There’s something satisfying about the close door button in an elevator, especially when you’re in a rush. However, it turns out that most of those close door buttons aren’t actually connected to anything; they have no effect. So why are they there?In this episode of Choiceology with Katy Milkman, we explore a quirk in the way people understand their ability to influence certain events.The 2002 Winter Olympics in Salt Lake City were a watershed moment for the Canadian men’s and women’s hockey teams. The men’s team hadn’t won a gold medal in 50 years, and the women’s team had never won gold, coming up short in prior Olympic events. The Canadians were facing powerhouse American teams, so they needed every advantage they could get.Enter Trent Evans. He was part of the Olympic ice-making team, though his allegiance was with the Canadians. During the initial ice making process, he marked the center of the rink with a small artifact in hopes that it would bring good luck to the Canadian teams. That artifact came to be seen by many as a key ingredient to success in the gold medal games.Broadcaster Peter Jordan covered the games for the Canadian Broadcasting Corporation and recounts the subterfuge involved in hiding the good luck charm. Peter was the host of the CBC television series It’s A Living for seven years.Good luck charms and superstitious beliefs are common, but generally easy to disprove. Still, this tendency to overestimate one’s influence appears regularly, even among skeptics.As an experiment, we had several volunteers roll a pair of dice in a simple board game scenario where they were aiming to roll a certain number to win the game. In almost every iteration of the experiment, our highly skeptical volunteers displayed this overestimation of influence.To learn more about the reasons for this behavior, we invited Don Moore to talk about his research on the phenomenon. Don is the Lorraine Tyson Mitchell Chair in Leadership and Communication at UC Berkeley Haas.To close the episode, Katy explores some of the contexts where this bias may impact important decisions in business and in life.Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast.If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts.Important Disclosures:All expressions of opinion are subject to change without notice in reaction to shifting market conditions.The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.(0919-9AR2)

If you’ve ever been through a home renovation, you know that it often takes more time or more money (or both!) than the contractor’s original estimate. But why is that? Experienced contractors renovate homes all the time. And yet they still regularly face delays and cost overruns. In this episode of Choiceology with Katy Milkman, we explore a tendency people have to be overly optimistic about what they can accomplish in a set period of time—starting with a story of the phenomenon playing out on a massive scale. The International Space Station (ISS) is a marvel of human ingenuity. It’s the largest manned object ever put into space. It orbits the earth every 90 minutes. It contains 8 miles of wire and is the third brightest object in the night sky. At a cost of well over $100 billion, it is also the most expensive object ever built. At the beginning of the project, however, it was expected to cost only a small fraction of that amount. Robert Godwin has written extensively about the ISS. He explains the tumultuous history of the project, which started as a relatively modest American plan to succeed the Skylab station and eventually becoming a massive international collaboration hampered by political and technical challenges. Godwin is the co-author of the book Outpost in Orbit: A Pictorial & Verbal History of the International Space Station. Astronaut Ken Bowersox was aboard the ISS during one of the most difficult periods of the project. He recounts the harrowing details of an emergency return trip to Earth after tragedy struck the American shuttle program. In hindsight, it’s easy to see how a project that involves international cooperation and cutting-edge technology could run into delays and cost overruns. However, this tendency toward over-optimism manifests itself even in simple projects back on Earth. As an experiment, we had several volunteers sit down, separately, with a child’s engineering toy. We asked them to estimate how long it would take to build a simple machine, using the included step-by-step instructions. The difference between their estimates and reality is telling. And this is a toy designed for 8-year-olds! Bradley Staats of the University of North Carolina’s Kenan-Flagler Business School joins Katy to discuss the mechanics of this bias and to give examples of a number of different domains where this tendency can cause problems. He also introduces some simple strategies to help reduce forecasting errors. Finally, Katy expands on some of those strategies in order to help you make better estimates around the time, effort and expense required to meet your goals. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc. (0519-9AY5)

Assuming you live in the northern hemisphere, which would you say is colder: a day in March or a Day in April? On average, of course, March is colder than April, but there’s probably not a big difference in temperature between March 31 and April 1. If you’re like most people, though, you put March days in the colder March category and April days in the warmer April category. It’s a useful shortcut, but it doesn’t always give you the best information about the temperature on individual days. This tendency to quickly categorize time, objects and people helps us to simplify a complex world, but it can also lead to important errors. In this episode of Choiceology with Katy Milkman, we look at the ways our snap judgments work for us and against us. First, Katy brings you a profile of Sophie Morgan, tracing her career path from relative unknown to reality TV model to lead presenter at one of the largest sporting events in the world. And you’ll find out what makes Sophie unique in her field. Next, we hit the street with a quick questionnaire to see how people make judgments when faced with uncertainty or incomplete information. You can try these questions yourself, before you listen: Question 1: William is an opera fan who enjoys touring art museums when he goes on vacation. He enjoys playing chess with his friends. Which is more likely? A: William is a professional violinist for a major symphony orchestra. B: William is a farmer. Question 2: Amy is 29 years old. She’s single, outspoken and very bright. As a student, she majored in English literature and was deeply interested in theater. Which is more probable? A: Amy is a bank teller. B: Amy is a bank teller and writes an arts review for her local newspaper. After revealing the answers to our questionnaire, Katy is joined by Modupe Akinola, of Columbia Business School and Dolly Chugh of New York University’s Stern School of Business to explore the functions and flaws of these types of judgments and the mental architecture behind them. Dolly Chugh is the author of The Person You Mean to Be: How Good People Fight Bias. Finally, Katy gives you some simple strategies to counteract some of the negative impacts of snap judgments and implicit attitudes. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc. (0519-9AKG)

