into the future in that very moment we’re buying stuff we don’t really need.
I would like to second the comments from Duff. As he mentioned context definitely matters. Considering things relatively makes more sense than going by absolute value for everything. It might, however make sense in a few instances but not always or for everything.
Then again, If you think about it, there is nothing absolute in the world in the true sense. There is no absolute truth or falsehood, absolute right or wrong. A Sense of content should on the contrary, be evaluated relatively. The example of rich and poor you gave, should actually be argued in the contrary.
And I also agree, that comparison could actually be a source of inspiration and constant improvization. I won a silver medal and did not compare myself to the one who one a gold medal, then I would not know if there is something I lack and work on the shortcoming.
Striving for the better and excellence should always be part of our journey in our life. But in the process, getting frustrated or disheartened is what we should oonciously avoid. Doing this is what I believe we should learn since this is not an easy thing to do.
Thanks for your comment, Prithvi!
Yes, I understand nothing is absolute in the world. The idea of the article is to stimulate people to broaden a little bit their perspective, even if that doesn not translate to 100% absoluteness in its true sense (which is impossible).
Man is social animal, he must live and deal with other. Without social relation we could not survive.It is natural compare with other without that we could not learn anything.All primary learning we learn by intimation.We are comparing to with those who is superior than us.We try to compete with him or start to jealous to him jealousy arise from fear of death.If he go ahead than me he overcome to death and Iam near to death. After all this kind fear is irrational but we always think irrational way so we are suffer, if you want live joyfully diminish comparison with other, accept your fate and love it.You are unique what kind fate you bring with you no one bring so love your uniqueness and develop it you will be more happy.
Hi Ramesh,
Although making comparisons can be a source of positive feelings (as previous commenters noted), it’s also a source of fear and stress. And, as you mention, it’s the natural way social animals work. But only because it’s the natural way, it doesn’t mean that we can’t use our hard-earned human brain capabilities to override it — even if briefly. Isn’t that what, in a way, “being rational” is all about?
Thanks for your comment!
If we behave all time rational way there will be no war, no revenge,no jealousy no envy ,whole world will live peacefully forever, that is not happening that means we are comparing with each other.Where is your rational thinking?
Hi Luciano,
Thanks for the post. It’s such a great reminder to focus on thinking in absolutes.
Regarding comparing ourselves to other people, I really like what I have heard Wayne Dyer say (I’m paraphrasing):
“I’m not better than anybody else. I’m just better than I used to be.”
If we focus on being the best we can be (and not on whether or not we are better or worse than others), we will probably be a lot happier. And a key point is that we pretty much have no control over how good or not good other people are. All we can control is ourselves, so that is all we should concern ourselves with.
Great post!
Hey Greg,
I wholeheartedly agree! In fact, I believe that the essential key to happiness is focusing on what we can control — but that’s probably the content for another post…
Thanks!
What our mind is designed for is comparison really but I know what you mean. Comparing will lead to constant happiness because there is always something bigger and better to compare too. Be happy with what you have and move from there. Self inflicted sadness is the stupidest phrase ever!
Hey Luciano
Amazing post! Thank You so much for the insight and for sharing such intelligent information.
I particularly like this line:
“The way to escape thinking in terms of comparisons and relative terms, is — not surprisingly — thinking more in absolute terms: you got to escape the trap of doing local comparisons and think more broadly.”
The great motivational speaker Tony Robbins once said “it’s all relative”, which I found interesting. But what a great suggestion; to think in absolute terms.
Thank You for challenging my thinking.
My best regards.
Challenging thinking is one of my major goals with this website, so I’m glad I was able to challenge yours with this post!
Thanks for stopping by!
very nice post Luciano..interesting stuff
…some random thoughts: to have a mind that lives in comparison is to live a life of conflict..it makes you become divided within yourself..to not constantly compare we need to learn how to see something simply..which is one of the hardest things to do…that is to put our thinking mind aside…less thinking more feeling…it really all just comes down to awareness…how awake you are in the world…if you are unaware and operating from your unconscious tendencies..everything becomes a struggle..The problem is that knowledge essentially binds us, the more knowledge a person gains the more asleep that he becomes. The more knowledge he gains the more entrenched his mind becomes in a certain way of thinking. He may think he is thinking outside of the box, it’s the same box; he just makes it look different…so I would suggest people to learn to observe their mind through meditation…to become a passive unattached witness to it…and hopefully be able to transcend their mind…then you wont need to compare…you will just be able to see and know….hope this did not sound too mystical and abstract lol 
…be well
This is mystical and abstract, Ivan… but I like it (probably because of the way you just left thoughts flow).
