Think Design : The Sunk Cost Fallacy

Have you ever watched a crappy movie all the way to the end? Have you ever stayed in a bad relationship? Finished your college degree even though you disliked the major you chose? Stayed at a job that you hated? Held onto a stock that kept going down? Kept playing a terrible game because you figured it just had to get better at some point?

If any (or all) of these is true, don’t worry about it. The reason we do these things is because of the Sunk Cost Fallacy, which says that once we’ve invested in something, we have a tendency to stick with it because we don’t want to ‘waste’ everything we’ve put in.

It’s important to note that the ‘cost’ here can be money, time, emotion, or effort. We value all of these things, so investing one or more of them into something creates that sense of cost.

“I don’t really want to go to this wedding either. But we already RSVP’d, and we marched all this way…”

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Think Design: The Endowment Effect

Close your eyes, and… No, wait! Don’t close your eyes, or you won’t be able to read this post.

Okay, keep your eyes open, definitely keep your eyes open. Now imagine your home. Imagine walking through it, from room to room. See your belongings exactly as you have them. Your furniture, artwork, electronics, clothes, everything. Now think of something you own that is valuable to you. Got something in mind? Great. How much would you sell it for? If it’s something really valuable to you, maybe you wouldn’t sell it for any price. Maybe you feel it has sentimental value. Part of what creates this sentimental value is the Endowment Effect.

The endowment effect says that we value things more when we own them. This is why home sellers often think that realtors and buyers are undervaluing their house. It’s also why we sometimes have a hard time lending books, movies, or games to friends. Because once we own something, it’s no longer a house or a game, it’s our house or my game.

I’m not sure if I want you borrowing my car – it’s a classic.

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Think Design : Anchoring

Most blog posts take about 15 minutes to read. This one should only take you about 5.

Today, we’re taking a look at another concept that affects the decisions we make. And I’ll warn you now: even when you know of this effect, it will be almost impossible to avoid falling for them.

Imagine you are going to donate to a charity you support. How much would you give:

  • $10
  • $25
  • $100
  • $500
  • $1000

I’m going to guess you chose either $10 or $25. Very few would choose $500, and almost no one would choose $1000. The reason is anchoring. When we have a few options to choose from, we often use an anchor as a kind of reference point, and compare the other options to it. In this case, the first number we see is $10, so we compare the other amounts to $10. Here, even $100 seems a lot when compared to $10.

But imagine if the order was reversed:

  • $1000
  • $500
  • $100
  • $25
  • $10

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Think Design : Alternative Blindness

 

Okay, pop quiz. You just inherited $50,000. Do you:

a)    Invest the money and spend it later.

b)    Spend most of it now on stuff you’ve wanted for a while.

Congratulations to anyone who invented their own option c) and chose that instead.

When we are presented with either/or choices, we often fail to think outside the box and look for other alternatives. This is called Alternative Blindness, and it can make us miss some great ideas in favor of ones that are just so-so.

You may have heard of a little challenge called the candle test: You’re at a table in the corner of a small room. On the table, there’s an ordinary candle, a book of matches, and a box of thumbtacks. Your challenge is to light the candle so that it can burn down without dripping wax onto the table.

Figured it out? Here’s the answer:

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Think Design : The Overconfidence Effect

I’m going to make a prediction. If I’m right, you have to read the rest of this post. Deal? Okay, here goes…

If you work in the games industry, you have been on a game project where at least one of these things happened:

  1. You had to cut features.
  2. The game went over schedule.
  3. The game went over budget.

I knew you’d still be reading. Almost every project in our industry suffers from one or more of these outcomes because of something called the Overconfidence Effect.

Here’s a challenge for you: The Sydney Opera House began construction in 1959. The original estimate stated that it would be completed in 1963 for a total cost of about $7 million. When do you think it was actually completed, and how much do you think it actually cost? Try to be accurate. I’ll give you the answer later.

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Think Design : Cognitive Dissonance

Has this ever happened to you? You saw a job posting, and it sounded perfect, like they copy/pasted your resume as their ideal candidate. You applied, landed the interview, and aced it. You pictured yourself and the company running and leaping toward each other on a beach – in slow motion. You told all your friends how awesome it was going to be to work there, and you were so excited you checked your email every twenty minutes for the offer letter.

Nailed it! I’m like the Rocky of business.

But the offer didn’t come. And so you waited. Eventually, you emailed yourself to make sure your email was still working. It was. So you sent the interviewer a quick message to make sure you didn’t miss an email. The interviewer wrote back, and you opened the email expecting to see an apology and the offer letter, but instead you read that they went with someone else.

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Think Design : Social Proof

Update: Wow, apparently this article is one of the most read posts on the VFS Arcade!

GTA V just came out. Tons of people will buy it. New console launches are happening within the next few months. If you’re anything like me, and I think most gamers, you will feel compelled to buy most or all of these things as soon as you can. Why? Because of something called Social Proof. (Admittedly, the force of In-Group Out-Group Bias is also at play here, but we’ll leave that for a future post.)

Will anyone not buy this game?

Social Proof says that we tend to do what others are doing. Further, it says that as more people do something, it becomes increasingly likely that we will do that same thing. For example, imagine you go out to dinner with some friends. If someone puts her napkin in her lap, you might ignore it. If a few other people at the table decide to put their napkin in their laps, you will feel very tempted to follow suit. If everyone else has done it, you will almost certainly put your napkin in your lap. And at the end of the meal, if they all order dessert, you will be more likely to do so, even if you feel full. Read More

Think Design : The Fear Of Regret

The Fear Of Regret

This post will be up for today and tomorrow only, so read NOW to learn valuable secrets so that you will never feel regret again!

Okay, probably not. But it kept you reading, right?

Last chance offer! Buy now, supplies are running out! There’s a lot of interest in this property, so if you like it, you better act fast! Call in the next 20 minutes and we’ll double your order!

We’ve all heard messages like these. They are intended to tap into our fear of regret, and panic us into taking action before it’s too late. In fact, it’s pretty much what the infomercial industry is built upon.

This ad is clearly preying on our fear of regret.

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Think Design : The Paradox Of Choice

A New Series Begins

Welcome to the first in a new series here on the VFS Arcade! In Think Design, we’ll be taking a look at some cool theories in human psychology that can help us design better games. Some of the questions we’ll tackle in upcoming posts include:

  • Why are teams always so confident that their new game will be a hit?
  • Why is it good to play games you hate?
  • Why do some people spend thousands of dollars on free to play games?
  • Why, oh why, do we always have to cut features and still do overtime?
  • Plus many more!

Today, we’ll be looking at how to buy jam, why you seem to always have unused talent points in Skyrim, and why you probably didn’t love your last restaurant meal.

 

The Paradox Of Choice

Let’s start with the Paradox of Choice. If it sounds familiar, you may have seen this great TED Talk by Barry Schwartz.

The Paradox of Choice essentially says that humans like choice, but only up to a point. Past a certain number of choices (usually around 6), we become overwhelmed and can’t easily make decisions. Ever heard the expression ‘analysis paralysis’? It describes what happens when we are faced with too many choices: we become so overwhelmed with analyzing our decisions that it paralyzes us from actually making a choice. We get stuck in the analysis phase.

Good luck – at least 29 different cheesecakes available, plus other desserts!

 

So if too much variety is a bad thing, why do we want more choices? Because we equate choice with freedom. Choice gives us the possibility of getting exactly what we want. But with too much choice, we don’t get freedom – we become trapped in a prison of indecision. Read More