Price Tag Can Change The Way People Experience Wine, Study Shows (Science Daily)

- According to researchers at the Stanford Graduate School of Business and the California Institute of Technology, if a person is told he or she is tasting two different wines—and that one costs $5 and the other $45 when they are, in fact, the same wine—the part of the brain that experiences pleasure will become more active when the drinker thinks he or she is enjoying the more expensive vintage.

- “What we document is that price is not just about inferences of quality, but it can actually affect real quality,” said Baba Shiv, a professor of marketing who co-authored a paper titled “Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness,” published online Jan. 14 in the Proceedings of the National Academy of Sciences. (Note: link here)

This Stanford article provides an overview of his research: click Here.

- “The belief in the academic field is that emotions are essential to decision making, otherwise you’ll end up making bad decisions,” Shiv says. “But,” he adds, explaining his huge contrarian streak, “I can show the opposite as well, that brain-damaged patients can make better decisions than normal individuals.”

- So what’s going on—are emotions beneficial or detrimental to good decision making? There’s no simple answer except, “It depends.” But on what? In making choices, when is it better to think things through and when should you go with your gut? And given that we have both modes of decision making at our disposal, why do we sometimes give in to our impulses even when we know better, while other times we show more self-control?

- “For example, Shiv worked with Ariely (and Ziv Carmon of INSEAD) on a series of studies that found a strange price-placebo effect: When participants bought an energy drink at a discount, they actually performed worse on a puzzle-solving task than participants who had paid full price for the same drink.”

Implication: perhaps we have to learn how to “placebo” ourselves at will, as part of effective emotional self-regulation. And not to let marketeers control our beliefs.

We asked Prof Shiv today for a practical suggestion to increase happiness among drinkers of cheap wine: “Have retailers who sell lower priced wines to have tasting ratings of experts so as to divert attention away from price to the ratings”, he suggests.

Feel free to experiment around this surprising effect. In moderation, please.

Their Alumni News Service recently interviewed me and published this great article on SharpBrains. The writer does a superb job of providing an overview of what we do, so I recommend you read it. I’d like to emphasize the following quotes for anyone looking for jobs these days, so that “brain exercise” is part of the equation:

• “Alvaro has some very high praise for the mental gymnastics that the McKinsey experience provides.  Given that the frontal lobes in our brain (behind the forehead) only mature in our late 20s, he says, the jobs we take in our early and mid-20s are very important not only for our career prospects, but also for our brain development fitness. This is the stage in our life where, consciously or not, we can improve our decision-making, initiative and self-regulation abilities, all of which literally affect the physical growth of our frontal lobes in a significant way.”
• “Joining McKinsey as a BA is literally like joining a brain gym,” Alvaro says. “The demands of the ‘McKinsey model’ – hypothesis-driven problem solving, 80/20 sequencing rule, issue tree logical analysis – supported by a very structured performance review process, contributes to the development of the frontal lobes, where these so-called Executive Functions reside.”
• “It is important to continue developing our brains beyond our 20s, however. Neuroscientists have shown that adults retain neuroplasticity (the ability of the brain to rewire itself through experience) and neurogenesis (the creation of new neurons) every single day of our lives. Factors such as well-targeted mental stimulation and physical exercise enhance these capacities, while, conversely, long periods of stress and anxiety inhibit them.”

Have you had similar experiences with your jobs?

Some related posts:

Use It or Lose It: what is It?

What do successful Traders and Students have in common

Executive Functions and MacArthur “Genius Grants”

If you haven’t read Dawkins’ classic book The Selfish Gene…it is never too late to enjoy it!

There are some “memes” floating now around bloggers and I have been “tagged” (included) by 2 of them. So here you have:

1) On good daily habits: this is the original post, and here are Hueina’s My Simply Successful Secrets.

My “Simply Sucessful Secrets” habits that I follow close to every day, in more or less that sequence:

• Perform 10-15 minutes of breathing exercises to improve grounding, balance, and breathing capacity
• Spend 10 minutes visualizing and writing down the key objectives for the day
• Eat a nice and healthy lunch-never in front of the computer
• Read something completely unrelated to my work in the evening
• Kiss and compliment my wife before going to sleep-never go unhappy/ stressed to sleep

2) On “5 things you may not know about me”. Senia: thanks for your patience…

• I defined myself as a “Learning micro-organism” in the Stanford class that probably influenced me the most. I love learning, and learning about learning-which is what led me to learning about how the brain works
• Originally from Bilbao, in the Spanish Basque Country, and very proud of it, I am now very happy to be living in the global community of the San Francisco Bay Area
• When I was working very very hard in consulting company McKinsey & Company, I started to take salsa dancing lessons-probably one of my wisest decisions ever
• The other one was to marry my wife Lisa and celebrate a World Wedding Tour to share the party with friends…instead of asking everyone to come to meet us, and given how much we love to travel…we decided to take the wedding on the road, including printing some tour T-shirts…
• My role models are the social entrepreneurs, many of them friends by now, who devote their lives to solving social problems in very pragmatic and scalable ways. My wife and I have been active in networks such as Ashoka and The Schwab Foundation for Social Entrepreneurship, so I am then very proud that SharpBrains has just been nominated for the The Tech Museum Awards – Technology Benefiting Humanity.

I tag, for both memes:

• Bora from A Blog Around The Clock
• Brett from Trading Psychology
• Michelle from Trading Mike
• Stephanie from idealawg
• Jane from NakedMedicine

Enjoy the final hours of the weekend!