What motivates you more: the desire to succeed, or the desire not to fail? Paul Graham mentioned in a talk on funding startups I saw at FooCamp that the fear of failure is a much stronger motivator than the desire for success. He says, "Fear of failure is an extraordinarily powerful force. Usually it prevents people from starting things, but once you publish some definite ambition, it switches directions and starts working in your favor." We live between success and failure, and, while we would all love to gain respect as one of the truly successful, we definitely don't want to be one of the biggest failures.
An interesting article in the NYT, Mind Games, talks about how the rational and emotional sides of our brain sometimes compete for control of our behavior when dealing with risky situations.
“The brain doesn’t like ambiguous situations,” Camerer said to me. “When it can’t figure out what is happening, the amygdala transmits fear to the orbitofrontal cortex.”
The results of the experiment (one where people were given MRIs while asked if they'd like to gamble 50/50 on either winning $150 or losing $100) suggested that when people are confronted with ambiguity their emotions can overpower their reasoning, leading them to reject risky propositions.
We will sometimes avoid big wins in order to avoid medium sized losses. In addition, we'll often prefer small emotional payoffs in the present to larger rational payoffs in the future.
If emotional responses often trump reason, there can be no presumption that people act in their own best interest. And if markets reflect the decisions that people make when their limbic structures are particularly active, there is little reason to suppose that market outcomes can’t be improved upon.
Consider saving for retirement. Surveys show that up to half of all families end their working lives with almost no financial assets, other than their entitlement to Social Security benefits. Saving money is difficult, because it involves giving up things that we value now—a new car, a vacation, fancy dinners—in order to secure our welfare in the future. All too often, the desire for immediate gratification prevails. “We humans are very committed to our long-term goals, such as eating healthy food and saving for retirement, and yet, in the moment, temptations arise that often trip up our long-term plans,” David Laibson, the Harvard economist, said. “I was planning to give up smoking, but I couldn’t resist another cigarette. I was planning to be faithful to my wife, but I found myself in an adulterous relationship. I was planning to save for retirement, but I spent all my earnings. Understanding this tendency stands at the heart of a lot of big policy debates.”
What can we do to avoid letting the counter-productive parts of our brains from getting the best of us? If we could battle it better and make decisions that were in our best interest, like being healthy, saving money, getting enough sleep, would we be a little happier? Or, not?
Link: The New Yorker: Mind Games.
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