Transcript of the podcast:
SPEAKER 1: All right, so let's get to it. So seeing as we're heading into next fiscal, I figured it was a good idea to make a decision on promotions soon. We've got one team leader spot opening up. I don't know if you have any thoughts about that.
SPEAKER 2: Oh, well, you know, I really like Alex—he's got lots of good ideas. He's always on time. He's got a good attitude with clients. He's a super nice guy.
SPEAKER 1: He's a very nice guy for sure, and he's been great to work with on our team as well. But if you put him side to side with Selena, have a look at these numbers. She's closed almost 20 more deals than Alex in the same time period, which was a huge boost to our numbers last quarter. Like, don't get me wrong. Alex is great, as well—they're both great—but Selena has really stepped up lately.
SPEAKER 2: Yeah. You're right. Actually, I hadn't thought about it and now that I see them side to side like this. Yeah, I see what you see. Selena also, she's been great to work with, too, actually.
SPEAKER 1: Yeah, for sure. So would you be all right if we moved Selena up to team leader?
SPEAKER 2: Yeah, that works for me.
SPEAKER 1: Great. OK, excellent. Thank you.
KATY MILKMAN: Conversations like this happen a lot when it's time to make decisions about promotions, hiring, and even raises. These are all important decisions, but sometimes managers will focus on one candidate at a time when it might be better to line candidates up next to one another to get the bigger picture. Today we'll talk about a quirk of human decision-making that has implications in the boardroom, the grocery store, even when it comes to selecting your family's pets. I'm Dr. Katy Milkman, and this is Choiceology, an original podcast from Charles Schwab. It's a show about the psychology and economics behind our decisions. We bring you true stories involving high-stakes choices, and then we explore the latest research in behavioral science to help you make better judgements and avoid costly mistakes.
VIVIENNE WAGNER: Get on your bed. Go. Go. OK. Sorry about that. So yeah, my name is Vivienne Wagner.
KATY MILKMAN: Vivienne runs a digital marketing agency in the Los Angeles area. She's divorced and remarried, and she's a mom to four sons. And she has two dogs, Corsa and Artie. For the moment, we're going to focus on a dog she owned in the mid-1990s. At the time, Vivienne was married to her first husband, and they had one young son with another child on the way.
VIVIENNE WAGNER: So we lived on a corner lot, and we were in kind of a historic downtown neighborhood in Vancouver, Washington, at the time.
KATY MILKMAN: Vivienne's husband decided that it would be a good idea to get a pet for their 3½-year-old son. The idea happened to strike him right after they watched a popular movie.
VIVIENNE WAGNER: My ex-husband decided that a boy needs a dog, and after seeing 101 Dalmatians, Dave just decided a Dalmatian was the breed to get.
KATY MILKMAN: Vivienne and her husband didn't know much about this particular breed of dog.
VIVIENNE WAGNER: This was back in 1996, so it wasn't like you could just Google something and compare breeds—we just didn't have access to information at our fingertips—so it was really just a blind decision in the dark based on a Disney movie.
KATY MILKMAN: Disney produced two versions of 101 Dalmatians, an animated feature in 1961 and a live-action version starting Glenn Close in 1996. And the live-action film was the one they saw. If you're not familiar with the plot, it's essentially the story of an evil fashion designer named Cruella de Vil who attempts to steal Dalmatian puppies in order to make an extravagant fur coat. Beyond the standard Disney good-versus-evil plot featuring an exciting Dalmatian escape, it's basically just wall-to-wall cute puppies, which probably explains Vivienne's husband's decision.
VIVIENNE WAGNER: That definitely was the catalyst for, and the deciding factor, to get not only a dog, but a Dalmatian.
KATY MILKMAN: Vivienne, for her part, wasn't entirely convinced that this was a good plan.
VIVIENNE WAGNER: We had a baby on the way. We had a fixer-upper house that we had just purchased the year before, and I had lots of remodeling plans, and who's going to take care of this puppy?
KATY MILKMAN: But Vivienne reluctantly agreed to the idea. Her husband and son went to see some Dalmatian puppies.
VIVIENNE WAGNER: When you're looking at a big pile of cute Dalmatian puppies, they're all adorable, right? Every single puppy is just precious. I mean, who doesn't like a puppy?
KATY MILKMAN: Naturally, they went home with one. Now, if you've ever owned a dog, then you know that puppies are a handful in the beginning. But Vivienne had no idea how much of a handful this little fellow would be.
