Overconfidence costs cash Read online It's a new year, so I've revamped my newsletter. You'll find a lesson, example, and resource. It's easy to read yet informative. I hope you like it, let me know what you think. Lesson: Day Traders Lie We've all seen content like this online. It's the first result when I searched "day trading, how i made." It sells the idea that day trading could generate eye-watering riches. But what's the evidence? Researcher Terry Odean secured access to 78,000...
9 days ago • 2 min read
Power of the crowd. Do loud football fans influence referees? Will booing or cheering change an official's decision? In 2002, three researchers decided to find out. The researchers contacted 40 qualified referees and asked them to evaluate all incidents during a Liverpool vs Leicester City match. 20 referees watched the game WITH crowd noise 20 referees watched the game WITHOUT crowd noise It turns out that those who heard the home crowd noise were influenced. They award 15% fewer fouls...
16 days ago • 1 min read
The illusion of effort. Rory Sutherland shares the story of the highly successful Chamberlen family from the 1500s. Chamberlens acquired an extremely good reputation for delivering babies during difficult births — and charged a lot to do so. Their success lay in psychology. When called, the Chamberlens would arrive with an unbelievably heavy box hauled into the birthing chamber. The pregnant woman would have a blanket which covered everything below breast height. She could listen to the...
23 days ago • 1 min read
Toy motivation. In 1994, David Novak was promoted to Pizza Hut CEO. He wasn’t excited. "It was a graveyard for executives," he said. "Morale was down, business was down. It needed energy injected into the business.” The solution? A rubber chicken. Novak handed out a mini rubber chicken toy (and a relatively small cash bonus) to hundreds of high-performing employees. Not much of a gift, but a surprising impact. The tiny gift had a dramatic impact. "This took off like you wouldn't believe it...
about 1 month ago • 1 min read
It's not new. It's Black Friday today, and you'll undoubtedly see news articles and social posts lamenting modern-day consumers' unparalleled and insatiable demand. Yet, history suggests this isn't the case. David Grann shares what happened in Cherokee Outlet in 1893 in his book The Killers of the Flower Moon. “After the U.S. government purchased the land from the Cherokee, it announced that a settler would be able to claim one of the 42,000 parcels of land—if he or she got to the spot...
about 1 month ago • 1 min read
Well Done! You don't follow the crowd. Thank you for opening today’s email. Because psychology suggests you wouldn’t. There’s a psychological principle known as negative social proof. Definition = if you make an unwanted behaviour seem commonplace, more people will perform the unwanted behaviour. Few examples: “Visitors steal 5 tons a year” increased wood theft at an Arizona park (Cialdini, 1984) “Many miss their NHS appointments” increased no-shows (Martin, 2024) “Over 1,000 people will...
about 1 month ago • 1 min read
The best of Seth Godin I’ve got a bit of a love/hate relationship with Seth Godin’s books. A lot of it is fluff, but there are some pearls of wisdom. Penguin Magic Seth calls PenguinMagic.com the “Amazon for magic tricks.” So, how did this family-run site achieve such a feat? Well, by leveraging the curiosity gap. Humans are drawn to incomplete information, we love cliffhangers and click on clickbait. Penguin Magic must know this. Their website contains thousands of tricks, each with...
about 2 months ago • 1 min read
KFC or ZFC? This KFC ad is much-praised online. Yet, I think it's misguided. By promoting imitation fried chicken shops, I think KFC is doing something they might regret. To explain, I need to share a study. Titled: To be in Vogue, the researchers analyzed adverts from years in Vogue magazine for this study. The researchers wanted to see if middle-brow fashion brands could raise their prices if they competed with high-end brands like Gucci. In other words, is the Halo Effect so powerful that...
about 2 months ago • 1 min read
Bowles' bowl cajole. In the runup to Prince Charles' and Camilla Parker Bowles' April 2005 wedding, souvenir sales were disappointingly low. Shops from London to Windsor reported sluggish sales of tea towels, coffee mugs, and commemorative bowls. The British public wasn't fussed. But then overnight, demand changed. Suddenly, sales sky-rocketed, with Brits cleaning out shops and buying up all available stock. Did Brits suddenly change their opinions? No, the date changed. At time of writing,...
2 months ago • 1 min read
