Transcript:

What makes a person buy one car over another?

What makes a girl choose which guy to date?

What makes people press the “buy now” button?

Charlie Munger, also known as Warren Buffet’s former business partner created a list of 25 cognitive biases that can affect our decisions. Now not every person falls for all of these, and some biases will affect you more than others.

But if you master these biases, you’ll become a better persuader, and become better at preventing impulse decisions that you might regret later. So, if you like getting scammed then don’t watch this entire video. Otherwise, Let’s get started.

I personally would separate these into difference biases but the first one is Reward / Punishment tendency. If you want to persuade people, just offer them big rewards and incentives. Everyone has a price. This might seem obvious, but Charlie says every year he realizes how much he has underestimated the power of incentives, so this bias alone is worth spending hours talking about. On the other hand, people tend to flee from punishment. If you want someone to lose weight or to quit drugs, then start by telling them all the potential health issues.

The second is liking/loving tendency. We tend to ignore the faults of other people, products or companies that we admire. One of my favourite books on this subject is “How to Win Friends and Influence People” by Dale Carnegie. But in general, just be nice, look sexy and people will be hypnotized by you.

The third bias is the opposite Disliking/Hating Tendency. Not many people ever talk about the good Hitler did. Why? Because we tend to ignore the virtues and positive stuff about people we dislike.

The fourth is Doubt Avoidance Tendency. If we are unsure about a decision, we try to quickly remove any doubt by making an ill-informed, quick decision. So, if you want to be more persuasive, then simply increase your certainty. For example, if you don’t enjoy the rest of this video, then I promise you a free time machine, so I can refund your time. No Questions Asked!

The fifth is Inconsistency Avoidance Tendency. Our brains conserve programming space by being reluctant to change. It’s why eliminating bad habits can be difficult. The ‘Foot in the Door’ technique is a great example of how people like to stay consistent. For example, “Can I borrow the car to go to school?” followed by "Can I borrow the car for the weekend?”

The idea is to get people to agree to a small task or request first, and then they’ll be more likely to agree to a bigger one.

The sixth is Curiosity Tendency. Curiosity has been one of the main drivers in human progress throughout history. Imagine if no other resources existed where you could learn the rest of the 25 biases from, and I said you’d have to buy my E-book for $7.00 to learn the rest. How would that make you feel?

The seventh is Kantian Fairness Tendency, which is pretty much the Golden Rule: treat others how you want to be treated. It’s the bias that makes a 300-pound big guy willing to line up behind an old lady, and follow the first-come-first-serve rule. Another example is letting in other drivers on the freeway believing that they will reciprocate in the future. So, think about situations where you get mad at strangers for not sharing, who don’t even owe you anything.

The 8th is Envy / Jealousy. This is self-explanatory. Warren Buffet says, “it is not greed that drives the world, but envy.” So be careful with this one, as showing off too much might make people dislike you.

The ninth is Reciprocation Tendency which related to the seventh. We tend to want to return the favor when someone gives us something or helps us out. This is why supermarkets offer free samples, or why a car salesman might offer free coffee, but it’s not why my E-book is free. I’m just nice.

The Tenth is Influence-From-Mere-Association Tendency. When Nike found out that Manny Pacquiao called the gay community dumber than animals, they immediately ended their longtime partnership with him. Association is that powerful, and that’s why models are often used to 0 products. Another example is how we associate price with the quality of the item. That’s why some companies make crappy products and price it high.

The eleventh is Simple, Pain-Avoiding Psychological Denial. We have a habit of distorting the facts. There are stories of mothers who receive news that their son from the army died and refuse to believe it. We can trick ourselves to numb the pain. ‘Get rich quick’ or ‘lose weight quickly’ scams work effectively on people who are in denial.

The twelfth is Excessive Self Regard Tendency. People tend to think highly of themselves. Most people on online dating sites think they’re more attractive than they really are. So, when persuading people, make them feel special and that just for them, you’re going to give them a big discount or something. But it doesn’t even have to be big. There's a study that shows how waitresses can increase their tips by simply using mints.

The 13th is Overoptimism Tendency. I’ve got a pill that after you take it -in 20 days- you’ll lose 100 pounds. In general, we have a tendency to be optimists, especially in new environments; to think that things will turn out fine.

