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The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

May 17, 2019

This behavioral economics podcast episode is about memories. Specifically, it will be an overview of memory biases  Last week, we took a little break from our series on “all the biases” for a behavioral economics analysis of Costco. Today, we dig into memory. This topic will be divided into three sections.

The first section is general memory stuff, then we will talk about false memories and wrap it up with some tips on how you can use these biases to help you remember things better! When we think about our brains and all the amazing things they do, much of what we are accessing are memories. This episode breaks it all down with some fun facts and cool tips about our memories that a lot of you may not know.


Show Notes:

  • [03:59] When we think about our brains and all the amazing things they do, much of what we are accessing are memories.
  • [04:21] Most people think of our brains like a filing cabinet, but that's not how it works.
  • [04:36] Our memories are basically inaccurate renditions our brains tell us...and every time we access them, we change them a little.
  • [04:49] The more we think about something the less likely it is to be accurate. This is partially because of two biases called leveling and sharpening.
  • [05:00] Memories can be distorted over time when details are lost. In this process, there may be selective recollection (where you only remember, sharpen and exaggerate certain portions of the memory). Or, it can be leveled out to fit some other biases that exist and just get a little dulled over time. Both of these are constantly reinforcing each other over time.
  • [06:41] Our biases impact our memories and our present and future.
  • [06:58] Because of the self relevance effect we find it much easier to recall memories about our self or things related to ourselves.
  • [07:13] You are the hero of your own story, but even you don't remember your own story correctly.
  • [07:20] Due to the fading effect bias, our brains like to feel positive emotions more than negative ones, so the emotions tied to bad memories will fade quicker than the emotions tied to positive events. This is likely tied to optimism bias and our ability to persevere through hardship.
  • [07:54] Because of reminiscence bump, people do not remember things from all times of their life equally. Instead, people will have memories and be able to recall more personal events from happenings in early adulthood and adolescence than from any other time in their life.
  • [08:35] We remember some time periods better than others, some items from years and years ago are able to be recalled “like it was yesterday.”
  • [08:55] Due to the telescoping effect, we tend to think of recent events as being further back in time, and those which happened longer ago are placed more recent in our minds.
  • [09:14] The peak end rule – where experiences are not about the sum of that entire experience over time. Instead, it is about how it was at its peak and how it ended.
  • [10:12] If something bad happened, it might be worth putting in some effort to make sure that is not the last experience and instead have it be a midpoint negative item if you can, that becomes outweighed by some very positive peaks over time.
  • [11:05] The tip of the tongue phenomenon. I am sure you have had this frustrating experience at least once – when you can almost remember something…and the word or phrase or moment or name of that movie is “on the tip of your tongue” – right? This is thought to happen due to blocking, when multiple memories that are similar to each other are being called upon at the same time.
  • [12:23] A false memory is when we accidentally think something we imagined really happened, and misattribute it as a memory.
  • [12:55] Think about selling – confidence is key to selling. Try and imagine what it would be like if you had done this successfully already, think through the whole memory to help make it as real as possible. When you believe it, that could make future selling easier.
  • [14:02] Our brains are powerful, but they are easily manipulated too.
  • [14:40] The illusion of truth effect. Essentially, people are more likely to believe something they have heard before – or are familiar with – than something they have never heard before (or are unfamiliar with).
  • [15:25] The opposite of a false memory is called cryptomnesia – when a real memory is mistaken as imagination because there is not the proper subjective experience of it being a memory.
  • [16:54] We kind of smooth and average things out. This is why we tend to remember high values, likelihoods and probabilities as lower than they were, and low ones as higher. This is known as the conservatism or regressive bias.
  • [17:39] You remember something that took a long time as not being as much as it really was, and because you are optimistic you will do even better the next time, you severely underestimate how long it will take.
  • [20:04] Don't bog down your consciousness with stuff that can be found easily. Make room for other stuff that can't be found easily.
  • [20:35] Repeated exposure over a long period of time is better than cramming it all in last minute.
  • [21:12] It's easier to remember something in the right context.
  • [22:23] It's easier to remember happy memories when you're happy and sad memories when you're sad.
  • [23:24] Repeating information out loud can help you remember it this is called the generation effect.
  • [24:38] Having the general message should be enough to help you remember.
  • [26:13] Note cards with images could help you remember.
  • [27:35] Stuff that takes longer to read and process is easier to remember.
  • [29:12] Put the most important things on the list at the end. This is because of the modality effect.
  • [30:21] In networking situations or in meetings…are you always waiting for someone to take a breath or pause so you can speak? That is a sign you aren’t really listening to others when they speak, because you are creating a next in line effect all the time.
  • [30:48] Being a good listener is key to building relationships in life and business.

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