 Welcome back to the Art of Charm podcast, a show where we bring you actual tips and strategies on how to become better socially, whether that's connecting, boosting your emotional intelligence or even this month making better decisions. I'm AJ. I'm Johnny. Last month was dedicated to the theme of mastering connections and we covered a lot of ground. We talked about ways to strengthen the connections we have and to build long lasting relationships. We also discussed how to prevent problems in a relationship, how to establish boundaries and more. Well, this month, as I said, we are going all in on decision making and today we are happy to have with us, Dan Aureli. He is a James B. Duke professor of psychology and behavioral economics at Duke University. Many of you may know him from his best selling books, Predictably Irrational, The Upside of Irrationality, The Honest Truth About Dishonesty and many more. If you've read any of his work, then you know that Professor Aureli made it his mission to research how and why humans repeatedly and predictably make the same mistakes again and again. And that's why we're so honored to have him join us. Obviously, you've done a massive amount of research around decision making. What drew you to that study in the first place? So it's actually a sad story, but I first started thinking about mistakes that people make when they make decisions when I was in hospital. So many years ago, I was badly injured. I was burned in almost all my body, 70%. I spent three years in hospital. In hospital is a place that you get to observe lots and lots of irrational behaviors. And there were few things that my doctors and nurses thought was the right thing to do and I didn't. All the way from trying to convince me that amputating my right arm is a good idea, to taking off bandages from burned patients very quickly, to limiting the amount of painkillers that we got, to lots of things like that. And when I, of course, when I was in hospital, I didn't have much decision power, right? You're a patient. You're supposed to be patient. It's not an active role. But when I left the hospital, some of those things still were very salient to me. And I started doing research on this. I started studying psychology and I started looking at the question of what is the best way to remove bandages from burned patients? And I found that the intuition that doctors and nurses had, which is that the best thing to do is to rip off the bandages as quickly as possible, was not the right intuition. It turns out it didn't minimize the patient's pain, it maximized them. And beyond the particular thing about hospital, it made me think about all kinds of places where people with good intentions and well meaning actually get things wrong in a very systematic, predictable way and to help me start trying to help. And my goal since then has been to look at all kinds of areas of life, not just pain, but to look at places where we think we know what the answer is. But the reality is we're not doing what's best for us, for our patients, for our clients, for whatever, and then try to come up with better mechanisms for that. Yeah, we've talked a lot on the show about cognitive biases and how our intuition can often steer us astray, obviously in the medical profession that has awful consequences when your intuition doesn't serve the patient. We talk about decisions. There are small decisions, like what I'm going to eat for lunch, and then there are bigger decisions, like who am I going to marry, or how am I going to sign this contract and deal with that? And in your research, have you found that we handle those types of decisions differently? Yeah, we do handle them differently, but if the question is, are we bias free as decisions get bigger, the answer is no. And I think what we have is we have a non-linear relationship. So I think, look, with small decisions, should I have coffee, should I have this donut? We don't pay a lot of attention to it, and we make mistakes. When we get to medium-sized decisions, like which digital camera to get, or should I get, which level of, I don't know, the new phone, then people invest a lot of time doing research. I'm not saying that we get it better, but at least we spend a lot of time on this. And then when it comes to really big decisions, like who to marry and what house to buy, people are spending substantially less amount of research than you would think they would. So let's say people spend three seconds deciding which donut to get, and they spend 17 hours deciding which digital camera to get, and 100 hours deciding what car to get. When they move to a house, who to marry, whether to have kids or not, it doesn't increase from there. It actually goes down. And partially is that when decision becomes harder, we can't handle it. It's just very, very tough, and maybe the best example, again, is medical. So when men are being told that they have prostate cancer, and there's no particular hurry to figure out what to do, the majority decide within the same meeting how to handle this. And if they happen to meet a radiologist, they have radiation. If they haven't to meet a surgeon, they have surgery. When decisions get bigger, it is so difficult and overwhelming that we don't spend enough time on this. So it's not exactly that we approach those things in the same way, but it's also not the case that with big decisions, we necessarily attack them in a bias-free way. So obviously when we talk about massive decisions like that, I'm sure there's a level of indecision that creeps in as well in your research in handling and trying to become more decisive and hopefully make better decisions. How have you found that we deal with the indecision that comes along with these options that we're presented with? Yeah. So maybe a good example here is to think about retirement savings. So imagine I went into your retirement saving portfolio. Actually, I went into your stock market portfolio. No retirement. And I sold everything. And I came back and said, everything is in cash tomorrow. Would you buy the exact things you have right now? Most people say no. I would have bought very different things or people that have a cryptocurrency. You say, hey, if I went and I sold your cryptocurrency, what would you do tomorrow? People say very different things. And that's an example of the fact that it's inertia. A lot of our decisions are not driven by us saying, oh, this is actually the best thing to do. It's by saying, oh, that's what I decided before, and I just don't have the energy to deal with it. And because of that, the decisions we make, like allocating our portfolio and deciding who to marry, making all of those decisions, stay with us for a very long time, even when there are no longer the right decisions for us. I'll tell you maybe a not so nice story. I have a friend, a very good friend. And he came to me a few years ago and he said, look, I've been married for eight years. Seven of them we've been fighting. And I don't know if to continue this relationship or not. And I said, look, I don't know what to tell. You're right, the pros and the cons, there were no kids. But I said, but here is one thing. I said, in your decision, you are thinking about one branch is do nothing and one branch is take an action. And that creates a bias because we are biased over the no action. So I said to get yourself to think about it in a more neutral way, imagine that you're not married. Imagine that you met this woman last night for the first time. And imagine that now you have a decision whether you want to marry her or whether you want to never see her again. And make the financial decision the same. If you decide to marry her, you'll have more money. If you decide to never see her again, you have to give her half of whatever you have. I mean, make it the same way. But don't think of it as a decision that says one branch is do nothing and just continue to fight. And one is an action of getting a divorce. Think of both of them as unequal footing. Anyway, they're both much happier married to other people today. But if you think about that approach of saying, I don't want to think about the forks in the road as having, do I do nothing or do I do something? But I want them to say, if I had both of those options on equal footing, which one would I pick? That's a really good starting point. A little bit like the stock market example I gave you, right? If I said, do you want to do nothing in your stock market or do you want to