Sponsored by Greenhaven Road Capital, finding value off the beaten path.
Robert Cialdini joined Barry Ritholtz to talk about his work on influence, persuasion, and scientific ways to get people to say yes. Cialdini said Influence was “the most instructive and most entertaining research project I’ve ever engaged in.” Why? He saw how people actually behaved.
“I went into it to get some ideas for doing research in my laboratories. Say something this way versus that way…I realized that in a laboratory with college students I was missing the power of these techniques to really make a difference outside of the laboratory in the real world.”
The real world is really all that matters. When Rory Sutherland spoke about the replication crisis he said it wasn’t a crisis outside of academia. “As a business person…I just need to know that the way you design a choice has a big effect on how people choose and I need to know also that the logical economic assumption isn’t true.”
“Moving from my university position in the avenues into the streets,” said Cialdini, “was the smartest thing I ever did.”
He beat the streets thirty years ago, so some things must have changed. Right?
Physical appearances change, mental processes don’t.
“The tendencies that people employ to decide to say ‘Yes!’ have not changed. Those have evolved over eons and are still hardwired. What’s changed are the channels that are available for tapping those tendencies and the biggest change is the internet.”
Now we there’s technology to create social proof. But no matter how fancy the technology, the grey matter is the software that matters. We like seeing others doing the things we do. We like to be consistent, both to ourselves and others. “We prefer, for reasons of self-concept, to be consistent with ourselves. We want to see ourselves as reasonable, logical, and rational individuals. And, the people around us want us to be consistent too.”
As evidence of the timelessness, Adam Smith wrote, “Man naturally desires, not only to be loved but to be lovely.”
We follow tendencies because they are easy and they work. What’s easier than acting naturally? “Those things (like social proof, authority),” Ritholtz said, “are hardwired because they serve a purpose.”
“That’s a great insight,” responded Robert, “They’re hardwired because they typically lead us in positive directions.”
Cialdini also praises Buffett and Munger for all they’ve taught him. The Berkshire Hathaway annual shareholder letter, Cialdini said, “is brilliant psychology.” It’s not just what Warren thinks that makes him a great investor, but what he says too. “Buffett is not just a brilliant investor, he’s a brilliant communicator about being a brilliant investor.”
Buffett communicates well to his stakeholders.
Among (many) other good ideas, Charlie Munger encourages people to invert, something we’ve seen people like Bill Belichick apply. Ritholtz said, “Very often (once you invert) it’s pretty clear that ‘Oh, I’m looking at this from the wrong angle. Once I flip it, it becomes clear.'”
Tyler Cowen said that Bloomberg Tyler and Tyrone are his ways of doing this. Rory Sutherland reminds us that “The opposite of a good idea may be another good idea.”
Campaigns (political and for products) may pass, but the principles persist. “During the (2016) campaign, there will be a lot of volunteers to call, solicit, and register. What others have found is that if that person can say to the recipient of the message, ‘I’m your neighbor or I live in town too.’ The connection allows the recipient to say, ‘This person is like me,’ and can move in that direction.”
This works for selling sandwiches too.
Cialdini suggested we read Aristotle’s Rhetoric. “It was the first time anybody took a systematic look. He was talking about orators about how to make a case convincingly.” Hidden Persuaders is also good, and was the “first time anyone has looked at the advertising industry and what makes commercials psychologically successful.”
“I also like Dan Ariely’s Predictably Irrational. It has the terrific insight that though we may be irrational (compared the theory) it’s in these rational ways.”
“Then there’s Nudge, I love Nudge.”
Thanks for reading.