relativity and immediate gratification

Most people believe that the inherent need to satisfy immediate gratification stems from greed, a lack of self control, or the ability to sacrifice a smaller short term gain for a greater long term gain. While I agree, I also think that some of our short sighted decisions stem from the natural way we compare alternatives in the decision making process. In fact I think the real cause of immediate gratification can be found in this picture from Dan Ariely's "Predictably Irrational". Which of the darker dots is larger? In this illusion it looks as though the dot on the left is larger. If we do a quick measure, we can easily see that the dots are in fact the same size. Even with this newly minted knowledge if we loose the ruler, our eyes go back to seeing the dot on the left as being larger.

The problem is relativity. As Ariely states, "our natural tendency is to compare things that are easily comparable-- and avoid comparing things are not easily compared." So how does this apply to immediate gratification? Just as our eyes can be tricked by visual illusions, our mind can be tricked by cognitive illusions. A great example of a cognitive illusion is my slightly modified example from "Predictably Irrational".

It is an illusion I have fallen for many times before. Suppose you are standing in line at the market getting ready to check out with your fancy $15 toothbrush when the person in front of you turns around and tells you that across town, the same toothbrush is on sale for $7. You get out of line, hop in your car, and drive 20 minutes across town to get your toothbrush on sale for $7. The next week you are at the suit store. You are standing in line ready to check out with your $500 suit when the person in front of you tells you that across town they have the same suit on sale for $492. You think to yourself $8 off a $500 suit that's not worth the 20 minute drive, so you stay in line and buy your suit. Aha! You have fallen for the cognitive illusion! How come you were willing to drive 20 minutes to save $8 off a toothbrush but not a suit? Before I explain, let me show you how this same type of cognitive illusion can cause you to fall into the immediate gratification trap.

The example comes from the book "Driven" by Paul Lawrence and Nitin Norhria. In the example participants were given a choice to receive $100 in 28 days or $120 in 31 days. Most of the participants in the study chose waiting 3 extra days to get the $120. Next participants were given the decision of receiving $100 now or $120 in 3 days. In this decision the same participants chose the $100 now over waiting three extra days for the $120 reward. So why did the participants decide to change their decision if the time between rewards in both choices is 3 days? The same reason you were willing to drive across town to save $8 on a toothbrush but not a suit!

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• dan ariely
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[McGinlay1]

@paco114 nicle done big yin ;)

[Issaxs1]

@paco114 There is an advantage because 3 days x $40/day = $120 compared to only $100 dolars you would get if you did not wait three days.

[paco114]

Let's do some math here...

$100/ 28 days ~ $3.57/ day

Add three days and $20...

$120/ 31 days ~ $3.87/ day

I see the advantage to waiting in that case.

$100/ 1 day = $100/ day

Add three days and $20...

$120/ 3 days = $40/ day

There is no advantage to waiting the extra three days in this one. Is my logic off or what?

[RiorXD]

iwouldnt drive 20 minutes for 8 dollars off something thats 500 dollars. the 8 dollars off the 15 dollar toothbrush is almost 50 precent off and if the suit was 50 percent off id drive the 20 minutes. so comparing the tooth brush to the suit isn't a fair comparison. but waiting for the extra 20 dollars in both cases is worth it weather its just 3 days or 31 days the extra is worth it

[Adkit2]

Or if you have Asperger's Syndrome like me you just think about the logics behind it instantly.

[macintoshpixel]

Very inreresting. Keynote rocks! How did you get this ical icon with your own days on it?

[Guildhelm]

Very interesting video :)

[pyrrho314]

this is totally awesome!

[crislv9]

Interesting analysis but it is missing a critical factor. Just like trombone7 says, you do not take into account the natural human way to assess risk. I think the rule is something like this: the further in time or greater in cost something is, there is a risk the alternative may not occur, therefore, it is better to take the reward of lesser risk. In other words.. it is something akin to "a bird in hand is worth two in the bush".

[carlmmii]

Very nicely done presentation.