VIVIENNE WAGNER: He was a cute little tornado going through the house. I have never had before or since a dog that chewed so many things. Even looking back now, I can't get over the amount of destruction this little puppy caused.
KATY MILKMAN: His name was Barkley, and the list of items he destroyed is quite impressive.
VIVIENNE WAGNER: Oh, my gosh. I don't even know where to begin. Let's see, he chewed a flowerpot. I came out on our deck, and he was crunching up a terracotta flowerpot. I once cut my fingers trying to remove the light bulb from his mouth that he was chewing. The most expensive thing that he chewed were our kitchen cabinets. He chewed the corners of all of those. So my kitchen cabinets all had rounded, chewed-up corners, thanks to the dog.
The downspouts—where the rain gutters would come out towards the bottom—he had punched them so full of holes, it was like little sprinklers at the bottom. He chewed probably all of my shoes, but not like a whole pair. He would chew one of the two and then move on to a brand new pair. So instead of just ruining one pair, he ruined dozens of pairs of shoes. And at one point he got on the counter and had knocked off a tub of margarine, and he ate all of the margarine and most of the tub. And then to my horror, we had people over visiting, and he walked into the living room in the middle of all of the people and threw up all of this margarine and the tub. In the middle of that mess, he threw up one of my sandals with most of the buckle still intact. But yeah—oh, my gosh, he was a mess.
KATY MILKMAN: Barkley was turning out to be an expensive member of the family.
VIVIENNE WAGNER: Oh, close to a thousand dollars easily. The puppy itself was a hundred bucks, but then you start factoring in everything that the dog chewed and either had to be replaced or refurbished, redone.
KATY MILKMAN: And the costs didn't end there. Barkley also managed to rack up some serious bills at the vet's office.
VIVIENNE WAGNER: Vet bills associated with some of the things that he chewed up and probably shouldn't have. Dalmatians are prone to kidney stones, and so he had those a lot, and he was allergic to grass. He had really sensitive skin when he was a puppy. I had to take him in to get a series of cortisone shots or steroid shots or something because he would break out if he was in the yard. I mean it was kind of one thing after the other. He was expensive.
KATY MILKMAN: While all the messes and chewing and expense strike Vivienne as pretty funny in hindsight, Barkley was a huge burden at the time.
VIVIENNE WAGNER: That was one of the more stressful periods I've ever gone through in my life. There was one time where I was racing out of the house to get to one of my doctor checkups, and I looked and I could see in the living room—I had a potted palm tree—and the dog, he had gotten in there and dug up the entire palm tree. It was shredded all over the living room. We had white Berber carpet, and all of the dirt was ground into those little nubs of the Berber carpet. And I'm late, and I remember throwing the dog out into the backyard and just thinking, "I'll deal with this later" and getting to the doctor's office. And they had the standard, "So how are you feeling?" And I just burst into tears. It was a horrible, horrible moment. And then having to go home and go, "Oh yeah, that's right, the palm tree." And starting to clean it up, and having the dog back in the house.
KATY MILKMAN: Eventually, Vivienne did bond with Barkley, and he slowly settled into the family.
VIVIENNE WAGNER: Well, despite the fact that he was an itchy, chewing, expensive vet bill on four legs, he was really a loving, wonderful dog, and I was his person. And every time I turned around, he was right there underfoot. He wanted to be wherever I was. And my new husband, I used to say, Barkley was pretty good for a Dalmatian, so he was not a fan of the breed.
KATY MILKMAN: This story is not meant to be an indictment of Dalmatians at all. Dalmatians can be a terrific breed for many families. But what I do want to point out is how Vivienne's family ended up with their Dalmatian, which didn't seem to be quite the right fit for them. Had Vivienne's ex-husband considered a few different dog breeds with different characteristics, the family might've made a different choice. But instead they looked at those Dalmatians in Disney's classic film, fell in love, and never made those comparisons. It was a choice made in isolation. As it turns out, Dalmatians as a breed are notorious for their rowdiness and exuberance. They need lots of exercise. They tend to be destructive when they're left alone. They're prone to some serious health issues, and they shed fur daily. These might not be deal breakers for some people, but they were a challenge for a family with a 3½-year-old and a newborn on the way.
VIVIENNE WAGNER: Good girl. Oh yeah. So as Barkley got older, we kind of felt like maybe it was time to get a companion for Barkley, get a new puppy. And so the old girl over there, we brought her home.
KATY MILKMAN: Vivienne is talking about Corsa—she's a golden retriever.