The 14th is Deprival Super-reaction Tendency. People tend to act irrationally with intensity to even small losses sometimes. This is why limited time offers are powerful. Even Charlie Munger and Warren Buffet -two of the most successful people in this world- both hate being in auctions because they always feel like getting manipulated. Going once, going twice, sold! to the man wearing a Fedora hat!

The 15th is Social Proof Tendency. There's an automatic tendency to think and act as others around us think and act. This simplifies our thoughts. This is why products are always filled with testimonials and reviews.

The 16th is Contrast Misreaction Tendency. Want to make a house look big? then compare it to a tent. Want to make the same house look small? then compare it to a skyscraper. What sounds better? it’s all yours for just a monthly payment of $49.99, or, it’s all yours for less than a cup of coffee from Starbucks a day.

The 17th is Stress-Influence Tendency. Stress can cause us to make bad decisions. Think of timeshares where they might put you in a tight room, where you just want to get out. Or at times when you buy something and they say they’re going to check with their manager first. Then they come back 10 minutes later, you talk some more and they say again, “well let me go talk to my manager again.” Then you say ‘screw it, I’ll just take it’.

The 18th is Availability misweighing tendency. The mind works with what is easily available to it, like fast-food. We might buy things that’s available right in front of us, even if there’s something much cheaper somewhere else. This is why we have instincts, so the mind doesn’t have to work as hard figuring stuff out. So, if you got a confusing website or advertisement, then good luck.

The 19th is the ‘Use it or lose it’ tendency. Too many learners simply cram for a test or presentation instead of trying to actually understand it fluently. So, practice and share these tendencies after this video. As much as I like sharing things, one of the biggest reasons I make these videos is for myself.

The 20th is the Drug Misinfluence Tendency. This is a very strong tendency that costs lives. It is often supplemented by Simple pain-avoiding psychological denial.

The 21st is Senescence misinfluence tendency. As we age, there is a natural loss of certain skills and abilities. So, if you have got a website targeted for older people, make sure the fonts are big. Try to to speak slower and annunciate yours words more.

The 22nd is Authority Misinfluence Tendency Humans tend to follow leaders. It’s one of the reasons I sometimes quote people of authority, like I did with Mr. Buffet earlier. If you want more insight, just look up Milgram’s Experiment.

The 23rd is the Twaddle Tendency. People like to spend a lot of time on nonsense. Think of TV and how so much people watch things like ‘the Kardashians’. So, when marketing, make sure there’s lots of content and consider making things longer. I’ve been to seminars that lasted over 10 hours and at the end, everyone was virtually buying and signing up.

The 24th is the Reason Respecting Tendency. We’re often scared to sell because we’ve got competitors, but sometimes even giving a meaningless reason increases compliances. The word “Because” is very powerful. There’s a study where a person successfully jumps in front of a line to use the copy machine simply by saying, ‘Excuse me, I have 5 pages. May I use the Xerox machine, because I have to make copies?’

The 25th and the most important of all, is the Lollapalooza Tendency. This basically says if enough cognitive biases are activated at the same period of time, you’ll become a helpless zombie.

Vocabulary bank:

Persuader - noun someone who tries to persuade or induce or lead on

prevent - verb prevent from doing something or being in a certain state; keep from happening or arising; make impossible

impulse - noun the act of applying force suddenly; an impelling force or strength; the electrical discharge that travels along a nerve fiber; (electronics) a sharp transient wave in the normal electrical state (or a series of such transients); a sudden desire; an instinctive motive

regret - noun sadness associated with some wrong done or some disappointment; verb be sorry; decline formally or politely; feel sad about the loss or absence of; feel remorse for; feel sorry for; be contrite about

scam - noun a fraudulent business scheme; verb deprive of by deceit

entire - adj. constituting the full quantity or extent; complete; (used of domestic animals) sexually competent; (of leaves or petals) having a smooth edge; not broken up into teeth or lobes; constituting the undiminished entirety; lacking nothing essential especially not damaged; noun uncastrated adult male horse

Reward - noun an act performed to strengthen approved behavior; the offer of money for helping to find a criminal or for returning lost property; payment made in return for a service rendered; benefit resulting from some event or action; a recompense for worthy acts or retribution for wrongdoing; verb act or give recompense in recognition of someone's behavior or actions; strengthen and support with rewards; bestow honor or rewards upon