change, you might be tempted to say, oh, yes, let me do nothing. But if I said, imagine doing nothing is not possible. You have to take an action. Would you buy the exact same things you have today? If you say no, then I say, OK, that means you're biased because of where you are, not because it's necessarily the right decision for you. So there are some games like this that we can play with ourselves to convince ourselves whether we're making the decision for the right reasons or not. And there's certainly a cost to that indecision that we struggle to calculate. I know for a lot of our clients that work with us in our bootcamp program, they come to us and we're going to talk about these two norms in a bit, but they come to us struggling with indecision in a lot of areas of their life. And when we ask them, well, do you understand the cost of that indecision of staying in that relationship, let's say, or staying down that road or staying in that career? It's very hard for us to wrap our head around and do that calculation. We will often look at the opposite calculation of what's to pay off if I make the decision. But indecision has a cost. Indecision has a cost. It's a little harder to see it. And then there's another thing. So I met an expert, somebody who was in the Air Force for a very long time, and he told me that he was helping his pilots. He said, every second, make a decision. Are you staying the course or changing? Think about it every second. Like, don't take it for granted. Another example for this is I had some friends who bought a new house and they were trying to sell their old house, but it was not selling. And it was on the market for four months and it wasn't selling. And they asked me what to do. And again, it's not for me to tell them what to do, but I said, let's think about how to frame that. I said, let's write down the cost of keeping the old house. How much are you spending per month on insurance and on heating and cooling and gardening and how much effort it's costing you to keep it on the market from your own life, showing it to people from time to time and so on. And then let's estimate how long you think it will take you to sell it in this market in the price that you're asking for. And they said, well, we think it will be about eight months, and here is the amount it would cost us to do it. So I said, look, that's an assumption. But what if you reduce the amount of the price that you're asking by what four months would cost you? And they said, well, then it will be below the price we bought it at. I said, yes, and I know, and it's painful. It's painful to lose money on the house, but you're going to lose anyway. If you think about waiting eight months, you lose money. Anyway, they eventually agreed with this framing. They cut it down by four months. The price, it was below the buying price, a little bit below the buying price, and they sold it within two weeks. So it was, according to their assumption, it was a good decision. But before we move on, I want to mention one other thing. Another thing that really helps procrastination or indecision is regret. So let's think a little bit about what regret is. So when do we regret, or what is regret? Regret is this idea that we compare what we have to an imaginary world. And if what we have in the real world is worse than what we have in the imaginary world, we feel bad about it. And if it's better, we feel good about it. So for example, when would you feel worse if you missed your flight by two minutes or by two hours? Two minutes, obviously, right? And why? Because you run to the gate, you see the plane pulling away, you see seat 2B, and you say, I could have been there. And if the person in line in front of me understood what no liquids is, if the TSA pre-actually worked, you come up with all kinds of things that you say, I could have been there. And because of that, you compare your state of not making it to a hypothetical state of making it, and you feel bad in comparison. If you're late by two hours, you don't come with a counterfactual. You don't say if only. It is not if only I would have been there with a two-hour delay. Or another example, imagine you drive to work and back every day. Work and back, work and back, work and back. One day on the way back, a tree falls on your car, destroys it completely. The insurance only pays 75%. You are left with some loss. How bad do you feel and for how long? OK, that's case one. Case two, work and back, work and back every day. One day you decide to go home on the scenic route. You take the scenic route. On that particular day, a tree falls on your car, destroys it. The insurance company pays only 75%. Now, you're more upset and for longer. Why? Because in the first case, you did what you did every day. You didn't do anything different. And you can't imagine if only today I took the scenic route. You can't think this way. You're saying, I just did whatever I do every day. It just happened. I mean, you're upset, but there's nothing you can do. If you took the scenic route, now you can say if only. If only I didn't take it. Why did I have to take the scenic route today? I knew it was not a good idea. And that's regret. Now, think about the forks in the road. When you do nothing, you can't go back and say, on March 22, I made a mistake. If you did nothing, there's not a particular day you made a mistake. Like you never made an action, but you can't go back to a particular moment. For regret, what you need is a moment you can go back to and hit your head and say, I should have known better. If you take an action, you can regret it. If you don't take an action, very hard to regret it because you don't know what the counterfactual is. So let's say you decide to get a divorce. And let's say it was a mistake. You can say, oh, on that day, March 22, I should have known. I should have known. Why did I ask for this divorce? If you don't get a divorce and it was a mistake, you can't go back to a particular day. You say, I lived my whole life miserable, right? But you can't connect it to any particular day. So regret creates an additional bias to favor inaction compared to action. It's not that it makes us happy, but it's another bias that causes us to favor the no regret option. And the no regret option is the option with the inaction that we don't do anything. And for those of us who are stuck in that constant feeling of regret and worried about regret of future decisions that leads to indecision, what kind of thought experiments do you have in mind to help us make that decision? Because the cost is still time. And a lot of us aren't calculating that time spent in indecision, spent on the same track because we haven't reached that fork. One thing we need to do is we need to start taking this time into account. And it's not easy to do, but we have to do it. We have to start taking time into account and say time is clicking. How much value would I get from this digital camera if I actually had something to use rather than wait for another one? Or how much happier would my life be? And we need to quantify that. Not easy to do. And one approach that I think is a practical advice helps is to ask people to give themselves a deadline and say, look, every day you're spending time making a decision has some returns. But those days have diminishing returns. At some point, the value of the thousandth day that you think about this is not going to be very valuable. How many days do you really need to spend making that decision? Give me this number and let's pick that that's your deadline. And by that day, you have to make a decision. And if you haven't made a decision by that day, decide to make the change. And why am I saying that? Like you could say, if you haven't made a decision by that day, flip a coin. Right? It doesn't matter. But the truth is that because we are so much more connected to the path of bliss resistance to the do nothing. If by that day, let's say we decide by August 13th, you need to do something. If by that day, you haven't decided and they look equally appealing to you, most likely you should make a change. Why? Because not making a change right now is weighing too much in your mind compared to the other options. So most likely it's the more, it's the better option. You're less likely to regret it later. And one other thing is, look, if we leave our lives by trying not to regret anything, that's going to be a life not worth living. I think we need to change our focus from outcome to process, right? If