Sunday, December 29, 2013
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Saturday, December 7, 2013
Citigroup Gives a Minor Analytic View into They're Opinion as a Market Mover for Bitcoin
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2 new 2013 Taxes
Sunday, September 15, 2013
The Science of Persuasion
*(1) Anytime "I" is used as a precursor to a statement regarding an experiment im using the words of someone who elected not to be named
Market Makers
Salespeople, politicians, friends and family all have a stake in getting you to agree to their requests. Social psychology has determined the basic principles that govern getting to "yes"
Hello there.
I'd like to let you in on something of great importance to you personally. Have you ever been tricked into saying yes? Ever felt trapped into buying something you didn't really want or contributing to some suspicious-sounding cause? And have you ever wished you understood why you acted in this way so that you could withstand these' clever ploys in the future?
Yes? Then clearly this article is just right for you. It contains valuable information on the most powerful psychological pressures that get you to say yes to requests. These musings contain direct references to research showing exactly how and why these techniques work. So don't delay, besides if you've come this far your need for immediate gratification is the devil insisting that you finish this article and he is in superposition murmering on your other shoulder. No angelic way out of this one, just settle in and get the information that, after all, you've already agreed you want.
The scientific study of the process of social influence has been under way for well over half a century, beginning in earnest with the propaganda, public information and persuasion programs of World War II. Since that time, numerous social scientists have investigated the ways in which one individual can influence another's attitudes and actions. For the past 30 years, I have participated in that endeavor, concentrating primarily on the major factors that bring about a specific form of behavior change-compliance with a request. Six basic tendencies of human behavior come into play in generating a positive response: reciprocation, consistency, social validation, liking, authority and scarcity. As these six tendencies help to govern our business dealings, our societal involvements and our personal relationships, knowledge of the rules of persuasion can truly be thought of as empowerment.
Reciprocation
When the Disabled American Veterans organization mails out requests for contributions, the appeal succeeds only about 18 percent of the time. But when the mailing includes a set of free personalized address labels, the success rate almost doubles, to 35 percent. To understand the effect of the unsolicited gift, we must recognize the reach and power of an essential rule of human conduct: the code of reciprocity.
All societies subscribe to a norm that obligates individuals to repay in kind what they have received. Evolutionary selection pressure has probably entrenched the behavior in social animals such as ourselves. The demands of reciprocity begin to explain the boost in donations to the veterans group. Receiving a gift--unsolicited and perhaps even unwanted--convinced significant numbers of potential donors to return the favor.
Charitable organizations are far from alone in taking this approach: food stores offer free samples, exterminators offer free in-home inspections, health clubs offer free workouts. Customers are thus exposed to the product or service, but they are also indebted. Consumers are not the only ones who fall under the sway of reciprocity. Pharmaceutical companies spend millions of dollars every year to support medical researchers and to provide gifts to individual physicians--activities that may subtly influence researchers' findings and physicians' recommendations. A 1998 study in the New England Journal of Medicine found that only 37 percent of researchers who published conclusions critical of the safety of calcium channel blockers had received prior drug company support. Among researchers whose conclusions supported the drugs' safety, however, the number of those who had received free trips, research funding or employment skyrocketed--to 100 percent.
Reciprocity includes more than gifts and favors; it also applies to concessions that people make to one another. For example, assume that you reject my large request, and I then make a concession to you by retreating to a smaller request. You may very well then reciprocate with a concession of your own: agreement with my lesser request. In the mid-1970s there was an published work that clearly illustrates the dynamics of reciprocal concessions. The scientists stopped a random sample of passersby on public walkways and asked if they would volunteer to chaperone juvenile detention center inmates on a day trip to the zoo. As expected, very few complied, only 17 percent.
For another random sample of passersby, however, they began with an even larger request: to serve as an unpaid counselor at the center for two hours per week for the next two years. Everyone in this second sampling rejected the extreme appeal. At that point they offered them a concession. "If you can't do that," we asked, "would you chaperone a group of juvenile detention center inmates on a day trip to the zoo?" They're concession powerfully stimulated return concessions. The compliance rate nearly tripled, to 50 percent, compared with the straightforward zoo-trip request.