VIVIENNE WAGNER: She probably made his life a little bit of a living hell for a couple of weeks until he got used to her. But with that play and that increased energy, I really feel like we probably got an extra two years with Barkley that we wouldn't have had without him sort of rediscovering a little bit of puppy in himself.
KATY MILKMAN: In the end, Barkley lived a full life, and Vivienne was devastated when he died, but it marked the end of a very eventful chapter for her.
VIVIENNE WAGNER: The whole journey where I went from didn't want the dog to I'm now devastated to lose the dog. And granted that journey took 11 or 12 years, but it was an important journey for me, nonetheless.
KATY MILKMAN: Fast forward to 2020. Corsa is now an elderly dog, and Vivienne and her current husband recently got a new puppy in the hopes that she could inject some energy into Corsa's life, the way Corsa had done for Barkley. But this time they approached the decision very differently than the choice to adopt Barkley.
VIVIENNE WAGNER: Artie, lay down. Go lay down. Get on your bed. The new puppy, I was OK with getting another dog this time. As for the breed, my husband spent probably six months researching the breed and what kind of dog we wanted to get. So he's a sportsman, so he loves hunting and fishing, and he wanted what's called a versatile hunting dog. And they're called versatile because they love to be out in the field and chasing the birds or pointing at things or whatever it is that they do. And then when they come home, they have the versatility to shut off the whole hunting, prey drive, get their sillies out in the field, they can shut that off, and then they're able to be home and be a normal loving family pet. And so being able to have a foot in both of those worlds was really important for us as far as the breed.
And he looked at a lot of different dogs, and he landed on, she's called a large Munsterlander, which I had never ever heard of before. And it's kind of like a short-haired pointer, but she's got long hair, and there's not very many of them in the country.
KATY MILKMAN: For Vivienne, the contrast in the two decisions couldn't be more stark.
VIVIENNE WAGNER: Bringing the Dalmatian home, immature husband and 3-year-old went and saw 101 Dalmatians and decided to get a Dalmatian. For this dog, for Artie, my husband went and watched other sporting dogs out in the field, talked to other people who owned different kinds of the hunting dogs, read numerous articles. Visited all sorts of hunting tournaments and watched the different dogs with their handlers, learned their personalities, learned what kind of diets did they have. I mean he exhausted every avenue he possibly could to have the best and most informed decision about which breed would be best for our family and for what he likes to do as a hobby. Night-and-day decision-making.
KATY MILKMAN: Vivienne Wagner runs a digital marketing agency called Houndstooth Media Group. She lives in the Los Angeles area with her family and her two dogs
For about a year after the release of the live-action version of the movie 101 Dalmatians, animal shelters reported sharp increases in the number of unwanted Dalmatian dogs. It was a sad byproduct of a successful film. The moral here is that it's probably not wise to make big decisions in isolation—say. in reaction to a cute movie. Vivienne's husband didn't compare Dalmatians side-by-side with other breeds. Instead, he was taken by the charm of the puppies on the big screen, and they are exceptionally cute, but lots of different breeds of puppies are cute.
And even if some of them aren't quite as cute as Dalmatians, that fixation on their appearance will likely decline if you compare Dalmatians head-to-head with other dogs on a wide range of important factors like temperament, health, and sociability. You may be tempted to say, "Well, of course you should make those assessments before adopting a pet." But it turns out that even if you do the very same research and have the same information in front of you, there are many decisions that we make in isolation that would be pretty different if we instead relied on side-by-side evaluations.
The way our choices shift when we make joint versus separate decisions is a topic my next guest has studied for decades. Because Max Bazerman and his collaborators were the first to study this phenomenon and have uncovered many of its most important implications, I asked him to join me on today's episode. Max, thank you so much for joining me. I really appreciate it.
MAX BAZERMAN: Thank you for inviting me to join. I'm happy to be back on your show.
KATY MILKMAN: First, I would love it if you could just define for us what separate and joint evaluation are.
MAX BAZERMAN: Sure. So many times in life we get one option at a time. We consider buying one car. We consider hiring one specific person. We consider hiring one job offer. And our research shows that when people evaluate one option at a time, their emotive, impulsive self has a significant impact on the decision that they end up making. In contrast, when people compare two or more options, they tend to be more cognitive, they tend to be more deliberative, they tend to be more rational in the decisions that they make. So what we find overall was a pattern where when people evaluate one option at a time, they often do things that they wouldn't have wanted to do in advance. And when they look back on it, they will have made a decision that they're less happy with. In comparison, when people compare two or more options, they tend to do what their long-term selves would have wanted.