you took all the information into account and you made a good decision, there's a chance it will turn out badly. The world is random, right? You can look at all the restaurants and pick the best one and eventually there was rain or the fish was bad or something happened. You can't look at the outcome of every decision and hit yourself over the head and regret it. What we need to do is to focus on the decision-making process. If I looked at all the options, I thought about it, I tried to eliminate the bias. I did the best I could for the decision-making process. Don't regret it. You did the right process. The fact that the outcome happened differently just happens. So that's another thing we need to do, by the way, for ourselves and also for rewarding, for example, employees. And talking about the cost analysis, for myself, indecision is a pet peeve of mine. I hate it in myself and I hate seeing it from those around me because it just bugs me out. It gives me anxiety from watching somebody in indecision or myself. And nothing speaks to this to me more so in aggravating myself more so than packing for a large, a long trip, like something over a week. And so I'll usually start throwing some things in and then I'm, well, what about this and what about that and what's the weather like and am I gonna go out to a nice evening? Do I need to bring something a little bit more special? And I can allow this to go on for days but fortunately for myself, there is a cut-off because you gotta go to the airport. And eventually at some point, I would just say enough is enough, but leading up to that, I'll be aggravated, I'll be frustrated, I'll be snippy, moody, I'll be cursing about leaving when, and I love traveling, but all this emotional theater is playing out but having that due date of, that's it, whatever's in here is in here, whatever it is that I'm going to buy and to go along with this, as I was saying, nothing speaks to me more than that example right there. I travel a lot, I spend in an average year about 300 days a year out, I teach at Duke and I spend about 300 days a year traveling. And my rule is nothing but to carry on. And that constraints really help because the amount of decisions you can make on top, I'm not going to describe to you my laundry procedures, but it does help having constraints, really help you focus on the essentials and leave the rest out of the question and you don't even get to debate them. So it sounds like your friends come to you a lot when they're struggling with their decision-making. How has your research influenced your own decision-making patterns? So very much, one thing is, another thing about my friends, if you start studying decision-making, your friends always think that you're doing an experiment on them. So no matter what happens, people come to dinner, they always think what's the catch here, what's going on, what's the particular thing that is, is this wine really this wine or is the change the label and so on. But in terms of my own decisions, I would say that there are kind of three types of decisions. There's the little decisions, the big decisions and the repeated decisions or habitual decisions. And on the little decisions, I don't think I've changed that much. It's a lot of effort to change all the little decisions. I do notice things. So I go and I say, oh, isn't it fun that there's a medium coffee that is this big or isn't it fun that they're putting a really expensive item on the menu. So I notice those things, but often they work on me just as well. It's a little bit like visual illusions. If you notice visual illusion, it doesn't mean you're not susceptible to them. You can see them. So that's one category. The category of big decisions, those I think I'm better on. And I think I'm better on them because I understand a little bit better all the biases that would come into them. I think about them more carefully and I think about what would maximize my wellbeing, right? So buying a house is an example. So when you buy a house, there's some standard decisions and mistakes that happen to people. So one is what is called anchoring. Anchoring is the idea that your previous decision influences your next decision. So if you bought an expensive house, you're likely to buy an expensive house again. So imagine that you have two people who are moving to Pittsburgh. One of them is moving from LA, very expensive housing market. One of them is moving from some small town in Texas where the housing market is very cheap. What will happen? And let's imagine those people have the same level of wealth and so on. What would happen to those people is that the LA person, everything will look so cheap to them and they'll buy a very big house. The Texas person, everything would look crazy expensive for them and so on even though they have the same financial resources. So for example, when I moved to Durham from Boston, everything looked very cheap to me, but I knew about this bias and I could try to overcome it. I would try to think, okay, let's not focus on pricing, let's think about what do I want from a quality of life. Or another example, we know that commuting makes people incredibly miserable. And the thing that makes people miserable in commuting, especially in the US, is that we don't know when we'll get there. So if you have a reliable public transportation, you get on the train, you know you'll be there in 50 minutes, you can read, you can relax. But if you never know if you'll make it on time or not, that stress basically doesn't let you enjoy the commute. I'm sure you know the feeling. And yes, yes. So for example, and people don't get used to it, right? So we get used to green countertops and we get used to smaller houses and we get used to lots of things. We don't get used to commuting because it's a daily annoyance. So when I decided where to move to, I said, okay, small short commuting distance is something that I should weigh higher because I know I will not get used to it. Or another example with housing. We know that if people live close to a grocery store, they actually are healthier. Because if you live far away from a grocery store and you make your trip to the grocery store only once in a while, you buy less fresh fruit and vegetables and you eat more frozen meals and that's very unhealthy. If you live in a short distance to a grocery store, you end up eating much more healthily. So you can see how even understanding what influences our decision can make your decision better. So that's on that side. And then we have the middle decision which we said, what about repeated decisions? And repeated decisions could be little decisions but they show up a lot. And here too, I think knowing something about decision making could be very helpful. So for example, if you think about the temptation of overeating, the temptation of having a muffin in breakfast or stuff like that, if it's a one-time thing, you might fail. But if you think about it as what habits do I want to create, now you can say, let me work on this habit. Let me strengthen the habit, let me create a process from it and so on. And now you can take away bad habits and create good habits. So just as an example for myself, I basically moved to a habit of no breakfast, right? Very tempting to eat a croissant with your morning coffee. You spend some time in Europe, you think that's the right thing to do. Not the most healthy thing in the world. I changed that. But not just did I change it, I did something else. I actually love espressos. And what I do is I use the morning espresso to create another activity in the office. So my usual ritual is I come in, I make my espresso, I get to my desk and I start working on something thoughtful. I don't open email, I don't open a browser. I work on something that I actually want to make progress on today. And that ends up being an incredibly useful thing because if you say, how many hours of productive work do we get a day, we all have to admit not enough. A lot of our days hijacked by all kinds of things, including social media. But if you basically start the day, so I not only just drink coffee and not have something, I use that coffee as a reward for something else that I want to do. One other thing I do in the morning, I have this standing desk that can go up and down. I don't know if it's really healthy or how healthy it is, but here is something I found. Again, a tribute to my own laziness is that if I come in the morning and the desk is in the down position, I