I will be speaking at 1pm at the Richmond Convention Center on Tuesday August 4th as a guest of The Retail Merchants Association. My talk is titled "How To Structure Your Intuition to Develop an Effective Discount Strategy." For more information on the Expo, go to http://www.retailmerchants.com/. I will be singing books after the talk. See you there.

Labels: choices, frames, illusion, risk

In July 1984, Jennifer Thompson was a beautiful, blonde-haired college student living in Burlington, North Carolina, looking forward to graduating with a perfect 4.0, and marrying her boyfriend Paul. After spending a pleasant day shopping and eating Chinese food, Paul took Jennifer back to her apartment. They relaxed for a while before he left at about 11:00 P.M. At around 3:00 A.M, Jennifer became aware that someone strange was in her apartment. A hand covered her mouth. Another hand held a knife to her throat while a voice told her not to scream. She was raped.

All during the ordeal, Jennifer kept studying the man's face. She was looking for scars, tattoos, his clothing - anything she could use to identify her attacker. Keeping her head about her, she was able to trick him into releasing her and escaped to a neighbor's house.

A few days later, the police asked Jennifer to look at a photo lineup. In a few minutes, she picked out a photo of a man the police considered the prime suspect. Shortly thereafter, she sat in a room with seven men who took turns stepping forward and saying, "Shut up or I will cut you. . ." She picked number five, Ronald Cotton, as her rapist. She was absolutely sure. Cotton went to prison for life.

Eleven years later, Jennifer learned she had identified the wrong man. DNA evidence exonerated Cotton. He was freed by attorneys working for The Innocence Project, a group of lawyers who work to overturn wrongful convictions. A man named Bobby Leon Poole had actually committed the crime.

Picking Cotton is a recently released book that gives a riveting account of faith, forgiveness, and redemption. It's an amazing story about how Jennifer came to ask Cotton for forgiveness, and how he somehow found it in his heart to forgive the person who had cost him 11 years of his life. Both Cotton and Thompson-Cannino now work together to win freedom for others who have been wrongfully convicted.

Picking Cotton is also the story of how tricky our memories can be. For 11 years, Jennifer was convinced beyond all reasonable doubt that she had identified the right man. Only in the face of irrefutable scientific evidence was she able to admit she made a mistake. There is an important lesson in this for all decision-makers. Our memories are fragile and can be incorrect even when we are absolutely convinced we are right.

Decision-Making Best Practice #7: Don't be so confident in your memory's ability to recount events if others disagree with you. Look for corroborating evidence when making an important decision based on memory recall. Notes, pictures, or news accounts can help you determine if your memory is accurate.

Labels: accuracy, evidence, memory

In his book Don't Believe Everything You Think, author Thomas Kida identifies the six basic mistakes we make in thinking. Perhaps the most common mistake is seeking to confirm, not question, our own ideas. And the current debate over the Fairness Doctrine provides a textbook case of parties on both sides having tunnel vision.

On July 15th, 2009, the House Rules Committee voted against the Broadcaster Freedom Amendment, which would have blocked the Federal Communications Commission (FCC) from reinstating the highly controversial and very unfair (according to some) Fairness Doctrine. In 1949, the FCC introduced the Fairness Doctrine in an effort to require holders of broadcast licenses to allot airtime to controversial issues of interest to the public, and to apply that rule evenly across the board when it came to presenting contrasting views. The Supreme Court upheld its use in limited circumstance in 1969. In 1987, during the Reagan Administration, the FCC repealed the policy. Mark Fowler, who was head of the FCC during much of the Reagan Administration and who worked to eliminate the policy, explained his views to radio host Mark Levin: "I believe, as President Reagan did, that radio should be as free from governmental control as the press that uses paper and ink," Fowler said.

A number of politicians, however, want to bring it back. Most of those who support resuscitating the Fairness Doctrine are Democrats. Nancy Pelosi, John Kerry, and Bill Clinton have all expressed support for reinstating the policy. Those that are for its revival believe broadcast license owners have a public trust that overrides their property rights. The Fairness Doctrine is needed once again, they say, because there are fewer broadcast licenses than people who would like to have them.

