The Two Big Strategic Mistakes That Investors Make
Research finds a discrepancy between what people plan to do when trading—and what they actually do.
The Two Big Strategic Mistakes That Investors MakePeople leave jobs, cities, or even lovers when the thrill wears off. But there may be an antidote, according to Chicago Booth’s Ed O’Brien and Ohio State University’s Robert W. Smith: injecting a little novelty into how you experience the familiar, rather than acquiring new things altogether, can reignite pleasure, they find. This may have significant implications from the personal to the environmental.
O’Brien and Smith explored the power of novelty in a series of experiments. In the first, participants came to a lab with the impression that they would learn to eat more slowly. Instead, they were asked to eat popcorn either with their hands or with chopsticks, and then to rate their enjoyment. The researchers find that people who used chopsticks derived significantly more pleasure from eating.
The effect was fleeting, however. When the researchers repeated the experiment with the same participants, those eating popcorn with chopsticks no longer derived more pleasure than the other group, suggesting that the novelty itself caused the increased pleasure in the first phase. “Chopsticks may boost enjoyment not because they represent an inherently superior way to consume but because they help provide an unusual ‘first-time’ experience,” the researchers write.
In another experiment, participants at home were instructed to think of five unusual ways to drink a glass of water. Their responses ranged from “drink out of a martini glass” to “lap at water with tongue like a cat” to “drink it out of a shipping envelope.” A third of the participants then drank water from a glass, a third picked oneof their unique ways to drink five sips, and the final third were asked to use a different unusual method for each sip. As the researchers expected, those who changed methods for each sip enjoyed each one more, while the two other groups’ pleasure declined with each sip.
The results could apply to almost any part of life, they write, adding that rethinking our relationship with possessions could positively affect the environment. Instead of dumping your phone, furniture, or even spouse for a newer model, consider first changing how you experience them. “Perhaps the ‘magic’ of first-time encounters,” the researchers conclude, “is felt not only when experiencing new things but when experiencing new perspectives on the things you already have.”
Ed O’Brien and Robert W. Smith, “Unconventional Consumption Methods and Enjoying Things Consumed: Recapturing the ‘First-Time’ Experience,” Personality and Social Psychology Bulletin, June 2018.
Research finds a discrepancy between what people plan to do when trading—and what they actually do.
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