KATY MILKMAN: That's super interesting, Max. Could you tell us a little bit about what first got you wondering about whether decisions might be influenced by joint versus separate evaluation?
MAX BAZERMAN: So this goes back to one of the most interesting dinners of my life. And during that dinner, which was with Amos Tversky and George Loewenstein, an argument broke out. And George had just presented a paper at Stanford. It was on social comparison processes and the degree to which we obsess about social comparison processes. In that paper we used what are commonly called Likert scales, or scales where you're asked how satisfied would you be on a one-to-seven scale. And over dinner, Amos Tversky basically said, "We don't care about what people think about on a one-to-seven scale; we care about what they do." George intensely defended the Likert scales that we had used in the study, and the next morning I woke up with the core observation that led to the publication of the idea of a joint versus separate preference reversal. And the idea was, if you imagine a situation where you're given a reasonable salary offer, and you learn that everybody else is getting the same salary, you're relatively OK with that.
Now imagine that instead of being paid 100,000 when other people are being paid 100,000, you are being offered 110,000, but you heard that other people were getting 115,000. And you could imagine that you emotively react to the fact that you don't like that $5,000 difference. And what we find in terms of this joint-separate preference reversal is that when people have one job offer, they pay an awful lot of attention to social comparison.
But if they had two job offers—one paid them 100 and paid other people 100—but the other job offer paid them 110, but other people were getting 115. Now all of a sudden social comparison processes become less important, because you can compare your own 110 to your own 100 and basically take the job that pays you more. So I'm not arguing that that's the right answer to that problem, but what I'm arguing is that social comparison processes tend to be a more emotive attribute. And emotive attributes become more important in single evaluation, and more deliberative, more rational thought processes end up being more important when we compare two or more options.
KATY MILKMAN: Max, could you describe one or two of your favorite early studies on joint versus separate evaluation?
MAX BAZERMAN: So recently my favorite joint versus separate preference reversal study is with Iris Bohnet and Alexandra Van Geen. And we basically use joint decision-making not to reduce but to eliminate gender-based discrimination. So we basically take a task where people are making hiring decisions, and it's for a mathematics-based task. And we show a common result, and that is when people evaluate one employee at a time, they discriminate against women for a math-related task. But what we find to a dramatic degree is that when we ask people to consider two employees at the same time and tell us whether they want to hire A, B, or neither, now all of a sudden in a comparative mode, people use job-relevant criteria and don't discriminate based on gender at all.
So we see enormous potential for getting people out of a separate mode, into a joint mode, not only to make wiser, more deliberative, more rational decisions, but also more ethical decisions where they deliberate about what is the right thing to do. And in this case, we're able to show that it's a terrific tool to eliminate gender-based discrimination.
KATY MILKMAN: Max, you've touched on this a little bit already, but why does it seem to be the case that people make such different choices when they're in joint versus separate evaluation?
MAX BAZERMAN: So I think that most decisions in life come to us one at a time. Sort of we evaluate one option, one idea, one person, one offer. And we know that a lot of our decisions are affected by emotive desires, emotive preferences that aren't stable and won't last over time. And as a result, people make decisions that they later regret.
One of the amazing things about joint decision-making is that the process of comparing two or more options requires that we think through what is a good decision in a more deliberative way. Not only to justify to other people, but even to justify to ourselves. So if I'm picking one option over another option, I want to know why, and thinking through that why tends to lead us toward more deliberation and more rationality.
KATY MILKMAN: Lots of our listeners are going to be listening with the goal of making better decisions as they learn about this kind of bias. And I'm wondering what you think the best advice we can give people who want to make better choices and know about this joint versus separate preference reversal issue. What can we tell them that will help them make better decisions?
MAX BAZERMAN: Sure. Terrific question. So I think that life is busy, and we make hundreds if not thousands of decisions a day. And there's lots of small decisions where I think we should use our intuitive systems and not worry so much. And that means if things come to us one at a time, let your intuition reign wild and make that decision. So if you're deciding what color to buy the product in, and you like red or blue and it may be a momentary impulse, that's OK. But I think that when you're making important decisions, and you realize that you're only looking at one option, that's when it's time to slow down. So when you see one house or even one car, I think that you want to make sure you stop and do more comparison. So if you're thinking about a job offer, I think you want to move that into a more comparative frame and try to move into joint decision-making for the most important decisions that we make in life.
KATY MILKMAN: Are there ever times when you think it actually is better to make more emotional and less reasoned choices and where you might actually tell someone maybe they actually should be in separate evaluation mode or listening carefully to what their separate evaluation mode tells them?