As Steve Rendall said a few years ago, "Unlike publishing, where the tools of the trade are in more or less endless supply, broadcasting licenses are limited by the finite number of available frequencies. Thus, as trustees of a scarce public resource, licensees accept certain public interest obligations in exchange for the exclusive use of limited public airwaves." Rendall is Senior Analyst with FAIR (Fairness & Accuracy in Reporting) and a supporter of the Fairness Doctrine.

But Mike Pence, Republican Representative from Indiana, disagrees with those who want to bring the policy back. He expressed bitter disappointment with the failure of the Rules Committee to pass the Broadcaster Freedom Amendment. For him, this is a first amendment issue.

This is a clear case of both sides looking only for ideas that support their own positions. Many conservatives feel that reviving the Fairness Doctrine would kill conservative talk radio because radio stations think they would have difficulty selling advertising for "progressive" (liberal?) programming. For many on the left, taking Rush Limbaugh and the like off the air would not bother them one bit. The sad thing is both sides are so busy looking for ideas that support their own preconceived thoughts, they don't look for common ground. How can we encourage broadcasters to provide education about controversial topics in a balanced way - without skewering the first amendment?

Decision-Making Best Practice #6: Play devil's advocate with your ideas. Try to find what's wrong with them. In doing so, you will expand your thinking and find innovative new solutions to problems.

Labels: Fairness Doctrine, FCC, thinking mistakes, Thomas Kida

I decided to take a short break from reviewing Cordelia Fine's book and talk about one of the most common thinking errors we humans fall prey to: "anchoring."

This occurs when we irrationally fixate on a number. We see this happen all the time. "Sell this stock when it gets back to what I paid for it." "I will refinance if I can get the rate below 5%." "I will sell this house for $250,000 and not a penny less." And so on. Often this fixation or anchoring on numbers is a form of regret avoidance.

Which brings me to my recently purchased Virginia state safety inspection sticker. . .

I recently took my car to the local Firestone to have a small nail removed from the tire. When I later picked up my car, the attendant reminded me I needed a new safety inspection sticker on my windshield. He assured me not to worry, since the car was only a year old and there was nothing wrong with it. He did warn me though that I could get a ticket if the sticker was expired. So I dutifully paid him $16 and purchased the nice new sticker you see to the left. As I drove home from Firestone, I couldn't help but think about anchoring. Obviously, the lawmakers who determined that vehicles need to be inspected for safety reasons were anchored on the one year or twelve month time frame. But why should vehicles be inspected every twelve months?

Don't get me wrong. The requirement to have your vehicle inspected supports the worthy social purpose of keeping unsafe vehicles off the road. But shouldn’t the Commonwealth accomplish its worthwhile objectives in a way that imposes the least costs and interference on its citizens?

Vehicle inspections verify such safety features like working horns and brake lights. But data for failure rates on safety features like brake lights is readily available, and an auto manufacturer would not be able to produce a car if the brake lights had a high failure rate in the first year. It seems to me that by studying the failure rates of vehicle safety features, one could determine the optimal time between inspections. Most likely, newer cars could be inspected much less frequently than once every twelve months, and older cars might even need to be inspected more frequently.

While this may seem like a minor point, Ask.com reports there are 62 million registered vehicles in the United States. There are probably at least 1.2 million in Virginia. At $16 dollars per inspection, Virginia citizens will spend about $200 million dollars over the next ten years on state inspections. If the Commonwealth of Virginia is going to require its citizens to spend $200 million dollars, doesn't it make sense to make sure all the money is spent wisely?

If lawmakers knew the subtle influences that can sway better decision-making practices, they may have realized they had irrationally anchored on twelve months. A study could determine the optimal time between safety inspections based on a car's age. The result would likely be lower costs for consumers, and maybe even safer roads for motorists. If anyone reading this has Governor Kaine's ear (or Bob McDonnell or Creigh Deed's), could you please forward him a link to this post?

Decision-Making Best Practice #5: When making decision regarding numbers, ask your self what the rational is for picking a particular number. If you can't give a compelling reason, most likely you are anchored on that number. Try to find a way to calculate the best number.