sit. If it's in the up position, I stand. So what I do is when I leave the office, I put it in the up position, right? I say right now I'm going to set it up for the morning person to come up and set the right decision environment. And at least I start standing up, later I change it. I don't think I need to stand all day, but it's a better rule. So for habitual decisions, I think very carefully about the environment and about temptation and what habit do I want and how they build on each other. And I try very much to create a system around that. Yeah, I think everyone focuses on motivation, willpower, and they don't realize that creating habits are actually more helpful to eliminate those decisions entirely. So the morning coffee, you know, don't have to go scrambling through the kitchen to figure out what you're gonna cook for breakfast. The coffee is now tied to something pleasurable for you and you avoid the meal altogether. But imagine every morning having to get up and say, well, am I gonna have an orange today? Or that croissant looks good. Even that little decision saps your willpower and ultimately leads to you overeating. Well, we were having a laugh about this because in doing the research this, I was starting to think about all the decisions that I'm making through today. And we were definitely talking about decision fatigue. But it dawned on me that in my morning ritual, I'm not really making a decision till after my shower. So there's, alarm goes off at five, there is get dressed to go to the gym. Those clothes are already laid out. I have a cup of coffee and then it's to the gym. And then at the gym I'm told what to do for an hour, whether it's by my trainer or the workout that I'm doing. I get home. It's back to another cup of coffee. I'll throw in some news to catch up. And then about an hour through that, I take a shower and then it's at that point that I look at my calendar and start plotting out how I'm going to attack my day. But there's a good few hours there that there is no decision being made. To me those decisions are already done. And by the time I am making my first decisions, I'm wide awake, I'm ready to go and I'm fired up about it. Yeah, and this is kind of the creating rituals and habits and you made a decision at some point, right? Or you made some sequence, you build it over time, what you do. But once you've made it, you're not re-examining it. And that's a way to take small decisions and to say instead of making the small decision every time, let's create a ritual. Let's create a habit. Let's create the repeated behavior and that would help us control our behavior. It will take away from the making lots of different decision and making it one big decision of what ritual to have and then it will self-inforce itself. Absolutely. And we were excited today because a big part of what we do here at The Art of Charm and what we've been focused on over the last 12 years is social norms and how to actually move within social settings and understand social behaviors so that you can be more charming, more confident and more decisive. And your latest book, Amazing Decisions, Johnny and I not only enjoyed because it's a comic, but also really dove into this exact idea of market norms and social norms as they exist around decision-making. Can you explain for our audience what the difference between those two norms are? Yeah, so one thing to say about the book, this is a book I co-created with Matt Trower and Matt is a graphic artist and a wonderful human being and it's a comic book. So not that much words, a lot of text. I think the drawing is just fantastic. I wish I had 10% of Matt's talent. But the topic of the whole book is really this question of what motivates us and we contrast these two types of motivations. One of them is about helping people and something that makes us feel good about ourselves and financial motivations that we wouldn't do something and we need somebody to pay us to do something. And the thing that is interesting about those two motivations is they don't add up, instead they substitute for each other. What we call crowd out. So imagine, for example, that I said, hey, I have a flat tire, will you help me change the tire on my car? Right, you can think yourself, yes, no, and so on. What will happen if I said the same thing? Hey, I have a flat tire, would you help me change the tire on my car? I'll give you five dollars. Right, most people say, I'll be less likely to do it. A whole five bucks, but a deal. We didn't do these experiments with changing tires, but we did them with helping people move sofas and other things like that. Now, in principle, you should say, gee, I get to help Dan plus I get five dollars. It should be just better than just helping another human being, but that's not how we think about it. Why? Because the moment the financial motivation enters, the social motivation gets out, right? You don't get both of them. You get one or the other. Now, if you gave me a thousand dollars, of course, or if I gave you, you would be willing to do it. It's not that we can't buy people with enough money, but it's about the fact that money and social motivation or social norms and market norms don't mix. They repel each other. And sometimes we get really bad behaviors when we try to add things together. So for example, what happens if we take teachers who are so excited about what they're doing? They think of it as a mission, social importance, and so on, and we offer them a small bonus if their kids do better, right? It turns out it's much like the example I gave you. They said, oh, this is all I'm working for. This is all I'm worthwhile to you. Not that interested in spending long nights preparing for it. The moment we have a social mission, it can capture our imagination and attention and motivation. But if you tell us how much you're paying for it, not that interesting. So, and I can give you many more examples. And the thing about this is that we kind of understand this. Like you would not go home to your significant other and offer the money to wash the dishes or have a romantic evening. We know those things will not work out correctly. There's no, imagine you're a 23-year-old guy. Are you going to date? And you, the guy, have paid for dinner and a drink. And you walk out with your maybe romantic partner to be to her apartment. And you walk up the stairs. And as you get to her doorstep, you're about to lean in to try and kiss her. And you mention, you say, by the way, it's interesting I spend $172 on the date so far. How well would the evening progress from there? If you decide to check it out, let me know. But it depends on who you're dating, I guess. There are some experiments you don't need to do. That's one of them. And you know, the guy in this story didn't say anything new. Everybody knows what the prices of the food is, what the price of drinks is in the menu, and so on. But there's something about mentioning the money that changes the relationship. And what you do when you go on a date, you say, maybe we have something long-term to do. Maybe we're interested in each other in general. The moment you say, I spend $172 on a date so far, you're basically saying, we're in a short-term relationship of give and take. I did my part, it's now yours. And the moment we add the money to relationship, we change the equation. Another example, imagine you came to my house for dinner and you were going to spend $40 on a bottle of wine. And you don't know, do I like white wine or red wine or New World or Old World? So you might spend $40 on a bottle of wine and I might get only $20 value out of it. I could have gotten a better wine for cheaper. So you should come to my house and say, Dan, thank you very much for inviting me for dinner. I was going to spend $40 on a bottle of wine, but not knowing what wine you like. I decided to just give you $40 in cash and you go ahead and buy yourself the best possible wine you can. Now that's economically efficient, but will certainly not be socially efficient. I will not like you anymore. The odds I'll invite you again is very low. And it's the dream for economists, right? Economists really wonder like, why do we give gifts? Like, you know, just give people cash. Or like, what's the waste? Dead loss, dead weight loss, it's called. Because I don't know what you like. But for social things, we need to move out of money and move into the realm that strengthen our social relationship. And sometimes we get it wrong. And I