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The Irrational Bundle
The Irrational Bundle
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The Irrational Bundle

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I love movies. If I had the time, I would watch one every day. When the doctors told me what to expect, I decided that I would not watch any movies until after I injected myself, and then I could watch as many as I wanted until I fell asleep.

On every injection day, I would stop at the video store on the way to school and pick up a few films that I wanted to see. I would have these in my bag and would eagerly anticipate watching them later that day. Then, immediately after I took the injection, but before the shivering and headache set in, I jumped into my hammock, got comfortable, made sure the bucket was in position, and started my mini–film fest. This way, I learned to associate the initial injection with the rewarding experience of watching a wonderful movie. Only an hour later, after the negative side effects kicked in, did I have a less than wonderful feeling about it.

Planning my evenings in this way helped my brain associate the injection more closely with the movie than with the fever, chills, and vomiting, and thus, I was able to continue the treatment.

DURING THE SIX-MONTH treatment, it looked as though the interferon was working, and my liver function improved dramatically. Unfortunately, a few weeks after the trial was over, the hepatitis returned, so I started a more aggressive treatment. This one lasted a year and involved not only interferon but also a drug called ribavirin. To compel myself to follow this treatment, I again tried the injection-movie-hammock procedure as before. (Thanks to my somewhat faulty memory, I was even able to enjoy some of the same movies I had watched during the first treatment with interferon.)

This time, however, I was also interviewing at various universities for a job as an assistant professor. I had to travel to 14 cities, stay overnight in hotels, give a talk to groups of academics, and then submit to one-on-one interviews with professors and deans. To avoid telling my prospective colleagues about my adventures with interferon and ribavirin, I would insist on a rather strange schedule of interviews. I routinely had to make some excuse about why I arrived early the day before the interview but could not go out for dinner that evening with my hosts. Instead, I would check into the hotel, take out the injection from a little icebox that I carried with me, inject myself, and watch a few movies on the hotel television. The following day I would also try to delay the interviews for a few hours, but once I felt better I would go through the interview as best I could. (Sometimes my procedure worked; sometimes I had to meet people while I still felt wretched.) Fortunately, after I finished my interviews I received excellent news. Not only had I been offered a job, but the combination treatment had eliminated the hepatitis from my liver. I’ve been hepatitis-free ever since.

THE LESSON I took away from my interferon treatment is a general one: if a particular desired behavior results in an immediate negative outcome (punishment), this behavior will be very difficult to promote, even if the ultimate outcome (in my case, improved health) is highly desirable. After all, that’s what the problem of delayed gratification is all about. Certainly, we know that exercising regularly and eating more vegetables will help us be healthier, even if we don’t live to be as old as the Delany sisters; but because it is very hard to hold a vivid image of our future health in our mind’s eye, we can’t keep from reaching for the doughnuts.

In order to overcome many types of human fallibility, I believe it’s useful to look for tricks that match immediate, powerful, and positive reinforcements with the not-so-pleasant steps we have to take toward our long-term objectives. For me, beginning a movie—before I felt any side effects—helped me to sustain the unpleasantness of the treatment. As a matter of fact, I timed everything perfectly. The moment I finished injecting myself, I pressed the Play button. I suspect that had I hit Play after the side effects kicked in, I would not have been as successful in winning the tug-of-war. And who knows? Maybe if I had waited for the side effects to kick in before I started the movies, I would have created a negative association and would now enjoy movies less as a consequence.* (#litres_trial_promo)

ONE OF MY colleagues at Duke University, Ralph Keeney, recently noted that America’s top killer isn’t cancer or heart disease, nor is it smoking or obesity. It’s our inability to make smart choices and overcome our own self-destructive behaviors.

Ralph estimates that about half of us will make a lifestyle decision that will ultimately lead us to an early grave. And as if this were not bad enough, it seems that the rate at which we make these deadly decisions is increasing at an alarming pace.

I suspect that over the next few decades, real improvements in life expectancy and quality are less likely to be driven by medical technology than by improved decision making. Since focusing on long-term benefits is not our natural tendency, we need to more carefully examine the cases in which we repeatedly fail, and try to come up with some remedies for these situations. (For an overweight movie lover, the key might be to enjoy watching a film while walking on the treadmill.) The trick is to find the right behavioral antidote for each problem. By pairing something that we love with something that we dislike but that is good for us, we might be able to harness desire with outcome—and thus overcome some of the problems with self-control we face every day.