Punishment - noun the act of punishing

tendency - noun a characteristic likelihood of or natural disposition toward a certain condition or character or effect; a general direction in which something tends to move; an attitude of mind especially one that favors one alternative over others; an inclination to do something

incentive - noun a positive motivational influence; an additional payment (or other remuneration) to employees as a means of increasing output

obvious - adj. easily perceived by the senses or grasped by the mind

underestimate - noun an estimation that is too low; an estimate that is less than the true or actual value; verb make too low an estimate of; make a deliberately low estimate; assign too low a value to

incentive - noun a positive motivational influence; an additional payment (or other remuneration) to employees as a means of increasing output

potential - adj. existing in possibility; expected to become or be; in prospect; noun the inherent capacity for coming into being; the difference in electrical charge between two points in a circuit expressed in volts

ignore - verb be ignorant of or in the dark about; refuse to acknowledge; fail to notice; give little or no attention to; bar from attention or consideration

fault - noun (sports) a serve that is illegal (e.g., that lands outside the prescribed area); responsibility for a bad situation or event; (electronics) equipment failure attributable to some defect in a circuit (loose connection or insulation failure or short circuit etc.); (geology) a crack in the earth's crust resulting from the displacement of one side with respect to the other; a wrong action attributable to bad judgment or ignorance or inattention; the quality of being inadequate or falling short of perfection; an imperfection in a device or machine; verb put or pin the blame on

admire - verb feel admiration for; look at with admiration

hypnotize - verb induce hypnosis in

virtue - noun the quality of doing what is right and avoiding what is wrong; a particular moral excellence; morality with respect to sexual relations; any admirable quality or attribute

Doubt - noun uncertainty about the truth or factuality of existence of something; the state of being unsure of something; verb consider unlikely or have doubts about; lack confidence in or have doubts about

Avoidance - noun deliberately avoiding; keeping away from or preventing from happening

refund - noun the act of returning money received previously; money returned to a payer; verb pay back

Inconsistency - noun the quality of being inconsistent and lacking a harmonious uniformity among things or parts; the relation between propositions that cannot both be true at the same time

conserve - noun fruit preserved by cooking with sugar; verb preserve with sugar; use cautiously and frugally; keep in safety and protect from harm, decay, loss, or destruction; keep constant through physical or chemical reactions or evolutionary change

reluctant - adj. not eager; unwilling to become involved; unwillingness to do something contrary to your custom

eliminate - verb kill in large numbers; terminate or take out; remove (an unknown variable) from two or more equations; remove from a contest or race; eliminate from the body; dismiss from consideration or a contest; do away with

consistent - adj. (sometimes followed by `with') in agreement or consistent or reliable; the same throughout in structure or composition; marked by an orderly, logical, and aesthetically consistent relation of parts; capable of being reproduced

agree - verb consent or assent to a condition, or agree to do something; be in accord; be in agreement; achieve harmony of opinion, feeling, or purpose; be agreeable or suitable; show grammatical agreement; be compatible, similar or consistent; coincide in their characteristics; go together

Curiosity - noun a state in which you want to learn more about something; something unusual -- perhaps worthy of collecting

progress - noun the act of moving forward toward a goal; a movement forward; gradual improvement or growth or development; verb develop in a positive way; form or accumulate steadily; move forward, also in the metaphorical sense

reciprocate - verb alternate the direction of motion of; act, feel, or give mutually or in return

Envy - noun spite and resentment at seeing the success of another (personified as one of the deadly sins); a feeling of grudging admiration and desire to have something that is possessed by another; verb be envious of; set one's heart on; feel envious towards; admire enviously

jealousy - noun zealous vigilance; a feeling of jealous envy (especially of a rival)

Reciprocation - noun alternating back-and-forth movement; the act of making or doing something in return; mutual interaction; the activity of reciprocating or exchanging (especially information)

sample - noun a small part of something intended as representative of the whole; all or part of a natural object that is collected and preserved as an example of its class; items selected at random from a population and used to test hypotheses about the population; verb take a sample of