Labels: anchoring, Bob McDonnell, Creigh Deeds

If you were on a jury and found an individual guilty of a crime, would you recommend the same punishment if the person looked like you, versus if they were of another race? Would the punishment you recommend be unaffected by what else was going on in your life?

Most people automatically say "yes." In her book A Mind of its Own, Cordelia Fine suggests that is not the case.

Fine describes a research study conducted with two groups of people. One group watched a particularly brutal film in which a young boy was beaten. The other group watched a film in which colorful shapes moved across the screen. Then, in an experiment that they were told was unrelated to the first, they were asked to review the facts of a series of tort cases and recommend the appropriate award for an individual who was injured as a result of another’s negligence. You guessed it; the people who watched the violent film awarded much greater damages than the people who had watched the colorful shapes. In some of the cases, there were mitigating circumstances that might have reduced the award, but the people who watched the violent film were in no mood to consider these factors.

I am personally trying to be aware of these types of influences in my own thinking. Recently, one of my favorite restaurants was sold to a new owner. The restaurant is in a trendy part of Richmond, and I thought this would be a great place for a book signing, so I made a point to go back and talk to the new owner.

When I returned to the restaurant the second time, I saw the new owner did not look like me at all. Her whole body was covered in tattoos and piercings. I ordered from the menu, and told the waitress I'd like to speak to the owner. The restaurant was not especially busy and the waitress told me she would be right out. I waited for almost half an hour before the waitress told me the owner would not be able to speak to me that day. I said this was no problem, and left my contact information and a copy of my book jacket with a note saying I was eager to speak to her about doing an event at her restaurant.

I never heard back from her. I wear a suit and tie every day. My initial concern was in wanting to make certain I was tolerant and accepting of someone very different from me. I never thought about the possibility that the owner might not want to work with someone who looked and dressed as **I** did. As I thought about this, I could not help but wonder if the restaurant owner was reluctant to do business with people that look like me.

Decision-Making Best Practice #4: Try to think about things from the other person's perspective. If they look very different from you, it is quite possble that their values and the way they think will be quite different from your values and thinking.

Labels: cordelia fine, perception

Continuing with the "Emotional Brain" from my previous post, Cordelia Fine explains that researchers cannot tell the physiological difference between when a person is either excited, afraid or angry.

She gives us this formula: Emotion = Arousal + Emotional Thought.

So when a person hits a 100 to 1 shot at the race track, or discovers his brand new car has been vandalized, or runs into an old flame who tells him she is available, that person has the same physiological reaction. The racing heart and the increased breathing are no different. What is different are the person's emotional thoughts.

This can cause some rather strange results. Cordelia points out a study in which a group of young men were told to do some strenuous exercise and then watch an erotic film. Some of the men watched the film immediately after exercising; others after a brief rest and still others after an extended break. The men who watched the film after only a brief rest reported the film was much more stimulating than the other two groups.

Researchers theorized that the men who had watched immediately after exercising attributed their racing hearts and accelerated breathing to the exercise. Those who had an extended rest had time for their heart rates and breathing to return to normal prior to watching the film. But those with just a brief rest actually confused the physical arousal from the exercise with their thoughts about the film.

As I read this chapter from Cordelia's book A Mind of its Own, I couldn't help but think of Abraham Lincoln and the letter he wrote to General Meade after the battle of Gettysburg. The defeated Confederate Army had retreated, but when they reached the Potomac River, they had to stop and wait for the river, swollen from the rains, to subside before they could cross. Demoralized and their supplies depleted, the Army of Northern Virginia could have been routed had Meade pressed them. But instead he hesitated and Lee escaped. Lincoln was furious with Meade for what he thought was an opportunity to crush Lee’s Army and end the war immediately. He wrote Meade a letter dated July 14, 1863 in which he severely chastised Meade for his inaction. But President Lincoln never sent the letter. It was found in his office after his death. Lincoln ultimately found the General who could get the job done.

Decision-Making Best Practice #3 (similar to #2): Learn from Lincoln. Avoid making important decisions when you are upset or angry. High emotions can only confuse or cloud your decision-making.

Labels: cordelia fine, emotions