Chapter 8

The High Price of Ownership

Why We Overvalue What We Have

At Duke University, basketball is somewhere between a passionate hobby and a religious experience. The basketball stadium is small and old and has bad acoustics—the kind that turn the cheers of the crowd into thunder and pump everyone’s adrenaline level right through the roof. The small size of the stadium creates intimacy but also means there are not enough seats to contain all the fans who want to attend the games. This, by the way, is how Duke likes it, and the university has expressed little interest in exchanging the small, intimate stadium for a larger one. To ration the tickets, an intricate selection process has been developed over the years, to separate the truly devoted fans from all the rest.

Even before the start of the spring semester, students who want to attend the games pitch tents in the open grassy area outside the stadium. Each tent holds up to 10 students. The campers who arrive first take the spots closest to the stadium’s entrance, and the ones who come later line up farther back. The evolving community is called Krzyzewskiville, reflecting the respect the students have for Coach K—Mike Krzyzewski—as well as their aspirations for victory in the coming season.

So that the serious basketball fans are separated from those without “Duke blue” running through their veins, an air horn is sounded at random times. At the sound, a countdown begins, and within the next five minutes at least one person from each tent must check in with the basketball authorities. If a tent fails to register within these five minutes, the whole tent gets bumped to the end of the line. This procedure continues for most of the spring semester, and intensifies in the last 48 hours before a game.

At that point, 48 hours before a game, the checks become “personal checks.” From then on, the tents are merely a social structure: when the air horn is sounded, every student has to check in personally with the basketball authorities. Missing an “occupancy check” in these final two days can mean being bumped to the end of the line. Although the air horn sounds occasionally before routine games, it can be heard at all hours of night and day before the really big contests (such as games against the University of North Carolina-Chapel Hill and during the national championships).

But that’s not the oddest part of the ritual. The oddest part is that for the really important games, such as the national titles, the students at the front of the line still don’t get a ticket. Rather, each of them gets a lottery number. Only later, as they crowd around a list of winners posted at the student center, do they find out if they have really, truly won a ticket to the coveted game.

AS ZIV CARMON (a professor at INSEAD) and I listened to the air horn during the campout at Duke in the spring of 1994, we were intrigued by the real-life experiment going on before our eyes. All the students who were camping out wanted passionately to go to the basketball game. They had all camped out for a long time for the privilege. But when the lottery was over, some of them would become ticket owners, while others would not.

The question was this: would the students who had won tickets—who had ownership of tickets—value those tickets more than the students who had not won them even though they all “worked” equally hard to obtain them? On the basis of Jack Knetsch, Dick Thaler, and Daniel Kahneman’s research on the “endowment effect,” we predicted that when we own something—whether it’s a car or a violin, a cat or a basketball ticket—we begin to value it more than other people do.

Think about this for a minute. Why does the seller of a house usually value that property more than the potential buyer? Why does the seller of an automobile envision a higher price than the buyer? In many transactions why does the owner believe that his possession is worth more money than the potential owner is willing to pay? There’s an old saying, “One man’s ceiling is another man’s floor.” Well, when you’re the owner, you’re at the ceiling; and when you’re the buyer, you’re at the floor.

To be sure, that is not always the case. I have a friend who contributed a full box of record albums to a garage sale, for instance, simply because he couldn’t stand hauling them around any longer. The first person who came along offered him $25 for the whole box (without even looking at the titles), and my friend accepted it. The buyer probably sold them for 10 times that price the following day. Indeed, if we always overvalued what we had, there would be no such thing as Antiques Roadshow. (“How much did you pay for this powder horn? Five dollars? Well, let me tell you, you have a national treasure here.”)

But this caveat aside, we still believed that in general the ownership of something increases its value in the owner’s eyes. Were we right? Did the students at Duke who had won the tickets—who could now anticipate experiencing the packed stands and the players racing across the court—value them more than the students who had not won them? There was only one good way to find out: get them to tell us how much they valued the tickets.

In this case, Ziv and I would try to buy tickets from some of the students who had won them—and sell them to those who didn’t. That’s right; we were about to become ticket scalpers.

