Mar
07
2008

Putting a dollar sign on loss

Sometimes it’s best to just let the door close.: Keeping your options open entails some very real costs--sometimes more than the option is worth.
Sometimes it’s best to just let the door close.: Keeping your options open entails some very real costs--sometimes more than the option is worth.Courtesy George Karamanis

“Keep your options open.” Sounds like good advice, right? Turns out, it has hidden costs.

Professors Dan Ariely and Jiwoong Shin at MIT ran an experiment to test rational behavior. Test subjects played a computer game. On the screen were three doors. If they clicked on a door, it opened. Click on it a second time, and a number would appear, and they would earn that much money. Click on a different door and it opens, but the first door closes. Some doors had higher average payoffs than others. The object of the game is to get as much money as you can in 100 total clicks. (You can play the game—without the money, sorry—here.)

Obviously, the winning strategy is to find the door that pays the best, and then keep clicking on it. But then the evil professors threw a curve. They presented a second version of the game, where the doors shrank and eventually disappeared if you didn’t click on them. Subjects would waste clicks keeping the lower-paying doors from disappearing. On average, they earned 15% less for the privilege of keeping their options open.

Ariely and Shin hypothesize that players kept the less-valuable doors open, even though it cost them money, to avoid the pain of losing the door forever. We all hate to lose things. But sometimes the cost of keeping them around is more than they are worth. The game is a good lesson in the value of just letting things go.

Your Comments, Thoughts, Questions, Ideas

zephyr's picture
zephyr says:

well i dont really get why people would make a game like this for peeople but ok, but i agree when they say you should let things go.

posted on Thu, 03/13/2008 - 9:52am
Gene's picture
Gene says:

The professor made the game as a test of human behavior. In real life, it's often hard to see how delaying decisions and commitments may cost you in the long run. In the game, it's pretty obvious. Nevertheless, people do tend to keep the doors open even though they can see immediately that it costs them money.

posted on Fri, 03/14/2008 - 10:32am
BLB's picture
BLB says:

It's a unique psychological way of teaching a lesson for the mind.

Yadadamean!!!

posted on Thu, 03/13/2008 - 10:06am
Candice_318's picture
Candice_318 says:

Wow i must be stupid because this makes no sense to me. I think i should keep reading it until it makes sense. But then again it won't what does picking a door have to do with anything... I played the game and didn't get the whole point... Call me immature but i think it's pointless... Sry kid

Candice
Sponsered in part by
IM AWESOME Productions

posted on Thu, 03/13/2008 - 10:08am
Gene's picture
Gene says:

No, I don't think you're stupid. I think maybe we just didn't explain it well enough. In life, you have to make decisions -- what job or career to pursue, what house or car to buy, whom to marry, etc. These are big decisions, and many people put off making them -- if you wait just a little bit longer, maybe a better job, a better house, a better person will come along. But, every day you spend not making the decision is one more day spent NOT having that great job, great house, great partner, whatever.

The game is a simplified version of that. The winning strategy is to quickly look behind each door, find out which one has the biggest payoff, and commit to that door for the rest of the game. But most people don't do that. They are so worried about losing an option that they keep the other doors open, even though it costs them points.

Try playing the game twice -- once trying to keep all the doors open, and the other time pick the best door early and just stick with it. You should see a higher score using the second strategy.

posted on Fri, 03/14/2008 - 10:41am
BLB's picture
BLB says:

I just played the game and I tend to keep my options open and it cost me points. its an interesting thing.

Yadadamean!!!

posted on Thu, 03/13/2008 - 10:12am
koallainfestation37's picture
koallainfestation37 says:

wow i never even thought about that
like how we have a hard time admitting to things or letting sertin things go
it really makes one think

posted on Thu, 03/13/2008 - 10:17am
DangYo's picture
DangYo says:

WoW!!
This sounds confusing...
This will only mess me up...
I rather play World Of Warcraft ^_^
Nd Yes!!! I said it...

posted on Thu, 03/13/2008 - 10:23am
LEE's picture
LEE says:

I think that it's funny how they make these games that are so weird, but fun to watch. It's also like a psychological way of teaching a lesson for the mind like BLB said.

posted on Thu, 03/13/2008 - 5:10pm
Brenna's picture
Brenna says:

i totallly agree with what your talking about!!!!!!!

posted on Fri, 03/14/2008 - 1:39pm

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