think we get it wrong with gifts. I think we get it wrong in how we interact with employees. We get it wrong in all kinds of ways when we take the economic reward perspective and we don't sufficiently understand the social rewards. And what I love about the book is the examples that you walk through. In a lot of these scenarios, it's intuitive for us to just go the market norm route of, oh, well, let's give a bonus to our staff members for their performance. Or let's negotiate really hard with the vendor so that we get a great deal, except, oh, when we need something else from the vendor, guess what? We're not getting a great deal anymore. And we've been preaching for years the importance of these social norms, but a lot of us are focused solely on the market norms and we don't pay attention to all of these things that are going on behind the scenes socially. Well, certainly with technology, I mean, if we're gonna sit in front of our computer all day, the market norms are taking place. I give you this, here's my credit card number, I'm getting that. And if we're gonna spend, and a lot of us are behind our computers for work for eight, 10, 11, hours, 12 hours a day, and we're living in that world and we tend to forget that approaching other human beings in that manner is going to, it's certainly not going, and I love this word, that word socially efficient. Wow, what a beautiful word. Yeah, the example you gave about negotiation is I think a very good example. So you go into a hard negotiation with somebody over terms and you're just fighting and you have maybe a piece of software that helps you to negotiate and you get them to reduce their prices and if the software helps it, it makes you seem like that's the right procedure to get to some economic efficiency. Great, and you got tremendous economic efficiency, but then the world changes as the world does and you need another something or you need to change the term and you need something. Now you've screwed that person on the other side of the equation. You've treated them not like a human being, you treated them in a bad way, you try to squeeze every last scent out of them. What are the chances that you have left some good will for them? The answer is very, very low. Or imagine that your employees show up and you do an auction with your employees. You say, you know, I have 20 employees but every day I'll do an auction and I'll take the 10 people who are willing to work for the least amount possible, right? We have a list of 20 people and every day you'll wake up and you will have an auction and we'll make it live. So you can see what the other people are offering and if you offer less, you'll get in and if you offer more, you'll get out. Okay, and let's say that allows us to reduce the cost of employees. But what about their good will? What about their actual joy of helping out? Now we've basically created a system that squeezes them to as much as possible. But now when you're an employee, the employer relies on your good will because you can sit there and work inefficiently and think about other things and not so much care about mistakes and so on. Or you can have the best interest of your employer at heart and really care about the product and the process and so on. And as you move into a market norm situation like the one I described when you tell people I'm auctioning you off, right? You're basically losing up on the other side. Or I think the same thing happens when companies do outsourcing, right? When they say, you don't really work here, right? You're working in somewhere else. We don't really care about you. We're saving some money on social benefits and so on. And you can work one day for company A, another way for company B and we don't care about your connection with your employer. You're just a mouth for hire or a mouth and a brain for hire. How excited would people be to go the extra mile to really work? The moment you tell somebody you're there to be hired by the minute, that's what they'll give you. Yeah, I mean, we had a classic example in our own company history where we worked with the web development team. We're really excited. We negotiated hard to get a great discount on the design of our website. And of course with any project, unforeseen circumstances, it took us a little off track. We tried to make some changes and then what do you know? They enforced the scope of work and asked for more money to extend the contract. And all of that happened because we went in with market norms. Like, I just gotta get the best deal. And unfortunately a lot of us through our work and being rewarded for our analysis, we view social relationships through the market norms lens. And what I love the book really outlines is that it can be very difficult to recover those social norms if you've gone the market norm route. Very, very tough, right? The moment you establish relationship with people, with employees that are market norm related, like saying I give you a dollar per word and here is our relationship, very hard to switch. And it's kind of one direction is easier and one harder. You can move from social norm to market norms. So you can go back to your employees and you can do the auction approach that we discussed. And that would work very quickly. Very quickly they would move from a market norm to a social norm. But if you then say, oh, sorry, my mistake, let's move back. They will still remember that you treated them this way and they could not forget it. Even if you move back to a regular salary, you would not recover from that sense. So moving from social norm to market norms is easy. Moving from market norms to social norms much, much tougher. Now there are obviously situations where the norm is ambiguous. Is it social? Is it market? Or maybe it's some combination of both. What do you think is the best way to approach the decision-making process in those circumstances where the norm may not be clear to you? So I think we get the best out of humanity if we moved over the social norms. And by the way, it's not always, right? But I think that's the expected value is positive. So if you show people more trust, your contracts are less detailed. You show more leniency. You let people to explore their own what works for them and not. All of those things eventually make it much more successful, but there is a risk. I'll tell you an experience I had not too long ago. So I'm a very trusting guy and I like having social contracts. And I had a contract, a social contract with somebody. This particular woman wanted to do a set of videos with me and anyway, we did this project and she went to somebody to sell it to them. Anyway, eventually I decided it was just not good enough. What we did was not good enough. I decided to pull the project back and she told me that she had all kinds of costs and wanted me to pay those costs. Now, this was not in our contract. I mean, we didn't have really a contract. It wasn't agreed on, but I decided to pay her for it. And then I learned that the cost she said she had, she really didn't have, and all kinds of things happened there and I felt very betrayed. So he was a person that took advantage of me. She pretended she had all kinds of expenses she didn't have, she said she paid people that she didn't pay, all kinds of things happened. And the first instinct when something bad happens is to say, I'm not trusting anybody again ever. I don't want to feel like this because it's a terrible feeling. It was such a feeling of being betrayed, it was awful. But then I thought about the many, many people I work with and the many, many people I have good social contracts with. And I said, look, it's true that this betrayal was very salient, very painful. I never want it to happen again, but if I stopped having social relationships and I moved to more market relationship, every one of my existing relationships and my one moving future, moving forward will suffer. Now it's true, I will maybe never have such a disappointment again, but the overall loss I will have is tremendous. And the point is that when we, when things go well because of social relationships, we don't see it. We don't see the gains we're making from it, right? You don't see the gains you have from having a social relationship with some partners and employees and friends and family members and so on. We just don't see it, we just take it for granted. What we see is the failures. And what I think is happening is that the failures are so painful that we create a tax on