THAT NIGHT WE got a list of the students who had won the lottery and those who hadn’t, and we started telephoning. Our first call was to William, a senior majoring in chemistry. William was rather busy. After camping for the previous week, he had a lot of homework and e-mail to catch up on. He was not too happy, either, because after reaching the front of the line, he was still not one of the lucky ones who had won a ticket in the lottery.

“Hi, William,” I said. “I understand you didn’t get one of the tickets for the final four.”

“That’s right.”

“We may be able to sell you a ticket.”

“Cool.”

“How much would you be willing to pay for one?”

“How about a hundred dollars?” he replied.

“Too low,” I laughed. “You’ll have to go higher.”

“A hundred fifty?” he offered.

“You have to do better,” I insisted. “What’s the highest price you’ll pay?”

William thought for a moment. “A hundred seventy-five.”

“That’s it?”

“That’s it. Not a penny more.”

“OK, you’re on the list. I’ll let you know,” I said. “By the way, how’d you come up with that hundred seventy-five?”

William said he figured that for $175 he could also watch the game at a sports bar, free, spend some money on beer and food, and still have a lot left over for a few CDs or even some shoes. The game would no doubt be exciting, he said, but at the same time $175 is a lot of money.

Our next call was to Joseph. After camping out for a week Joseph was also behind on his schoolwork. But he didn’t care—he had won a ticket in the lottery and now, in a few days, he would be watching the Duke players fight for the national title.

“Hi, Joseph,” I said. “We may have an opportunity for you—to sell your ticket. What’s your minimum price?”

“I don’t have one.”

“Everyone has a price,” I replied, giving the comment my best Al Pacino tone.

His first answer was $3,000.

“Come on,” I said, “That’s way too much. Be reasonable; you have to offer a lower price.”

“All right,” he said, “twenty-four hundred.”

“Are you sure?” I asked.

“That’s as low as I’ll go.”

“OK. If I can find a buyer at that price, I’ll give you a call. By the way,” I added, “how did you come up with that price?”

“Duke basketball is a huge part of my life here,” he said passionately. He then went on to explain that the game would be a defining memory of his time at Duke, an experience that he would pass on to his children and grandchildren. “So how can you put a price on that?” he asked. “Can you put a price on memories?”

William and Joseph were just two of more than 100 students whom we called. In general, the students who did not own a ticket were willing to pay around $170 for one. The price they were willing to pay, as in William’s case, was tempered by alternative uses for the money (such as spending it in a sports bar for drinks and food). Those who owned a ticket, on the other hand, demanded about $2,400 for it. Like Joseph, they justified their price in terms of the importance of the experience and the lifelong memories it would create.

What was really surprising, though, was that in all our phone calls, not a single person was willing to sell a ticket at a price that someone else was willing to pay. What did we have? We had a group of students all hungry for a basketball ticket before the lottery drawing; and then, bang—in an instant after the drawing, they were divided into two groups—ticket owners and non–ticket owners. It was an emotional chasm that was formed, between those who now imagined the glory of the game, and those who imagined what else they could buy with the price of the ticket. And it was an empirical chasm as well—the average selling price (about $2,400) was separated by a factor of about 14 from the average buyer’s offer (about $175).

From a rational perspective, both the ticket holders and the non–ticket holders should have thought of the game in exactly the same way. After all, the anticipated atmosphere at the game and the enjoyment one could expect from the experience should not depend on winning a lottery. Then how could a random lottery drawing have changed the students’ view of the game—and the value of the tickets—so dramatically?

OWNERSHIP PERVADES OUR lives and, in a strange way, shapes many of the things we do. Adam Smith wrote, “Every man [and woman] . . . lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.” That’s an awesome thought. Much of our life story can be told by describing the ebb and flow of our particular possessions—what we get and what we give up. We buy clothes and food, automobiles and homes, for instance. And we sell things as well—homes and cars, and in the course of our careers, our time.

Since so much of our lives is dedicated to ownership, wouldn’t it be nice to make the best decisions about this? Wouldn’t it be nice, for instance, to know exactly how much we would enjoy a new home, a new car, a different sofa, and an Armani suit, so that we could make accurate decisions about owning them? Unfortunately, this is rarely the case. We are mostly fumbling around in the dark. Why? Because of three irrational quirks in our human nature.