It’s amazing how down-to-earth, scientifically-tested concepts like the ones I present in the article can be seen under various different lights (more concrete… or more “mystical”), and how, in the end, they tie nicely together.
Thanks for the flow of thought!
Great article. Dan Ariely brings a lot of interesting “whats”, but he never seems to tackle the “whys” in a satisfactory way. Why did nature wire us to think in relative terms? What’s the advantage, if any? Is there any hidden logic behind those bad decisions or are we all simply mad? Another interesting point is that we need to be careful not to replace a irrational trap with another one just because it looks more rational. It may not be. Not every dollar is created equal after all. For instance, given a choice between a 50% chance of winning 1 million or nothing and a sure chance of winning 350 thousand, it may seems the rational choice is to go for the first because of the expectancy of winning 500 thousand, yet a more rational choice may be to for the second. I would.
Hi Thales,
You’re right: it’s very uncommon to see authors tackling the ‘whys’… I think it’s because behavioral economics, neuroscience and other related sciences are still on their infancy… so uncovering the ‘whats’ is probably good enough at this early stage. We will, eventually, get to the whys.
My opinion (which is nothing more than an unfounded speculation) is that we’re wired to make comparisons because it’s a quick way to evaluate situations — and it does work most of the time indeed. From an evolutionary standpoint, back when it was paramount to make snap judgments to survive having a fast brain was definitely much more important than having “rational” one. But that’s just a guess, as I said…
Thanks for your comment, Thales!
One thing that always bugs me with experiments like the pen vs. suit one, that they carry a lot of added emotional baggage. So you can say that rationally and if you follow the instructions precisely than there is no difference, but of course people know from previous experiences that buying a pen is easy: you go into the shop pick up the pen and you are out vs. buying the suit is much more involved, you go in the shop search for the suit, try it on, or you have to call the assistant to bring it in your size, whatever, so it takes more, so you have much more resistance to buy clothes than to buy groceries or pens, so you are not really having the same 15 dollar difference but also you doubled the hassle (which I suppose for most people is bigger in the case of the suit).
This problem prevails in much of the psychology studies, where they measure something, but they don’t really control for all the factors (which is very hard), so at the end you cannot do much with the conclusions…
The example of the concert ticket is somewhat better in that sense I think, but of course we have no data to compare the two (i.e. which percentage of the people choose “irrationally”)
just my 2 cents
Hi Istvan,
I agree that it’s very hard (impossible?) to control all the factors in these psychological studies. There may be hidden variables (like the “hassle factor” you mention) that interfere with the results.
However, I disagree that there’s not much we can do with the conclusions. Yes, for one specific study you’re right — it may be inconclusive.
The key to progress in any science is doing exactly what you did: acknowledging that the studies are not perfect, and keep improving them, accumulating new knowledge and designing better studies with the (imperfect) conclusion from previous ones.
But, yeah, I definitely know what you mean… sometimes I also miss the rigor of “pure” disciplines (like math).
Thank you so much for enriching the discussion with your $0.02!
Phiuuuhhh ! Thank God I had Choosen A and C
Hey Adriano,
You probably meant to comment on this other post, didn’t you? Hehe, no worries — thanks for dropping by!
Hi Luciano.
I like the examples you provide. They are accurate. We think in small percentages or values instead of thinking broadly about monetary or regular risks. The person who works with a bigger mind always has an advantage.
Relative thinking is very common. I avoid it in a large way because I have seen that it rarely ever helps me. When I find that someone is usually a disadvantage to me, I cut it out of my thinking. This is similar to how I once realized that I didn’t enjoy much small talk, so I cut that out, and then I realized that I didn’t lose anything and gained time that I could enjoy instead. That is just one example that came to mind.
When I do comparing, I make sure that the end result of it is that I am more motivated, and not less. I like to plan my thinking beforehand so it doesn’t lead me down some frustrating corridor.
I enjoy your article details.
Hey Armen, thanks for stopping by!
Deliberately choosing the comparisons you make is a great technique, but it requires a lot of self-awareness and meta-cognition. It’s very hard, but probably awesome if you can master it…
Hey Luciano,
Thanks for post.