Association - noun the act of consorting with or joining with others; the process of bringing ideas or events together in memory or imagination; (ecology) a group of organisms (plants and animals) that live together in a certain geographical region and constitute a community with a few dominant species; a formal organization of people or groups of people; (chemistry) any process of combination (especially in solution) that depends on relatively weak chemical bonding; a relation resulting from interaction or dependence; the state of being connected together as in memory or imagination; a social or business relationship

partnership - noun a contract between two or more persons who agree to pool talent and money and share profits or losses; the members of a business venture created by contract; a cooperative relationship between people or groups who agree to share responsibility for achieving some specific goal

showcase - noun a setting in which something can be displayed to best effect; a glass container used to store and display items in a shop or museum or home

quality - adj. of high social status; of superior grade; noun an essential and distinguishing attribute of something or someone; a degree or grade of excellence or worth; a characteristic property that defines the apparent individual nature of something; high social status; (music) the distinctive property of a complex sound (a voice or noise or musical sound)

crappy - adj. very bad

Psychological - adj. mental or emotional as opposed to physical in nature; of or relating to or determined by psychology

denial - noun the act of asserting that something alleged is not true; the act of refusing to comply (as with a request); (psychiatry) a defense mechanism that denies painful thoughts; renunciation of your own interests in favor of the interests of others; a defendant's answer or plea denying the truth of the charges against him

distort - verb alter the shape of (something) by stress; make false by mutilation or addition; as of a message or story; affect as in thought or feeling; form into a spiral shape; twist and press out of shape

refuse - noun food that is discarded (as from a kitchen); verb show unwillingness towards; refuse to accept; refuse to let have; refuse entrance or membership; elude, especially in a baffling way; resist immunologically the introduction of some foreign tissue or organ

numb - adj. so frightened as to be unable to move; stunned or paralyzed with terror; lacking sensation; (followed by `to') not showing human feeling or sensitivity; unresponsive; verb make numb or insensitive

scam - noun a fraudulent business scheme; verb deprive of by deceit

effectively - adv. in actuality or reality or fact; in an effective manner

Excessive - adj. beyond normal limits; unrestrained, especially with regard to feelings

tend - verb manage or run; have care of or look after; have a tendency or disposition to do or be something; be inclined

dating - noun use of chemical analysis to estimate the age of geological specimens

attractive - adj. pleasing to the eye or mind especially through beauty or charm; having the properties of a magnet; the ability to draw or pull; having power to arouse interest

optimism - noun a general disposition to expect the best in all things; the optimistic feeling that all is going to turn out well

pill - noun a dose of medicine in the form of a small pellet; something that resembles a tablet of medicine in shape or size; a contraceptive in the form of a pill containing estrogen and progestin to inhibit ovulation and so prevent conception; something unpleasant or offensive that must be tolerated or endured; a unpleasant or tiresome person

reaction - noun doing something in opposition to another way of doing it that you don't like; a bodily process occurring due to the effect of some foregoing stimulus or agent; an idea evoked by some experience; extreme conservatism in political or social matters; a response that reveals a person's feelings or attitude; (mechanics) the equal and opposite force that is produced when any force is applied to a body; (chemistry) a process in which one or more substances are changed into others

irrationally - adv. in an irrational manner

intensity - noun high level or degree; the property of being intense; the amount of energy transmitted (as by acoustic or electromagnetic radiation); chromatic purity: freedom from dilution with white and hence vivid in hue; the magnitude of sound (usually in a specified direction)

limited - adj. including only a part; not unlimited; having a specific function or scope; small in range or scope; not excessive; mediocre; subject to limits or subjected to limits; noun public transport consisting of a fast train or bus that makes only a few scheduled stops

auction - noun the public sale of something to the highest bidder; a variety of bridge in which tricks made in excess of the contract are scored toward game; now generally superseded by contract bridge; verb sell at an auction

manipulate - verb treat manually, as with massage, for therapeutic purposed; hold something in one's hands and move it; control (others or oneself) or influence skillfully, usually to one's advantage; influence or control shrewdly or deviously; manipulate in a fraudulent manner; fake or falsify

