December 13th, 2012Top Story How Your Brain Corrupts Your Shopping Choices By Thorin Klosowski Ever come home from a day of shopping and wondered why on earth you purchased certain items? As it turns out, our brains corrupt our shopping choices to the point that we barely know what we're doing. Here's what's happening and what you can do about it. We've talked about the stupid things you do when shopping before, but those are just part of the problem. The other big issue? You have cognitive biases that sabotage your decisions, cause you to waste money, and buy things you ay not even really want. Let's dig into a few of the worst ways your brain corrupts your choices when when you're shopping. Confirmation Bias Causes You to Waste Money on Things You Don't Need Confirmation bias is one of the worst biases we have. You believe your opinion is based on years of objective analysis, right? In reality, your opinion is nothing more than the a collection of information you choose to pay attention to. Confirmation bias is when you only believe information that conforms to your prior belief and you discount everything else. It's the reason hard-lined Republicans watch Fox News and hard-lined Democrats watch MSNBC. Confirmation bias colors your decisions in everything ranging from politics to science, but it's just as impactful on your shopping choices. As financial blog The Simple Dollar points out, confirmation bias is used by advertisers all the time to affect your decisions: Let's say you've seen repeated advertisements and product placements that convince you that a particular product is really cool. You go into a store, see it on a well-designed display, and find yourself really wanting this item you don't need. You sigh, decide that you can probably afford it, and head to the checkout aisle. It's not just gadgets that trick your confirmation bias, it's pretty much everything. Take the common cold as an example. As we've talked about before, most "alternative" treatments for a cold, like Vitimin C and zinc, aren't as well proven as basic home remedies. People still believe they work so strongly because they've been told as much for most of their lives. You end up wasting money on something with no proven benefit because you're unwilling to believe evidence to the contrary. With shopping especially, confirmation bias also causes you to narrow your research to positive results that conform to your previous opinion. The main way to counter this is to keep an open mind, research through a variety of sources, and if the data tells you you're wrong, accept it and find another product. The Decoy Effect Confuses You Into Thinking You're Getting a Deal The decoy effect is one of the toughest biases to see because it's essentially a marketing trick. Basically, it's when we change our preference for a product when an expensive product is right next to it. In his book Predictably Irrational: The Hidden Forces That Shape Our Decisions, author Dan Ariely shares this example: When Williams-Sonoma first introduced a home "bread bakery" machine (for $275), most consumers were not interested...Flustered by the poor sales, the manufacturer of the bread machine brought in a marketing research firm, which suggested a fix: introduce an additional model of the bread maker, one that was not only larger but priced 50 percent higher than the initial machine...Sales began to rise, though it was not the large bread maker that was being sold...people didn't have to make their decision in a vacuum. They could say: "Well, I don't know much about bread makers, but I do know that if I were to buy one, I'd rather have the smaller one for less money." Here's another way to put it using this years supposed hottest gift: the tablet. You might have no interest in a tablet at all, but when you have the iPad priced at $499 and the smaller Kindle Fire at $159 right next to each other, you're going to buy the cheaper, smaller one. You might even say to yourself, "Well, I don't know much about tablets, but I do know that if I were to buy one, I'd rather have the smaller one for less money." In most cases, a little bit of research on a product can counteract the decoy effect. It's also important to ask yourself if you're purchasing something you actually want, or if you're just buying it because you think you should. Photo by Intel Free Press. Hyperbolic Discounting Makes You Buy Items Right Now Because You Can't Wait Hyperbolic Discounting is a biases that we've probably all fallen for, knowing full well we were falling for it. Essentially, hyperbolic discounting is when you prefer an option that arrives sooner rather than later. So, lets say you're standing in a store and you see that a piece of software you want is 25% off. You know for a fact you can order it from Amazon for 50% off, but you don't want to wait. You want the software right now, so you buy it from the store at the higher price instead of Amazon. Fortunately, this is one of the biases you can really fight against. If you start comparing prices before you're actually in a store (although these mobile apps can help you in the store as well), you have a better chance of putting everything on the same delivery timeline. Two day shipping from Amazon to save 50% sounds pretty good when you're sitting at your computer and thinking about the commute to the store. If you know the variation on prices beforehand, you're more likely to not worry about getting it immediately. Photo by Roger Price. Restraint Bias Makes You Believe You Actually Have Control Over Impulse Purchases Restraint bias is when you overestimate your ability to control impulsive behavior. You believe you can control your impulses all the time when in fact you're pretty horrible at it. On its own restraint bias is just an annoying quirk of your brain, but when it's coupled with shopping (or any addiction) it means you're more likely to buy things on a whim than you think you are. As science writer Ed Yong points out, the more control you think have over your impulses, the more likely it is you'll lose control. So, let's say you walk into an Apple store, because you want to "just check out" a new iPad. You believe that you have the restraint to not actually buy one, but when you get there and start playing with it you convince yourself to buy it on an impulse. You tell yourself you'll do it "just this once." Later that day, you head to the grocery store and in the checkout lane you start flipping through People Magazine. You decide to buy it "just this once" because you never succumb to your impulses. And so on, and so on. The easiest way to fight against restraint bias is to simply not put yourself in situations where you're challenging your self-control. While you can boost your self-control with practice, it's best to not believe you're in control in the first place and stay away from those situations. Photo by Gord Webster. Anchoring Makes You Believe the Worth of All Items Based on the First Anchoring is a bias where you rely on the first piece of information you see to set the standard for all the information that follows. For example, if you see that Apple sells their iPad for $499 then you believe that's a fair price for all tablets. In fact, we usually have no idea what a product is worth, and the first company that throws out a number sets the standard for everything else. Unfortunately, that's not all. That anchor works across different products as well. The Atlantic shares one story about how a store can adjust your anchor: You walk into a high-end store, let's say it's Hermès, and you see a $7,000 bag. "Haha, that's so stupid!" you tell your friend. "Seven grand for a bag!" Then you spot an awesome watch for $367. Compared to a Timex, that's wildly over-expensive. But compared to the $7,000 price tag you just put to memory, it's a steal. In this way, stores can massage or "anchor" your expectations for spending. Anchoring works in pretty much any type of shopping experience, from the housing market to groceries stores where everything is always "discounted" from an manufacturer's suggested price. The worst part? Anchoring is really hard to avoid even when you know you're doing it. Like most of these biases, the best thing you can do is acknowledge it exists and challenge your thought process as often as possible. Photo by Jason Meredith. Choice-Supportive Bias Causes You to Make Stupid Decisions Based on Nostalgia Choice-supportive bias is when you only remember the positive attributes of a choice you made in the past. It's part of the explanation behind brand loyalty, and whether you realize it or not, it colors every future decision you make in a bad way. So, let's say you've worn Converse since childhood, and you continue to purchase them despite the fact they don't seem to last as long as they used to. Your nostalgia for that original purchase, combined with how your memory is blinded by choice-supportive bias causes you to keep buying those same shoes even though you're consistently disappointed with them because you only remember the positive qualities. The only real way to fight this is to get yourself out of the rut of purchasing the same products, try out different brands, and research other options. Photo by Jacob Bøtter. The most interesting thing about our biases is the fact they all work together to sabotage our basic thinking and decision-making skills. The worst part is that collectively, we all believe we don't have these biases to begin with. In this case, it's best to simply recognize you have these biases, and keep them in mind when you're out shopping. Title images by CLIPAREA (Shutterstock) and Mushakesa (Shutterstock). Click to view

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