Consistency
In 1998 Gordon Sinclair, the owner of a well-known Chicago restaurant, was struggling with a problem that afflicts all restaurateurs. Patrons frequently reserve a table but, without notice, fail to appear. Sinclair solved the problem by asking his receptionist to change two words of what she said to callers requesting reservations. The change dropped his no-call, no-show rate from 30 to 10 percent immediately.
The two words were effective because they commissioned the force of another potent human motivation: the desire to be, and to appear, consistent. The receptionist merely modified her request from "Please call if you have to change your plans" to "Will you please call if you have to change your plans?" At that point, she politely paused and waited for a response. The wait was pivotal because it induced customers to fill the pause with a public commitment. And public commitments, even seemingly minor ones, direct future action.
In another example, Joseph Schwarzwald of Bar-Ilan University in Israel and his co-workers nearly doubled monetary contributions for the handicapped in certain neighborhoods. The key factor: two weeks before asking for contributions, they got residents to sign a petition supporting the handicapped, thus making a public commitment to that same cause.
Social Validation
On a wintry morning in the late 1960s, a man stopped on a busy New York City sidewalk and gazed skyward for 60 seconds, at nothing in particular. He did so as part of an experiment by City University of New York social psychologists Stanley Milgram, Leonard Bickman and Lawrence Berkowitz that was designed to find out what effect this action would have on passersby. Most simply detoured or brushed by; 4 percent joined the man in looking up. The experiment was then repeated with a slight change. With the modification, large numbers of pedestrians were induced to come to a halt, crowd together and peer upward.
The single alteration in the experiment incorporated the phenomenon of social validation. One fundamental way that we decide what to do in a situation is to look to what others are doing or have done there. If many individuals have decided in favor of a particular idea, we are more likely to follow, because we perceive the idea to be more correct, more valid.
Milgram, Bickman and Berkowitz introduced the influence of social validation into their street experiment simply by having five men rather than one look up at nothing. With the larger initial set of upward gazers, the percentage of New Yorkers who followed suit more than quadrupled, to 18 percent. Bigger initial sets of planted up-lookers generated an even greater response: a starter group of 15 led 40 percent of passersby to join in, nearly stopping traffic within one minute.
Less obvious, however, are the circumstances under which social validation can backfire to produce the opposite of what a requester intends. An example is the understandable but potentially misguided tendency of health educators to call attention to a problem by depicting it as regrettably frequent. Information campaigns stress that alcohol and drug use is intolerably high, that adolescent suicide rates are alarming and that polluters are spoiling the environment. Although the claims are both true and well intentioned, the creators of these campaigns have missed something basic about the compliance process. Within the statement "Look at all the people who are doing this undesirable thing" lurks the powerful and undercutting message "Look at all the people who are doing this undesirable thing." Research shows that, as a consequence, many such programs boomerang, generating even more of the undesirable behavior.
For instance, a suicide intervention program administered to New Jersey teenagers informed them of the high number of teenage suicides. Health researcher David Shaffer and his colleagues at Columbia University found that participants became significantly more likely to see suicide as a potential solution to their problems. Of greater effectiveness are campaigns that honestly depict the unwanted activity as damaging despite the fact that relatively few individuals engage in it.
Liking
Affinity, "rapport" and affectio all describe a feeling of connection between people. But the simple word "liking" most faithfully captures the concept and has become the standard designation in the social science literature. People prefer to say yes to those they like. Consider the worldwide success of the Tupperware Corporation and its "home party" program. Through the in-home demonstration get-together, the company arranges for its customers to buy from a liked friend, the host, rather than from an unknown salesperson. So favorable has been the effect on proceeds that, according to company liter- ature, a Tupperware party begins somewhere in the world every 2.7 seconds. In fact, 75 percent of all Tupperware parties today occur outside the individ- ualistic U.S., in countries where group social bonding is even more important than it is here.
