Stories tagged loss

Mar
07
2008

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.