everything. But with the tax on everything we moved way too many social relationships into market relationship and eventually on the whole we lose out. We need to certainly be less concerned with occasional failures and regrets and so on and we need to focus more on the benefit that social relationships give us. And certainly those, the benefits of their peace of mind, belonging, trust and trust works both ways of having a bond that allows you to, some stability that having a contract holding you to, I don't think that feeling is quite the same. I certainly feel like the quantification that comes along with the market norms, obviously money clear when we talk about contracts when it's spelled out, guess what? People follow it to the letter of the law. So you could imagine in that scenario that now after that one employee out of 80 was distrustful, you come in the next day with a contract that explicitly states everything you need people to do. Well, what's gonna end up happening in forcing that market norm is you're gonna see that they follow it to a T. They don't put in the extra 10%. Not only they follow it to a T, they look for the loopholes. Yeah. Yeah, and the thing is that there'll always be loopholes and we always want people to try new things and even taking risks, right? We want people to take risks and so on. I'll give you one other example. So I teach at Duke, we have a research center here called the Center for Advanced Hindsight and every year I think what do I want to give the people that work with me here is a end of the year gift and usually my principles for doing it is all about social norms. So I say the gifts that I give, I want them to show that I care about them as people which is true, right? I don't want just them to. And I want them to be forward-looking, not backward-looking. So it's not thank you for what you've done, but it's here's our future together. And I want people to think about it. I want them to remember, right? It's a little selfish of me, but if I give them something I don't want it to fade into the background. Giving people money as a bonus is probably the worst one you can do, right? Money is backward-looking, thank you so much. Here's I'm paying you extra. Certainly not going to be something that people think about and certainly not something that would get people to think that I think about them as human beings and complete person and so on. So one thing I tried a few years ago is I asked everybody to write me one paragraph about what it is that they want to learn as a person that is not connected to work. I said it could be up to two weeks, something you want to study, learn, improve. It could be anywhere in the world and I'll send you to do that and I'll pay for it. And people came up with lots of wonderful things all the way from learning how to do cartoons to meditation, to watching some rituals. People have lots of ideas and lots of wonderful things. And it ended up being a great gift because all the things, right? It made clear to people I care about them as human beings, I want them to develop moving forward. People came up going and coming throughout the year telling people about what they're going to, what they're coming, changing information and lessons and excitement and so on. At the end of the day it was about $3,000 per person which I think but had a tremendous impact and what people did was they did something that they would never have the guts to spend on themselves and that experience has stayed with them. Now if you think about that as an example, that's something that is very strong on the social norm side, right? Yes, I could have given them $3,000 but instead I thought very carefully about what is the social message I want to send? What is the thing I want them to get that I can uniquely help them, provide them that they would do themselves and I became this agent of improvement in their lives because of that. Now speaking of trust, do you feel that one norm preferentially distinguishes or builds trust over the other? Do you see that market norms make people less trustworthy than social norms? Absolutely and the reason is the timeline. So what happens with money is that the exchange is very time bound. You open the door for me, I give you a dollar, right? It's like a tip, right? The relationship is over. Money basically says we're done, right? We close down the books. Whereas what trust comes in is trust is about having repeated games. Like imagine you and I were going to meet for dinner every night for the next, or once a week for the next 10 years. This has the condition for trust to emerge because we are going to be here for each other for a really long time. And if you think about the development of trust in ancient human history, we lived in small communities and trust was very important and our face was our currency. And if we misbehaved to one person, they would tell everybody and our future would be gone. And trust basically created because we knew that those are the people that we have to interact with for a really long time and betraying them is just a really bad strategy. But if you have a relationship in which you pay people and you close the books, you don't have the ingredients to let trust emerge. And you don't have our instinct that this is the situation that creates trust. In creating trust, you actually want the books to be open. So if I wanted to create trust with you, I would start by, let's say as a friend, I would start by telling you a secret about myself, right? If I said, you know, trust me, that's just not very effective. If I paid you, that's not very effective. But if I said, look, let me tell you something very difficult about my current life or historically or something, I basically give you power over me, right? And I said, look, I'm trusting you, right? And now you would feel more comfortable trusting me, trusting me back. So trust is about we can't, we give each other power over each other. We are linked. We depend on each other. And it cannot happen in short-term relationship. You have to have this longer-term relationship for it to emerge. So obviously we've heard study after study, people losing trust in institutions, politicians, the economy. In a society where we're seeing trust break down and obviously technology on the rise, something that Johnny and I have been chewing on, whether it's trolling online or the way that we behave in antisocial ways because of technology, do you feel that technology has created this environment of distrust and what can we do to start rebuilding this trust? So I think it's both, it's the modern lifestyle, right? So it's big cities, it's anonymity. Of course, if we spend more time online in anonymous, it helps. And I think it has a lot of bad consequences, that there was a chief of police in some country that I talked to not too long ago. And he thought that a lot of crime, not mafia or things like that, but a lot of crime had to do with the fact that we just don't know our neighbors. So how do you feel about double parking if you know all your neighbors in the neighborhood versus you're in a neighborhood that you don't know anybody? How do you feel about trash and not picking after your dog? How do you feel about stealing from a grocery store? So I think there is something about the modern life, anonymous, disconnected life that makes us feel like we're not in repeated game with anybody else. Repeated game is like the term that we're, like one interaction, then we're gone. And I think we need to fix that. I think we need to give people a sense of doing it. And I think we could, like technology is obviously not helping, but think about reputation on eBay. eBay took this situation where you interact one day with person A, another day with person B. I said, look, if you interact one time with each person, you don't have to be nice to them, but we'll create a reputation system. And the reputation system will stay with you. And that means that if you misbehave to somebody, it will stay with you forever. It's kind of as if you're playing with the same person over and over, interacting with the same person over and over again. So there are I think some technological ways to think about reputation. Credit scores is a little bit like that, right? It says, look, be careful about how you manage your money because your credit score will stay with you. Why don't you develop it, right? Invest in it, it's worthwhile, it will come back to you. And so in China, for example, they are developing