MAX BAZERMAN: Sure. I think that taken to the extreme, any sort of adjustment we make to our decision process that makes it seem too rational, too deliberative could have interpersonal consequences. So I think that many of us don't want to seem overly deliberative in our closest interpersonal relationships. And the party that we're interacting with, and you can certainly be thinking in terms of a romantic partner, may not appreciate if you're constantly thinking about everything in a more deliberative manner. So there's something natural and interpersonally normal about letting our emotions be part of how we interact. I also think that our emotions can give us a lot of hints about things that we might value, that we could end up not considering if we simply are in a deliberative mind frame on a constant basis.
KATY MILKMAN: Thank you so much. I really appreciate you taking the time to talk about this, Max.
MAX BAZERMAN: Thanks, Katy. It was great to be back on the show.
KATY MILKMAN: Max Bazerman is the Jessie Isidor Straus Professor of Business at the Harvard Business School and the Harvard Kennedy School and the author of many books, including most recently The Power of Experiments: Decision-Making in a Data-Driven World with Mike Luca.
One of the most fundamental decisions that investors make is choosing between different account types. On a recent episode of our sister podcast, Financial Decoder, host Mark Riepe and his guest, Hayden Adams, conducted what was essentially a joint evaluation of individual retirement accounts, or IRAs. You can check out the episode—titled "Should You Open a Roth or Traditional IRA"—at schwab.com/financialdecoder or wherever you listen to podcasts.
There's a fairly straightforward lesson in this phenomenon. Even when we have the very same information available to us, we use it quite differently when we're making choices in sets rather than in isolation. Choices made in isolation tend to be based more on our emotions and instincts. We go with what feels right. Choices that we make on the basis of comparisons, though, tend to focus on weighing pros and cons and look a lot more reasoned and less emotional.
In situations where a cool, calculated choice is the best one to make—and there are a lot of those—there's a big benefit to making joint evaluations. So it's worth ensuring you're doing side-by-side comparisons, rather than just responding to options one at a time as they arrive. Of course, sometimes you'll want to listen to your feelings.
When I teach my MBA students at Wharton about the research on joint versus separate decisions, we always spend some time debating whether it's truly better to take a higher paying job at a company where you're underpaid relative to your peers. There's an argument to be made for listening to your heart over a cool and calculated cost-benefit analysis in some situations. But most of the time it is helpful to do that side-by-side comparison, and in particular it can lead to fairer judgements.
You've been listening to Choiceology, an original podcast from Charles Schwab. If you've enjoyed the show, we'd be really grateful if you'd leave us a review on Apple Podcasts. It helps other people find us. You can also subscribe to the show for free in your favorite podcasting apps. That way, you won't miss an episode. Next time we'll look at a tendency to overpay for things we want when we're competing for them. I'm Dr. Katy Milkman. Talk to you next time.
SPEAKER 6: For important disclosures, see the show notes or visit schwab.com/podcast.
After you listen
One of the most fundamental decisions that investors make is choosing between different account types.
- Check out the "Should You Open a Roth or Traditional IRA" episode of the Financial Decoder podcast to hear a joint evaluation of these individual retirement accounts.
Have you ever purchased a car or a motorcycle or a boat, based on some particular quality it had that made you fall in love? Maybe it was candy apple red. Maybe it had sleek lines. Maybe the engine made a pleasing purr. Hopefully that decision was a happy one. But what happens when the red sports car spends most of its time in the shop? Or the sleek motorbike is hard on your back? Or the purring boat engine is a gas-guzzler?
In this episode of Choiceology with Katy Milkman, we look at how our preferences tend to shift when we evaluate a choice on its own versus side-by-side with other possible options.
The episode begins with Vivienne Wagner and her family's decision to adopt an adorable puppy after seeing a popular movie that featured the breed. (You know, the spotty dogs—over a hundred of them.) It's a cautionary tale about a lovable but incredibly difficult pooch named Barkley and the perils of selecting a family pet in a vacuum.
Max Bazerman is an authority on the phenomenon of shifting preferences when decisions are made separately or jointly. He joins Katy to discuss the ways in which our evaluation tendencies can impact activities ranging from hiring an employee to communicating with a spouse. He also discusses strategies to be more deliberative while making important decisions.
Max Bazerman is the Jesse Isidor Straus Professor of Business at the Harvard Business School and the Harvard Kennedy School and the author of many books, including, most recently, The Power of Experiments: Decision-Making in a Data-Driven World with Mike Luca.
If you enjoy the show, please leave a rating or review on Apple Podcasts.
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