I tried to put myself in “pen VS suit” situation, and found one more behaviour factor: I would not like to feel fooled and tricked buying a one dollar pen for 16, and ther is no such feeling in “suit” case.
With regards,
Oleg
Hi Oleg,
Sorry but I didn’t understand what you mean by your comment.
From what I got it seems that you’re reversing the situation… is that it? Like: raising the price from $1 to $16 would be outrageous, but raising from $485 to $500 would be OK? Is that what you mean?
I’d love to know what you mean exactly, would you clarify? Thanks!
Good day Luciano!
Sorry for vagueness. Generally you’ve got the idea.
Why I would not buy pen for 16$ if I know it costs 1$? Because I would think seller tries to make fool of me, as only naive and silly can pay 16 times more for pen than it costs. No one whants others to think he is foolish.
In “suit” case, I would buy for 500 to let others consider me as generous, that I don’t care about 3% price markup.
P.S. Saying “I” and “me” I mean common man.
P.P.S. I don’t pretend to objective truth, admiting Russian mentality factor.
Interesting point, Oleg. If I understood correctly you’re saying that people infer “social costs” on top of the monetary costs for each transaction. A store that charges $15 more for a $1 item is more likely to be perceived as malicious, trying to take advantage of its customers, who’ll then be inclined to go shop elsewhere as a form of punishment and disapproval of the behavior. On the other hand, a $15 markup on a $500 item doesn’t sound too unfair, the store not too dishonest, so there’s a smaller “emotional cost” for buying there. However rational or not that is, and people tend to let the ego get in the way, maybe the trap is not that people can’t think on absolute costs alone, but that they’re inferring additional costs to each choice based on the relative monetary costs, and then deciding on these total costs.
Hello Thales,
I liked how did you proceed with this idea.
Your “additional cost” can explain a lot, but seems like add many questions as well: what does it include? It appears to be a mass of emotions, expectations, perceptions, fears, etc.
I am about to modify your theory in the following way:
We compare every price we see with our personal evaluation of the object adjusted to the place, time and all other conditions, including our knowledge that the same thing can be bought with discount. We can buy a pen even for 100$ if we need it here and now to sign million contract.
With regards
Oleg
Yes! These “social costs” definitely exist. Do you know the “Ultimatum Game”?
It’s a social experiment that clearly shows how the notion of fairness affects our rational thinking.
From Wikipedia:
“The ultimatum game is a game often played in economic experiments in which two players interact to decide how to divide a sum of money that is given to them. The first player proposes how to divide the sum between the two players, and the second player can either accept or reject this proposal. If the second player rejects, neither player receives anything. If the second player accepts, the money is split according to the proposal. The game is played only once so that reciprocation is not an issue.”
Rationally, a player should always accept the other player’s offer, even if the split is $1 to $999. (after all, getting $1 is better than getting nothing). In reality, players rarely accept such offers…
Thanks Thales and Oleg for the great discussion!
Hey Luciano,
I enjoyed this post. I followed the link to Dan Ariely’s book and started to read the preview on Amazon. Sounds like some good stuff.
On a similar note, you may enjoy this Nova episode that deals with behavioral economics: http://video.pbs.org/video/1479100777 . The program discusses the differences between traditional and behavioral economics, and how they play into our current world financial situation.
Hey Kent,
Wow, that video (along with the other links on the page) looks really interesting, except for a small detail…
No love from PBS for Brazilian IP addresses, I guess…
But, hey, thanks for sharing! I’m sure other Litemind readers will like it!
Hi Luciano Passuello, I got your blog from http://godisthere.wordpress.com/ blog roll.
Great Article ! Will love to visit your blog more frequently.:)
Luciano,
Comparing to only your standards is an incredibly important thing to do. Making yourself happy first will put you in the mindset to make others happy. I often think about this time vs. money thing, and I am coming to realize that it all boils down to being busy doing what you choose and what you want to do.
I’d rather have a lot of time on my hands trying to figure out what is the best thing to do than be constantly bombarded with time consuming things aimed at making a little extra money. But the real gold winner is to use your time to figure out how to most wisely spend your time and your money.
Luciano,
I enjoyed reading this post.
It truly is a natural tendency to compare because we usually use history to learn from. If you do NOT have a similar situation in front of you, then I feel, we are a little more “open”. When we are presented something, we automatically scan our “brain’s archives” for comparable situations so we can devise a plan to overcome it. This is all done on a subconscious level.
