The Cherry Coke Effect?

Hunger Games

If you want a favorable decision from a judge pray that you get a hearing early in the day or straight after lunch.  In similar fashion you shouldn’t be making investment decisions on an empty stomach.  In the parlance, such arbiters of justice and seekers after profit are suffering from ego depletion; although we might perhaps just say that they’re hungry.

Anyway, ego depletion seems to have a real effect on our ability to make important decisions: we’re more likely to be decoyed, to procrastinate and to compromise over our decisions when we’re low in energy.  So this explains why Warren Buffett is such a good investor; it must be down to his addiction to Cherry Coke. Surely?

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Birds, Bees and Decoy Effects

Fleeced

If there's one message I hope to get across here it's that we're our own worst enemy when it comes to making decisions if we're anywhere in the vicinity of money.  If there's a second one it's that if we don't damage ourselves with our behavioral biases then someone else will try and do it for us.  Nowhere is this more evident than with the fiendishly devilish decoy effect.

The decoy effect was made salient by Dan Airely in Predictably Irrational, presumably as a warning for us all about the dubious machinations of marketing departments.  In a world where no good deed goes unpunished it's promptly spawned a thousand websites excitedly describing how to fleece their customers.  You've got to love the entrepreneurial spirit even if the moral outlook is distinctly cloudy.

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