Thursday, September 18, 2008

Close A Few Doors

Keeping too many options open is not always the best idea, according to "The Advantages of Closing A Few Doors" article in the New York Times. In the third century B.C. Xiang Yu, who took his troops across the Yangtze River, performed an experiment in decision making by crushing his troops pots and burning their ships. He explained this was to focus them on moving forward. In a series of experiments at MIT, students played a game that paid cash to look for money behind three doors on the screen. (you can play yourself, without pay, at Students were allotted 100 clicks and once they opened a door with the click of the mouse, each subsequent click earned a varying sum of money. The students could switch rooms to search for higher payoffs but each switch used a click. The best strategy was to quickly check all three rooms and stay in the one with the highest rewards.

A new feature was soon introduced to the students which baffled the students. If they stayed out of any room the door would shrink and eventually disappear. Instead of ignoring the shrinking doors, the students wasted time rushing back to reopen those doors that their earnings dropped 15%. The penalties for opening the shrinking doors increased (a cash fee was assessed) they still frantically attempted to keep all the doors open.

Another feature was added-the players had the option of making the door reappear at no cost if it had disappeared yet they still persisted on frantically preventing the door from disappearing. The players would probably say they were fixated with keeping their doors open because they wanted to try and keep their future options open. Dr. Ariely disagrees. They did not care about maintaining flexibility in the future; instead, they were motivated by the desire to avoid the immediate pain of watching a door close.

"Closing a door on an option is experienced as a loss, and people are willing to pay a price to avoid the emotion of a loss" says Dr. Ariely. The cost in the game was lost cash; however, the costs in life can be wasted time, missed opportunities which are less obvious.

Since conducting the experiments Dr. Ariely has made a conscious effort to cancel projects and give away his ideas to colleagues. He suggests we should resign from committees, prune holiday card lists, rethink hobbies and remember the lessons of door closers like Xiang Yu.

Sometimes you've got to say "no" instead of "yes" to build a stronger business.