To counter, I would recommend consciously assessing each situation we come across. The lesson you give kind of falls in line with this. Asking yourself conscious questions in the moment. Stop yourself so YOU can decide and not let your past dictate your present.
Peace!
- Ali
Hi Ali,
You’re right when you mention the use of our “brain archives”. There’s always a tradeoff between “being and expert” vs “being open-minded”, and that does indeed have a lot to do with comparing…
I’ve written a bit about this issue in the post Are you stuck in a rut? Run from the experts!
Thanks for the comment!
you have explained the bad habit of comparing ourselves to others in a very creative way, that’s a very good post
Awesome article.
Not to play devil’s advocate or anything, but shouldn’t you make comparisons, just not obsess over them? On one level I definitely think that comparing yourself to others can be a bad thing to do–if you find your worth totally in the eyes of others it’s easy to get depressed and it’s hard to improve things. But on the other hand, refusing to compare yourself to others makes it hard to see if we’re moving toward improving ourselves or just deciding to be comfortable sitting still.
I know in my life I made a concious effort to stop judging myself relative to others. A few years later I realized that while many of the people I knew had gone on to do great things, build businesses, and find happiness, I had done little but convince myself I’m okay as I am.
I think obsessing over comparisons can absolutely lead us astray, so I think this is a fantastic article. But I also think, to move forward in life, you need to make accurate comparisons so you can compete and improve.
Does that at all make sense? I’d be really interested to hear your thoughts on this.
Thanks for all you do!
-Joe
Hey Joe, I agree with you! You should not strive for not doing comparisons at all (that would probably be impossible!). As long as you’re conscious of the comparisons you make — and make them in an intelligent and empowering matter — you’ll avoid many of the traps involved.
In my opinion, the best kind of comparisons you can make is with your former self, to compete against yourself and to improve based on what you once were (continuous growth).
Thanks for the comment!
Well, my first thought was that this post is quite a bit more intelligent than most I’ve read of late, but then I realized I had fallen into the relativity trap. But in this case I’ve decided to succumb to the trap anyway. Thanks for a clever piece.
Hahaha, thanks for the compliment, Paul!
I think comparing is crucial and since it is natural for us to compare, should not be discouraged. Of course it is important to posses the ability to use others methods of reasoning, but the most important it probably the use of relativity. Almost everything is based on this, your place in society, the metric system, weather, politics. Degrees must be measured by exteremes, and we to must in improving ourselves use other people. I don’t care if I’m disapointed when I see someone write better than myself, and only use that as an opportunity to improve. It is good to compare because when we compare we can identify mediocrity and see our advantages, or identify superiority and make improvments. As far as keeping up with the Jonses, I think comparing yourself at that level is pointless unless you base your life around materialism as opposed to focusing on things more important such as career, family, society, etc.
Just a thought for when/if you write on article on this. Oh, and by the way, interesting blog.
I agree… tI facilitate T-shirt painting workshops and when I bring examples to show people what’s possible with fabric paint, then the create spirit emerges. It was very strange for me when I first started the workshops, I just thought people would be so happy to be able to paint whatever they wanted that there would be an abundance of fresh designs instantaneously. NO! As soon as I provided something for people to compare to, bingo, people got creative, so yes – comparisons are needed sometimes.
Thanks John and Dale for you viewpoints! I agree 100% with you.
See, comparisons are not always traps. We’re wired to compare actually. The important thing is to be conscious of the comparisons we’re making, treating comparisons as just another tool (like John mentioned). If using that tool brings us benefits, more power to us — let’s use it!
Thanks again for your contribution!
Interesting posts, some excellent comments.
No-one has considered the magnitude and frequency of each of the $15 losses. Yes both of them will lose an equal amount of time and money, but i think that a suit is a longer term investment – you would purchase more pens within the life of the suit. This makes the loss less significant for the suit. (I am assuming that you would make the same decision every time you bought a pen)
You should choose a cheaper item which has a similar product life and purchase frequency to the suit. Supposing a suit lasts for 5 years, i would probably buy about 30 pens in that time… losing $15 each time. So over 5 years my loss would be $450 with the pens and $15 with the suit.
The cheaper item should be something more like a stapler as i don’t lose them as often/chew the end! Actually my stapler HAS lasted longer than my suit………
That’s an excellent point, Paul!
Yes, I overlooked taking into consideration the objects’ life times. Your stapler example does indeed illustrate the concept of relativity better than mine.
Thanks for the insight!