GLORY MILAR

Students at MIT wrote down the last two digits of their social security number, then bid on a bottle of wine. The ones with higher random numbers paid up to three times more — for the exact same bottle. Dan Ariely, "A Beginner's Guide to Irrational Behavior," Week 2, Relativity. Free, on Coursera and YouTube, nearly 200,000 people enrolled the first time it ran. Before the auction, students wrote their SSN's last two digits at the top of a page, then wrote that same number as a price next to a bottle of wine, a keyboard, a wireless mouse. Then they bid for real. Students whose numbers landed in the 80s and 90s bid, on average, three times higher than students whose numbers landed in the teens — on items they'd examined for the exact same amount of time, with the exact same information. Afterward, almost every student insisted the number hadn't influenced them at all. It had. Nobel laureate Richard Thaler later called it "an almost irresistible force" — people anchor on a number even when they watched themselves generate it at random, seconds earlier, from nothing. Ariely runs the same idea through a second experiment that's uglier and funnier: he shows students two photos of classmates and asks who's more attractive. Split roughly even. Then he adds a third photo — a slightly worse version of one of the two, a deliberately unflattering "decoy." Suddenly 75% of people pick the person the decoy resembles. Nothing about that person changed. The comparison did. That's the same mechanism restaurants use when they add one deliberately overpriced entrée to a menu just to make everything else look reasonable next to it. Marketing consultants charge real money to teach "anchoring strategy" as a trade secret. This lecture hands you the actual mechanism, and the actual data, for free. The lecture is free. Noticing which random number just became your anchor, before you bid, is the entire edge.