Of course, most commercial transactions take place beyond the homes of friends. Under these much more typical circumstances, those who wish to commission the power of liking employ tactics clustered around certain factors that research has shown to work.
Physical attractiveness can be such a tool. In a 1993 study conducted by Peter H. Reingen of Arizona State University and Jerome B. Kernan of the University of Cincinnati, good-looking fund-raisers for the American Heart Association generated nearly twice as many donations (42 versus 23 percent) as did other requesters. In the 1970s researchers Michael G. Efran and E.W.J. Patterson of the University of Toronto found that voters in Canadian federal elections gave physically attractive candidates several times as many votes as unattractive ones. Yet such voters insisted that their choices would never be influenced by something as superficial as appearance.
Similarity also can expedite a rapport. Salespeople often search for, or outright fabricate, a connection between themselves and their customers: "Well, no kidding, you're from Minneapolis? I went to school iMinnesotata!" Fundraisers do the same, with good results. In 1994 psychologists R. Kelly Aune of the University of Hawaii at Manoa and Michael D. Basil of the University of Denver reported research in which solicitors canvassed a college campus asking for contributions to a charity. When the phrase "I'm a student, too" was added to the requests, donations more than doubled.
Compliments also stimulate liking, and direct salespeople are trained in the use of praise. Indeed, even inaccurate praise may be effective. Research at the University of North Carolina at Chapel Hill found that compliments produced just as much liking for the flatterer when they were untrue as when they were genuine.
Cooperation is another factor that has been shown to enhance positive feelings and behavior. Salespeople, for example, often strive to be perceived by their prospects as cooperating partners. Automobile sales managers frequently cast themselves as "villains" so the salesperson can "do battle" on the customer's behalf. The gambit naturally leads to a desirable form of liking by the customer for the salesperson, which promotes sales.
Authority
Recall the man who used social validation to get large numbers of passersby to stop and stare at the sky. He might achieve the opposite effect and spur stationary strangers into motion by assuming the mantle of authority. In 1955 University of Texas at Austin researchers Monroe Lefkowitz, Robert R. Blake and Jane S. Mouton discovered that a man could increase by 350 percent the number of pedestrians who would follow him across the street against the light by changing one simple thing. Instead of casual dress, he donned markers of authority: a suit and tie.
Those touting their experience, expertise or scientific credentials may be trying to harness the power of authority: "Babies are our business, our only business, .... Four out of five doctors recommend,'' and so on. (The author's biography at the end of this article in part serves such a purpose.) There is nothing wrong with such claims when they are real, because we usually want the opinions of true authorities. Their insights help us choose quickly and well.
The problem comes when we are subjected to phony claims. If we fail to think, as is often the case when confronted by authority symbols, we can easily be steered in the wrong direction by ersatz experts--those who merely present the aura of legitimacy. That Texas jaywalker in a suit and tie was no more an authority on crossing the street than the rest of the pedestrians who nonetheless followed him. A highly successful ad campaign in the 1970s featured actor Robert Young proclaiming the health benefits of decaffeinated coffee. Young seems to have been able to dispense this medical opinion effectively because he represented, at the time, the nation's most famous physician. That Marcus Welby, M.D., was only a character on a TV show was less important than the appearance of authority.
Scarcity
While at Florida State University in the 1970s, psychologist Stephen West noted an odd occurrence after surveying students about the campus cafeteria cuisine: ratings of the food rose significantly from the week before, even though there had been no change in the menu, food quality or preparation. Instead the shift resulted from an announcement that because of a fire, cafeteria meals would not be available for several weeks.
This account highlights the effect of perceived scarcity on human judgment. A great deal of evidence shows that items and opportunities become more desirable to us as they become less available. For this reason, marketers trumpet the unique benefits or the one-of-a-kind character of their offerings. It is also for this reason that they consistently engage in "limited time only" promotions or put us into competition with one another using sales campaigns based on "limited supply."