The first quirk, as we saw in the case of the basketball tickets, is that we fall in love with what we already have. Suppose you decide to sell your old VW bus. What do you start doing? Even before you’ve put a FOR SALE sign in the window, you begin to recall trips you took. You were much younger, of course; the kids hadn’t sprouted into teenagers. A warm glow of remembrance washes over you and the car. This applies not only to VW buses, of course, but to everything else. And it can happen fast.

For instance, two of my friends adopted a child from China and told me this remarkable story. They went to China with 12 other couples. When they reached the orphanage, the director took each of the couples separately into a room and presented them with a daughter. When the couples reconvened the following morning, they all commented on the director’s wisdom: Somehow she knew exactly which little girl to give to each couple. The matches were perfect. My friends felt the same way, but they also realized that the matches had been random. What made each match seem perfect was not the Chinese woman’s talent, but nature’s ability to make us instantly attached to what we have.

The second quirk is that we focus on what we may lose, rather than what we may gain. When we price our beloved VW, therefore, we think more about what we will lose (the use of the bus) than what we will gain (money to buy something else). Likewise, the ticket holder focuses on losing the basketball experience, rather than imagining the enjoyment of obtaining money or on what can be purchased with it. Our aversion to loss is a strong emotion, and as I will explain later in the book, one that sometimes causes us to make bad decisions. Do you wonder why we often refuse to sell some of our cherished clutter, and if somebody offers to buy it, we attach an exorbitant price tag to it? As soon as we begin thinking about giving up our valued possessions, we are already mourning the loss.

The third quirk is that we assume other people will see the transaction from the same perspective as we do. We somehow expect the buyer of our VW to share our feelings, emotions, and memories. Or we expect the buyer of our house to appreciate how the sunlight filters through the kitchen windows. Unfortunately, the buyer of the VW is more likely to notice the puff of smoke that is emitted as you shift from first into second; and the buyer of your house is more likely to notice the strip of black mold in the corner. It is just difficult for us to imagine that the person on the other side of the transaction, buyer or seller, is not seeing the world as we see it.

OWNERSHIP ALSO HAS what I’d call “peculiarities.” For one, the more work you put into something, the more ownership you begin to feel for it. Think about the last time you assembled some furniture. Figuring out which piece goes where and which screw fits into which hole boosts the feeling of ownership.

In fact, I can say with a fair amount of certainty that pride of ownership is inversely proportional to the ease with which one assembles the furniture; wires the high-definition

television to the surround-sound system; installs software;

or gets the baby into the bath, dried, powdered, diapered, and tucked away in the crib. My friend and colleague Mike Norton (a professor at Harvard) and I have a term for this phenomenon: the “Ikea effect.”

Another peculiarity is that we can begin to feel ownership even before we own something. Think about the last time you entered an online auction. Suppose you make your first bid on Monday morning, for a wristwatch, and at this point you are the highest bidder. That night you log on, and you’re still the top dog. Ditto for the next night. You start thinking about that elegant watch. You imagine it on your wrist; you imagine the compliments you’ll get. And then you go online again one hour before the end of the auction. Some dog has topped your bid! Someone else will take your watch! So you increase your bid beyond what you had originally planned.

Is the feeling of partial ownership causing the upward spiral we often see in online auctions? Is it the case that the longer an auction continues, the greater grip virtual ownership will have on the various bidders and the more money they will spend? A few years ago, James Heyman, Yesim Orhun (a professor at the University of Chicago), and I set up an experiment to explore how the duration of an auction gradually affects the auction’s participants and encourages them to bid to the bitter end. As we suspected, the participants who were the highest bidders, for the longest periods of time, ended up with the strongest feelings of virtual ownership. Of course, they were in a vulnerable position: once they thought of themselves as owners, they were compelled to prevent losing their position by bidding higher and higher.

“Virtual ownership,” of course, is one mainspring of the advertising industry. We see a happy couple driving down the California coastline in a BMW convertible, and we imagine ourselves there. We get a catalog of hiking clothing from Patagonia, see a polyester fleece pullover, and—poof—we start thinking of it as ours. The trap is set, and we willingly walk in. We become partial owners even before we own anything.

There’s another way that we can get drawn into ownership. Often, companies will have “trial” promotions. If we have a basic cable television package, for instance, we are lured into a “digital gold package” by a special “trial” rate (only $59 a month instead of the usual $89). After all, we tell ourselves, we can always go back to basic cable or downgrade to the “silver package.”