right now a very extreme reputation system. And it's not as if I'm recommending that system, but I do see the importance of getting some reputation system into our isolated anonymous life. And understanding obviously that, you know, we were laughing about this earlier, some of the online reputation is gained and you can pay people to manage it. And much like the face-to-face interactions we were joking earlier, you know, if you have an issue with your dry cleaner in the past and they ruined your shirt, you'd be frustrated, you'd probably go in and try to resolve it. But now you go online, you bash them on Yelp, you say all these things that you wouldn't say in person because there are no social consequences to your reputation. You're just a user on Yelp. Yeah, and I think those are not good things. And I taught a class on Coursera a few years ago and, you know, Coursera is a wonderful platform for education and I taught a class on decision-making. And I had a few very bad actors in the class. So there were about 200,000 students, there were two bad people. That's not a lot, right? Percentage, it's very, very minimal, but they created such a terrible environment for me and for some of the students that I decided not to teach that class again. And when it happened, so there was one guy who was harassing students and there was one guy who was harassing me and it was just awful, just awful. Awful, the one who harassing students was terrible for the students, the one who was harassing me was terrible for me. And I asked Coursera, I said, look, can we just kick them out? And they said, no, it's the internet. Everybody is free and they can get another ID and they can log in and that's the ideology. Well, that ideology is good as long as people are good players. But what happened here is that one guy was playing or two guys were playing by different rules and they ended up ruining it for everybody, right? And also I decided not to keep on offering this class, it was just too much, too painful to deal with this. So I decided not to continue offering this class. I think everybody suffered because of that. And I think we have to understand that trolls, some of the bad actors are really destroying the system for everybody. And we have to find a solution for that. I mean, if you think about how much good is there and how much bad, I think there's much more good than bad. But if you think about how visible is the good compared to how visible is the bad, the bad is more visible. And if you think about what's the impact on people's lives, I think the bad has a potential of destroying people's lives, sadly, very quickly. Well, it's always been certainly easier to destroy something and build something up. And so, and certainly when we're delivering our classes, I have a tendency to try to link everyone together and order for them to get the best out of myself. So for instance, when I start, I let everyone know that in order for me to give my best lecture, I need their best attention. And if they gave me their best attention, then I will be able to give the best of my abilities to that lecture. And that best attention means that everyone's cell phones are put away, everyone is dressed and ready for class and engaged and of course, now the other students are holding each other accountable because of course they all want that for them to get the most out of it. Yeah, we need a social coordination that we all agree to participate better and we need to do something against the bad actors because they can deteriorate the whole system. So understanding that social norms, although they are not as easily quantifiable for us, tend to realize more gains over time. We've been preaching for years now to be high value, which is to be someone who is cooperative, who is acting within social norms. Looking for opportunities to help others instead of looking to take, which would be more of the market norms. We talk about some low value behaviors like being competitive, being combative, right? Again, being transactional in the way that we maneuver. Unfortunately, technology and the attention economy has incentivized this bad behavior and it does get clicks, it does get likes, it does get attention. You think about all those students in your online course, well, they were seeing all the trolling going on, it was getting their attention and that person was getting some value out of seeking attention in that way. So in breaking these bad behaviors, it starts with us being better leaders and when we are in a situation where we've been market norm focused for all of our life and maybe we've been burned, maybe we've now become distrustful, what can we do to shift that mindset into social norms, to overcome regret, to overcome the distrust that we may have experienced in the past? Yeah, so I don't have a good answer for this. But I will say that I think it is useful to realize that we're making trade-offs and to think about all the things we're making trade-offs on when we choose between those two models. So we could say, look, we can move to this other model of market norms but let's realize what we're giving and what we're taking. And if we will put ourselves into the other position, we would also see more readily the impact. So if I say, I'm giving you a contract, right? I'm the employer and I'm giving you the employer contract, I might say I was burned by something, I'm going to give you a market, a more extreme market norm contract. Then you want to say, okay, let's think about what we're getting and what we're giving up with each of those. And then let's pretend that we are the ones who got that contract. We were on the other side of the equation and asked ourselves and how would we feel and what would be our motivation? And basically think about all the dimensions that we get to gain and lose for in each of those contracts. And I think if we looked more holistically in both contracts and both from both perspective, the person giving it and the person receiving it, I think it would be easier for us to understand the value that social contracts provide. So it sounds like strengthening our empathy and looking at it from the other perspective is how we can start to shift to more of a social norm. Yeah, so one is to increase the scope of what we look for as a measurement, right? So we don't say, oh, we just want to measure control, we want to measure goodwill, we want to measure interest, we want to measure, we increase the scope of what we look at and then empathy and then looking at it from both sides. You know, 12 years ago, we started the show focused solely on dating, it's grown since, but I feel like for most of us, this is really where we are confronted with this market versus social norm and tend to have the most difficulty. Do you have any guidance for our listeners when it comes to dating and how to focus on the social norms instead of the market norms where obviously apps and technology have created this environment where there's this plethora of options, it's difficult to find the right person to settle down with and sometimes we're always thinking about that next best option. Yeah, so I think that dating apps have certainly made it more of a menu-like choice rather than experiencing a person, right? And they also reduce a person to some attributes, height and weight and where do they study and all kinds of things like that. And the reality is that by reading the description of those people, you're not able to understand what it will mean to spend time with them. As an exercise, imagine that you went to your 50 best friends or 10 best friends and you describe them on those attributes, height and weight and eye color and hobbies and whatever these websites describe, how many of those friends you would say, oh, this is exactly what I would pick to be my best friend, right? The reality is that what makes your best friend your best friends have nothing to do with those attributes. It's also true for romantic partners but they help us break people into those things and then we do it. And I think that that's one mistake, is the breaking into attributes. And then the second mistake is that it makes the dating experience an interview. It's like a job interview rather than something romantic. So I don't think you can avoid apps these days. I mean, if you can, that's great. Ask friends to introduce you but it's not going to happen. We need to realize that's one, you just can't go fishing when there's no fish, right? You need to be at the online