Less widely recognized is that scarcity affects the value not only of commodities but of information as well. Information that is exclusive is more persuasive. Take as evidence the dissertation data of a former student of mine, Amram Knishinsky, who owns a company that imports beef into the U.S. and sells it to supermarkets. To examine the effects of scarcity and exclusivity on compliance, he instructed his telephone salespeople to call a randomly selected sample of customers and to make a standard request of them to purchase beef. He also instructed the salespeople to do the same with a second random sample of customers but to add that a shortage of Australian beef was anticipated, which was true, because of certain weather conditions there. The added information that Australian beef was soon to be scarce more than doubled purchases.
Finally, he had his staff call a third sample of customers, to tell them (1) about the impending shortage of Australian beef and (2) that this information came from his company's exclusive sources in the Australian National Weather Service. These customers increased their orders by more than 600 percent. They were influenced by a scarcity double whammy: not only was the beef scarce, but the information that the beef was scarce was itself scarce.
Knowledge Is Power
I think it noteworthy that many of the data presented in this article have come from studies of the practices of persuasion professionals--the marketers, advertisers, salespeople, fund-raisers and their comrades whose financial well-being depends on their ability to get others to say yes. A kind of natural selection operates on these people, as those who use unsuccessful tactics soon go out of business. In contrast, those using procedures that work well will survive, flourish and pass on these successful strategies [see "The Power of Memes," by Susan Blackmore; SCIENTIFIC AMERICAN, October 2000]. Thus, over time, the most effective principles of social influence will appear in the repertoires of long-standing persuasion professions. My own work indicates that those principles embody the six fundamental human tendencies examined in this article: reciprocation, consistency, social validation, liking, authority and scarcity.
From an evolutionary point of view, each of the behaviors presented would appear to have been selected for in animals, such as ourselves, that must find the best ways to survive while living in social groups. And in the vast majority of cases, these principles counsel us correctly. It usually makes great sense to repay favors, behave consistently, follow the lead of similar others, favor the requests of those we like, heed legitimate authorities and value scarce resources. Consequently, influence agents who use these principles honestly do us a favor. If an advertising agency, for instance, focused an ad campaign on the genuine weight of authoritative, scientific evidence favoring its client's headache product, all the right people would profit--the agency, the manufacturer and the audience. Not so, however, if the agency, finding no particular scientific merit in the pain reliever, "smuggles" the authority principle into the situation through ads featuring actors wearing lab coats.
Are we then doomed to be helplessly manipulated by these principles? No. By understanding persuasion techniques, we can begin to recognize strategies and thus truly analyze requests and offerings. Our task must be to hold persuasion professionals accountable for the use of the six powerful motivators and to purchase their products and services, support their political proposals or donate to their causes only when they have acted truthfully in the process.
If we make this vital distinction in our dealings with practitioners of the persuasive arts, we will rarely allow ourselves be tricked into assent. Instead we will give ourselves a much better option: to be informed into saying yes. Moreover, as long as we apply the same distinction to our own attempts to influence others, we can legitimately commission the six principles. In seeking to persuade by pointing to the presence of genuine expertise, growing social validation, pertinent commitments or real opportunities for cooperation, and so on, we serve the interests of both parties and enhance the quality of the social fabric in the bargain.
Surely, someone with your splendid intellect can see the unique benefits of this article. And because you look like a helpful person who would want to share such useful information, let me make a request. Would you buy this issue of the magazine for 10 of your friends? Well, if you can't do that, would you show it to just one friend? Wait, don't answer yet. Because I genuinely like you, I'm going to throw in--at absolutely no extra cost--a set of references that you can consult to learn more about this little-known topic.
Now, will you voice your commitment to help? ... Please recognize that I am pausing politely here. But while I'm waiting, I want you to feel totally assured that many others just like you will certainly consent. And I love that shirt you're wearing.
Sunday, September 8, 2013
The Inflection Point
Silvers' decline
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Berkshire Hathaway Class B Securities on Strong Earnings
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