But once we try the gold package, of course, we claim ownership of it. Will we really have the strength to downgrade back to basic or even to “digital silver”? Doubtful. At the onset, we may think that we can easily return to the basic service, but once we are comfortable with the digital picture, we begin to incorporate our ownership of it into our view of the world and ourselves, and quickly rationalize away the additional price. More than that, our aversion to loss—the loss of that nice crisp “gold package” picture and the extra channels—is too much for us to bear. In other words, before we make the switch we may not be certain that the cost of the digital gold package is worth the full price; but once we have it, the emotions of ownership come welling up, to tell us that the loss of “digital gold” is more painful than spending a few more dollars a month. We may think we can turn back, but that is actually much harder than we expected.

Another example of the same hook is the “30-day money-back guarantee.” If we are not sure whether or not we should get a new sofa, the guarantee of being able to change our mind later may push us over the hump so that we end up getting it. We fail to appreciate how our perspective will shift once we have it at home, and how we will start viewing the sofa—as ours—and consequently start viewing returning it as a loss. We might think we are taking it home only to try it out for a few days, but in fact we are becoming owners of it and are unaware of the emotions the sofa can ignite in us.

OWNERSHIP IS NOT limited to material things. It can also apply to points of view. Once we take ownership of an idea—whether it’s about politics or sports—what do we do? We love it perhaps more than we should. We prize it more than it is worth. And most frequently, we have trouble letting go of it because we can’t stand the idea of its loss. What are we left with then? An ideology—rigid and unyielding.

THERE IS NO known cure for the ills of ownership. As Adam Smith said, it is woven into our lives. But being aware of it might help. Everywhere around us we see the temptation to improve the quality of our lives by buying a larger home, a second car, a new dishwasher, a lawn mower, and so on. But, once we change our possessions we have a very hard time going back down. As I noted earlier, ownership simply changes our perspective. Suddenly, moving backward to our pre-ownership state is a loss, one that we cannot abide. And so, while moving up in life, we indulge ourselves with the fantasy that we can always ratchet ourselves back if need be; but in reality, we can’t. Downgrading to a smaller home, for instance, is experienced as a loss, it is psychologically painful, and we are willing to make all kinds of sacrifices in order to avoid such losses—even if, in this case, the monthly mortgage sinks our ship.

My own approach is to try to view all transactions (particularly large ones) as if I were a nonowner, putting some distance between myself and the item of interest. In this attempt, I’m not certain if I have achieved the uninterest in material things that is espoused by the Hindu sannyasi, but at least I try to be as Zen as I can about it.

Reflections on the Challenges of Ownership

In 2007 and 2008, home values across America plummeted as fast as George W. Bush’s approval ratings. Each month brought with it more bad news: more foreclosures, more new homes for sale in a stagnant real estate market, and more stories of people who couldn’t get mortgages. Results from a study by Zillow.com (a Web site that facilitates home searches and price estimations) illustrated just how strongly this news affected home owners: in the second quarter of 2008, nine out of ten home owners (92 percent) said there had been foreclosures in their local real estate market, and they were concerned that these foreclosures had lowered home values in their neighborhoods. Moreover, four in five home owners (82 percent) did not see much hope for improvement in the real estate market in the near future.

On the face of it, Zillow’s research suggested that homeowners had been paying attention to the media, had an idea of what was happening in the economy, and understood that the housing crunch was a reality. But this study also found that these seemingly well-informed people believed that the values of their own homes had not decreased as much. Two out of three home owners (62 percent) believed that the value of their own home had increased or stayed the same, and about half (56 percent) planned to invest in home improvements, even as they watched the housing market collapse around them. What explained the wide gap between their inflated perception of their homes’ values and the gloomy market reality?

As we discussed in Chapter 8, ownership fundamentally changes our perspective. In the same way that we think our own kids are more wonderful and special than our friends’ and neighbors’ children (regardless of whether our children deserve such esteem), we overvalue everything that we own, whether it’s a pair of basketball tickets or our domiciles.

But home ownership is even more interesting and complex than, say, the regular case of owning a coffee mug or a pair of baseball tickets—because we invest so much in our houses. Think, for example, about all the changes and tinkering we do to our homes once we move into them. We replace laminate countertops with granite. We take out a wall and install a new window that lets the light shine just so on the dining room table. We paint the living room walls a deep earthy clay color. We change the bathroom tile. We add a porch and install a koi pond in the backyard. Little by little, we make changes here and there until the house feels perfectly tailored to our unique individual tastes, until it expresses our elegant or eclectic sense of style to everyone else. When the neighbors come over, they admire our countertops and light fixtures. But in the end, do other people value the changes we have so lovingly made as much as we do? Do they value these changes at all?