Social - adj. marked by friendly companionship with others; living together or enjoying life in communities or organized groups; tending to move or live together in groups or colonies of the same kind; composed of sociable people or formed for the purpose of sociability; relating to human society and its members; relating to or belonging to or characteristic of high society; noun a party of people assembled to promote sociability and communal activity

automatic - adj. operating with minimal human intervention; independent of external control; like the unthinking functioning of a machine; without volition or conscious control; noun a pistol that will keep firing until the ammunition is gone or the trigger is released; light machine gun

simplify - verb make simpler or easier or reduce in complexity or extent

testimonial - adj. of or relating to or constituting testimony; expressing admiration or appreciation; noun something that serves as evidence; something that recommends (or expresses commendation) of a person or thing as worthy or desirable; something given or done as an expression of esteem

review - noun practice intended to polish performance or refresh the memory; (law) a judicial reexamination of the proceedings of a court (especially by an appellate court); an essay or article that gives a critical evaluation (as of a book or play); a periodical that publishes critical essays on current affairs or literature or art; (accounting) a service (less exhaustive than an audit) that provides some assurance to interested parties as to the reliability of financial data; a subsequent examination of a patient for the purpose of monitoring earlier treatment; a formal or official examination; a new appraisal or evaluation; a summary at the end that repeats the substance of a longer discussion; a variety show with topical sketches and songs and dancing and comedians; verb look at again; examine again; look back upon (a period of time, sequence of events); remember; hold a review (of troops); refresh one's memory; appraise critically

Contrast - noun the act of distinguishing by comparing differences; the range of optical density and tone on a photographic negative or print (or the extent to which adjacent areas on a television screen differ in brightness); the perceptual effect of the juxtaposition of very different colors; the opposition or dissimilarity of things that are compared; a conceptual separation or distinction; verb put in opposition to show or emphasize differences; to show differences when compared; be different

skyscraper - noun a very tall building with many stories

stress - noun the relative prominence of a syllable or musical note (especially with regard to stress or pitch); (physics) force that produces strain on a physical body; difficulty that causes worry or emotional tension; special emphasis attached to something; (psychology) a state of mental or emotional strain or suspense; verb put stress on; utter with an accent; to stress, single out as important; test the limits of

influence - noun causing something without any direct or apparent effort; a power to affect persons or events especially power based on prestige etc; a cognitive factor that tends to have an effect on what you do; one having power to influence another; the effect of one thing (or person) on another; verb have and exert influence or effect; shape or influence; give direction to; induce into action by using one's charm

timeshare – noun a holiday home which is shared between several people throughout the year

Availability - noun the quality of being at hand when needed

instinct - adj. (followed by `with')deeply filled or permeated; noun inborn pattern of behavior often responsive to specific stimuli

cram - verb prepare (students) hastily for an impending exam; study intensively, as before an exam; put something somewhere so that the space is completely filled; crowd or pack to capacity

Drug - noun a substance that is used as a medicine or narcotic; verb administer a drug to; use recreational drugs

Senescence - noun the property characteristic of old age; the organic process of growing older and showing the effects of increasing age

annunciate - verb foreshadow or presage

Authority - noun official permission or approval; the power or right to give orders or make decisions; an authoritative written work; an expert whose views are taken as definitive; (usually plural) persons who exercise (administrative) control over others; freedom from doubt; belief in yourself and your abilities; an administrative unit of government

insight - noun grasping the inner nature of things intuitively; the clear (and often sudden) understanding of a complex situation; a feeling of understanding; clear or deep perception of a situation

Twaddle - noun pretentious or silly talk or writing; verb speak (about unimportant matters) rapidly and incessantly

nonsense - adj. having no intelligible meaning; noun a message that seems to convey no meaning; ornamental objects of no great value

seminar - noun a course offered for a small group of advanced students; any meeting for an exchange of ideas

competitor - noun the contestant you hope to defeat

compliance - noun happy friendly agreement; the act of submitting; usually surrendering power to another; acting according to certain accepted standards; a disposition or tendency to yield to the will of others

helpless - adj. unable to manage independently; unable to function; without help; lacking in or deprived of strength or power

zombie - noun several kinds of rum with fruit juice and usually apricot liqueur; someone who acts or responds in a mechanical or apathetic way; a dead body that has been brought back to life by a supernatural force; a god of voodoo cults of African origin worshipped especially in West Indies; (voodooism) a spirit or supernatural force that reanimates a dead body