How to Profit From Bad Technology Decisions

We could do better if technologists thought more about the constraints of human cognition.

In her “monkey economy” experiment, Laurie Santos, associate professor of psychology at Yale University, shows that monkeys trading for treats make irrational decisions similar to those humans make in a monied economy. We design systems too difficult for our brains to navigate successfully, she says, and technology both helps and hurts.

What irrational things did the monkeys do when trying to get treats?

They evaluated situations in relative terms, rather than absolute terms. They were averse to losses, wanting to avoid ever going into the red, even when doing so would have helped them long term. They work harder to avoid losses than to seek out equally sized gains. Those are the salient features in how we make decisions. So we should worry when we design systems that require people to process things in an absolute way. They won’t do it. Imagine you’re trying to design a system to tell people that their bank account or stock portfolio is doing something. They’re not paying attention to absolute numbers, but to the changes from last time.

Why are we so smart but make colossal mistakes?

Modern humans live in environments that our brains weren’t evolved for. You can overcome biases, but it takes a lot of work and will never be automatic. We were hunter-gatherers. The kinds of technologies we use are different from what we were built for. We do OK, but we could do better if technologists thought more about the constraints of human cognition.

How?

Think about designing systems and products with people’s foibles in mind. We design now thinking people are going to be rational and make decisions with perfect math, but that doesn’t happen. Technology designers should think about people in the field. We have complicated lives and want to do things quickly and have limited time to process information.

Can companies use that knowledge to their advantage?

Companies were savvy about people’s mistakes long before social scientists. Look at advertising and marketing. But there are ways to align with consumers and gain trust. People want to overcome their limitations, too. If you give them a mechanism to do that, they will like you. They will buy from you. Odysseus tied himself to the mast of his ship to avoid succumbing to the sirens’ song. People will pay to get tied to their masts.

So human foibles are profitable?

Look at the food companies that offer 100-calorie packs. Companies are benefiting from helping people control an urge. People will eat until the serving is gone. The whole package is your reference point. Companies are making money on that. Now the new insight is for companies to think, “If we develop products to overcome human biases, they will buy them.” Small changes to technologies or products can change the way people behave, sometimes in ways that benefit both customers and companies. People will pay to have their biases curbed.

Follow Senior Editor Kim S. Nash on Twitter: @knash99. Or read her blog, Strategic CIO.