dating. But I would say don't expect too much from it and move quickly to a meeting. And then once you're in a meeting, don't do the interview thing. The interview thing is like a process and what checkbox you get and so on. Go ahead and do something together. The reality is that we learn a lot about people by doing something with them. Go to a museum, see things, react together to things. Go together to a concert, do something. Yes, it's more commitment to go to a museum with somebody than to have a meeting for a coffee. If you really want low commitment, do chores with them, right? Go to Home Depot. Actions speak louder than words. You can tell a lot about someone's temperament and behaviors, more so than just listening to them in conversation or interviewing them even. And Johnny's a huge proponent of avoiding doing the online research about the person before the date and just go into the date curious instead of quenching all of that thirst before by going on Google, Facebook, Instagram to find everything about that person. Yeah, and one more piece of advice is if you have a date where your heart very quickly tells you that's not it, use it as an opportunity to learn how to strike conversations with people. Use it as an opportunity to say, let me learn about something new in the world. Everybody is interesting. Everybody has, say, I'm going to ask some difficult questions. I'm going to learn how to get somebody to talk openly about their childhood or sexual fantasy or something like that. Don't leave quickly. Instead, take advantage of this opportunity and just redirect it into something else that would make that meeting better and more meaningful. At the end of the day, there's lots of ways to meet people. And when we meet people and we have only dating in mind, that's a shame because, yes, we'll meet lots of people who are not our dateable material for us, but they're still wonderful human beings and we could use that meeting to learn something new about ourselves, about them. And if you find that the dating approach is not working, just switch to a different mode and try to get the most out of it. Certainly people look at dating as, it either has to work out, it has to be a good date or it's just another failure. And the mindsets are so important. It's like, well, you were mentioning about getting something out of it, an opportunity to practice skills which is an amazing way to go about it. And another one is it's entertainment. You could watch a movie or you could go out and this entertainment that you're about to go on, it could be a bad movie or it could be a good movie as the date is going to go. But it's entertainment nonetheless. Even if we see a bad movie, at least we go home and we can bitch about it with our friends, but you wouldn't have that opportunity if you didn't go see the movie. And we started the show and I mentioned picking a spouse. Recently I proposed to my girlfriend, it was a major decision in my life and we get asked all the time, how do you know that this person is right for you? One of the most important decisions in anyone's life, what do you and science say to help those of us who may be struggling to make that final decision on the person we want to marry? Well, there's lots to say about that. I don't know if you had Eli Finkel on the show, but he's one of the world's expert on this question. Eli is basically proposing that we had like three periods of love. There was the period in which people got together because it was cold and difficult and complex and working together was easier than being alone. Then we invented love. That was the second period, right? And we married for love. And now we want self-actualization. And the reality is that that's a little bit too much to ask from one person. Like the good news is that if you find it, if you find somebody who lets you flourish as an individual, that's an amazing treat. The bad news is it's unlikely to happen. So for the few that this happens to them, it's working very well for the majority that this is not going to get all three, somebody to spend cold nights with somebody to love and somebody to help you improve yourself, that's going to be disappointing. And if I had to pick one thing, I would say lower your expectations. I know it sounds defeated, but the reality is that if you basically say, I need to find a person that would be everything for me, that's unlikely to work. Look for it. But at some point we need to understand we might need many people to fulfill all the things we need in life. We shouldn't look for one thing. So that if you gave me one piece of advice, if you gave me the second piece of advice, I would say that it's not just about the person, it's about your journey moving forward. So I think that a lot of the things that are happening these days is that everybody's very busy. Everybody's very busy. And what we tend to do is we tend to specialize. One person does this and the other person does that and we each take our own mission and we each get better at them. And as we get better at them, we also don't discuss them anymore because you become better at X, your significant other becomes better at Y. And if you had to now explain to them X, it will take you forever. If they had to explain to you Y, it will take them forever. So we become like a factory where people are specializing in something and we lose our communication and we lose being together. And it's all because of efficiency. And efficiency is wonderful, but it has a cost. And the cost is that we grow apart. And the second thing would be to say, it's not about who you choose, it's about how you make the journey growing together rather than apart. What is the journey going to be? And it's going to be very tough to do. It's not easy. You need to deliberate about creating a journey that you can grow together, but it's incredibly important because we are unbelievably privileged in the modern world, in the Western world. We live for a very long time. We'll be very different people every decade we change. That's another interesting thing. When you ask people, how much did you change in the last 10 years? People say a lot. You say, how much will you change in the next 10 years? People say, oh, not that much. I arrived, right? It's, I'm already here. The reality is that 10 years from now, you look back on this last 10 years, you say, wow, how much have I changed? And if you change separately from your significant other, it will not be the same. So how do we change together? I think it's, so one question is picking the right person. The second one is lowering expectation. And the third is making sure that the journey is making you more compatible rather than less compatible. Well, I feel fortunate that I found all three. And Amy, thank you so much for joining us and helping us understand the norms I play in decision-making and really bringing the science that Johnny and I have been trying to preach on the show for the last 12 years in the light for those of us who are so focused on market norms. We really appreciate you stopping by for our listeners who want to get better at decision-making, what are some resources of yours that they can check out? So my website is danareally.com, D-A-N-A-R-I-E-L-Y.com. I have a few books out. There's a couple of movies. There's even a card game that we've done. All of those are supposed to give you some insights about what are the mistakes we make and some of the ways to try and fix them. And check out Amazing Decisions, your new book. It's illustrated and it allows you to understand the norms and move through them more appropriately. Thank you so much. Thank you, Dan. Thank you. As always, we're gonna wrap this episode with a challenge for you. This week, Johnny and I would like you to take stock of your relationships with your friends and then ask yourself, is this an equal give and take? That's right, are you using social norms with your friends? And hey, if you realize there's an imbalance, shoot them a message of appreciation. Let them know how much you enjoy having them in your life and that alone could be enough to put the scale back in balance. Let us know, we're always excited to hear from you. You can send us your thoughts by going to thearticharm.com slash questions and you can email us questions at thearticharm.com. The Articharm podcast is produced by Chris Holland and Michael Harold and engineered by Danny Luber and Bradley Denham at Cast Media Studios in sunny downtown Hollywood. I'm AJ. And I'm Johnny.