Consider a home owner who compares her own beautifully remodeled house with a similar one down the street that has been languishing on the market for months, or with another that has recently sold for much less than the asking price. In so doing, she understands why the owners of these other homes had such a hard time selling them. They had the laminate and not the granite countertops, no earthy clay paint or light that fell just so on the dining room table. “No wonder those houses didn’t sell,” she thinks to herself, “they simply are not as nice as mine.”

MY WIFE, SUMI, and I also fell victim to this bias. When we worked at MIT, we bought a new house in Cambridge, Massachusetts (the house was originally built in 1890, but it felt new to us). We promptly went about fixing it up. We took down some walls to give the house an open feel, which we loved. We renovated the bathrooms and set up a sauna in the basement. We also converted the carriage house in the garden into a small combination office-apartment. Sometimes we would pack our laundry basket with some wine, food, and clothing, and escape to the carriage house for a “weekend away.”

Then, in 2007, we took jobs at Duke University and moved to Durham, North Carolina. We assumed that the housing market would continue to decline, and that it would be in our best interest to sell the Cambridge house as quickly as possible. We also wanted to avoid having to pay for heating, taxes, and a mortgage on two homes.

Many people came to see our beautifully remodeled Cambridge home. They all seemed to appreciate the structure and the feel of the place, but no one put in an offer. People told

us that the house was beautiful, but somehow they could not fully appreciate the benefit of the open floor plan. Instead, they wanted something with more privacy. We heard what they said, but it didn’t fully register. “Clearly,” we said to each other after each set of prospective buyers had come and gone, “those people are just dull and unimaginative, and have no taste. Surely our beautiful, open, airy home will be just right for the perfect someone.”

Time passed. We paid double mortgages, double heating bills, and double taxes while the housing market continued to slow down. Many more people came to see the house and left without extending an offer. Eventually Jean, our real estate agent, delivered the bad news to us the way a doctor tells a patient there’s something funny looking on his X-ray. “I think,” she said slowly, “that if you want to sell the house, you will have to rebuild some walls and reverse some of the changes you have made.” Until she said those words, we had not accepted this truth. Despite our disbelief, and still fully convinced of our superior taste, we took the plunge and paid a contractor to re-erect some walls. A few weeks later the house was sold.

In the end, the buyers didn’t want our home. They wanted theirs. This was a very expensive lesson, and I certainly wish we had had a better sense of the effect of our modifications on potential buyers.

OUR PROPENSITY TO overvalue what we own is a basic human bias, and it reflects a more general tendency to fall in love with, and be overly optimistic about, anything that has to do with ourselves. Think about it—don’t you feel that you are a better-than-average driver, are more likely to be able to afford retirement, and are less likely to suffer from high cholesterol, get a divorce, or get a parking ticket if you overstay your meter by a few minutes? This positivity bias, as psychologists call it, has another name: “The Lake Wobegone Effect,” named after the fictional town in Garrison Keillor’s popular radio series A Prairie Home Companion. In Lake Wobegone, according to Keillor, “all the women are strong, all the men are good-looking, and all the children are above average.”

I don’t think we can become more accurate and objective in the way we think about our children and houses, but maybe we can realize that we have such biases and listen more carefully to the advice and feedback we get from others.

Chapter 9

Keeping Doors Open

Why Options Distract Us from Our Main Objective

In 210 BC, a Chinese commander named Xiang Yu led his troops across the Yangtze River to attack the army of the Qin (Ch’in) dynasty. Pausing on the banks of the river for the night, his troops awakened in the morning to find, to their horror, that their ships were burning. They hurried to their feet to fight off their attackers, but soon discovered that it was Xiang Yu himself who had set their ships on fire, and that he had also ordered all the cooking pots crushed.

Xiang Yu explained to his troops that without the pots and the ships, they had no other choice but to fight their way to victory or perish. That did not earn Xiang Yu a place on the Chinese army’s list of favorite commanders, but it did have a tremendous focusing effect on his troops: grabbing their lances and bows, they charged ferociously against the enemy and won nine consecutive battles, completely obliterating the main-force units of the Qin dynasty.

Xiang Yu’s story is remarkable because it is completely antithetical to normal human behavior. Normally, we cannot stand the idea of closing the doors on our alternatives. Had most of us been in Xiang Yu’s armor, in other words, we would have sent out part of our army to tend to the ships, just in case we needed them for retreat; and we would have asked others to cook meals, just in case the army needed to stay put for a few weeks. Still others would have been instructed to pound rice out into paper scrolls, just in case we needed parchment on which to sign the terms of the surrender of the mighty Qin (which was highly unlikely in the first place).

In the context of today’s world, we work just as feverishly to keep all our options open. We buy the expandable computer system, just in case we need all those high-tech bells and whistles. We buy the insurance policies that are offered with the plasma high-definition television, just in case the big screen goes blank. We keep our children in every activity we can imagine—just in case one sparks their interest in gymnastics, piano, French, organic gardening, or tae kwon do. And we buy a luxury SUV, not because we really expect to drive off the highway, but because just in case we do, we want to have some clearance beneath our axles.

We might not always be aware of it, but in every case we give something up for those options. We end up with a computer that has more functions than we need, or a stereo with an unnecessarily expensive warranty. And in the case of our kids, we give up their time and ours—and the chance that they could become really good at one activity—in trying to give them some experience in a large range of activities. In running back and forth among the things that might be important, we forget to spend enough time on what really is important. It’s a fool’s game, and one that we are remarkably adept at playing.

I saw this precise problem in one of my undergraduate students, an extremely talented young man named Joe. As an incoming junior, Joe had just completed his required courses, and now he had to choose a major. But which one? He had a passion for architecture—he spent his weekends studying the eclectically designed buildings around Boston. He could see himself as a designer of such proud structures one day. At the same time he liked computer science, particularly the freedom and flexibility that the field offered. He could see himself with a good-paying job at an exciting company like Google. His parents wanted him to become a computer scientist—and besides, who goes to MIT to be an architect anyway?* (#litres_trial_promo) Still, his love of architecture was strong.

As Joe spoke, he wrung his hands in frustration. The classes he needed for majors in computer science and architecture were incompatible. For computer science, he needed Algorithms, Artificial Intelligence, Computer Systems Engineering, Circuits and Electronics, Signals and Systems, Computational Structures, and a laboratory in Software Engineering. For architecture, he needed different courses: Experiencing Architecture Studio, Foundations in the Visual Arts, Introduction to Building Technology, Introduction to Design Computing, Introduction to the History and Theory of Architecture, and a further set of architecture studios.

How could he shut the door on one career or the other? If he started taking classes in computer science, he would have a hard time switching over to architecture; and if he started in architecture, he would have an equally difficult time switching to computer science. On the other hand, if he signed up for classes in both disciplines, he would most likely end up without a degree in either field at the end of his four years at MIT, and he would require another year (paid for by his parents) to complete his degree. (He eventually graduated with a degree in computer science, but he found the perfect blend in his first job—designing nuclear subs for the Navy.)

Dana, another student of mine, had a similar problem—but hers centered on two boyfriends. She could dedicate her energy and passion to a person she had met recently and, she hoped, build an enduring relationship with him. Or she could continue to put time and effort into a previous relationship that was dying. She clearly liked the new boyfriend better than the former one—yet she couldn’t let the earlier relationship go. Meanwhile, her new boyfriend was getting restless. “Do you really want to risk losing the boy you love,” I asked her, “for the remote possibility that you may discover—at some later date—that you love your former boyfriend more?” She shook her head “no,” and broke into tears.* (#litres_trial_promo)

What is it about options that is so difficult for us? Why do we feel compelled to keep as many doors open as possible, even at great expense? Why can’t we simply commit ourselves?* (#litres_trial_promo)

To try to answer these questions, Jiwoong Shin (a professor at Yale) and I devised a series of experiments that we hoped would capture the dilemma represented by Joe and Dana. In our case, the experiment would be based on a computer game that we hoped would eliminate some of the complexities of life and would give us a straightforward answer about whether people have a tendency to keep doors open for too long. We called it the “door game.” For a location, we chose a dark, dismal place—a cavern that even Xiang Yu’s army would have been reluctant to enter.