Think about a time when something happened that just seemed meant to be. Maybe you had a feeling that your child would get into a certain college. Perhaps you just knew that your partner would forget to pack something important for your vacation. The question is, did you really know it along? In this episode of Choiceology with Katy Milkman, we explore a tendency to be overconfident in our predictions about events that have already come to pass. We begin with the story of the fall of France. In the early days of World War II, the French surrendered a mere six weeks after the German invasion. How did one of the great European powers fall so quickly? Shortly after the end of hostilities in France, historians began to construct a narrative to explain this rapid defeat. That narrative focused on unflattering perceptions of French society and culture at the time. Historian Julian Jackson of Queen Mary University of London explains the origins of this line of thinking. Then we hear from military historian and Distinguished Professor Emeritus Douglas Porch of the Naval Postgraduate School about the Mechelen Incident—an event leading up to the German invasion that could have easily altered the trajectory of the war. Next, we conduct an audio experiment to demonstrate this tendency to revise our own predictions. Along with our participants, you’ll hear a distorted audio clip and then the undistorted version. As you listen to the experiment, try to remember what it was like to be naive about the content of the clip. It’s not easy! Kathleen Vohs of the Carlson School of Management at The University of Minnesota joins Katy to discuss the broader implications of this bias on how we make important decisions. Finally, Katy provides some simple strategies to help you avoid falling prey to this bias. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc. (0419-9AJY)

Have you ever noticed that there’s something satisfying about seeing a car’s odometer roll over from 99,999 to 100,000 miles? Or maybe more likely, looking at a clock right when it hits 12:00 on the nose? What’s so special about these moments? In this episode of Choiceology with Katy Milkman, we look at quirk of human behavior that can lead, in some cases, to superhuman achievement. Katy brings you the story of Roger Bannister’s quest to break the four-minute mile—a centuries-old psychological barrier—and the great leaps in athletic achievement that followed his feat. You’ll hear the history of the four-minute mile from Jason Beck, author of The Miracle Mile: Stories of the 1954 British Empire and Commonwealth Games, and a curator at the British Columbia Sports Hall of Fame. You’ll also hear documentary interviews from Roger Bannister and John Landy about their famous race. You can see a photo of the stopwatch used in the Miracle Mile race here. The watch is permanently stopped at Roger Bannister’s sub-four-minute time. Next, we visit the rather more humble setting of a gas station to demonstrate how a preference for round dollar amounts is common, even when cash is not involved. Then, Devin Pope of The University of Chicago Booth School of Business joins Katy to discuss the psychological costs and benefits of goals and how round numbers can affect your motivation in different contexts. Finally, Katy provides some actionable intelligence on how you can use round-number goals to improve outcomes, whether that’s getting into college, saving for retirement or running a faster marathon. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. ( 0419-93J5)

If you’ve ever watched a TV crime drama, you’ve probably heard that eyewitness testimony is notoriously unreliable. A person commits a crime literally right in front of someone, but the witness can’t identify key characteristics of the perpetrator—or worse, gets the details wrong and implicates an innocent person. Why does this happen? In this episode of Choiceology with Katy Milkman, we look at the limitations of attention and perception. The episode begins with the description of a surprising experiment involving two teams passing basketballs. You can try the experiment here, even if you’ve already listened to the episode. Katy follows with the story of one of the most famous marketing blunders of all time: the introduction of New Coke by the Coca Cola Company. Mark Pendergrast, author of For God, Country & Coca Cola, recounts the history of the brand and takes you inside the company to explain how their executives came to a disastrous decision. Robert Teszka then demonstrates how magicians harness the limitations of an audience’s attention in order to surprise and entertain. Next, we hear from Dolly Chugh of New York University’s Stern School of Business and Max Bazerman of the Harvard Business School. They explain how this tendency to miss important information is systematic and predictable, and how it can negatively affect decisions in business and life. Dolly Chugh is the author of The Person You Mean to Be: How Good People Fight Bias. Max Bazerman is the author of The Power of Noticing: What the Best Leaders See. Finally, Katy offers simple strategies to help you expand your awareness and make better-informed decisions. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. (0319-92FV)

“For most things are differently valued by those who have them and by those who wish to get them; what belongs to us, and what we give away, always seems very precious to us.” –Aristotle In this episode of Choiceology with Katy Milkman, we look at the peculiar ways people tend to value the things they own. The episode begins with a tour of the Sports Immortals Museum. Owner and proprietor Joel Platt claims it’s the largest and most diverse assortment of sports mementos in the world. You’ll hear Joel tell some amazing stories behind a few of his most prized pieces—stories about Babe Ruth, Muhammad Ali, Honus Wagner, Jim Thorpe and Jack Dempsey. Joel spent decades collecting memorabilia, much of which he believes is priceless. But it turns out there’s a disconnect between Joel’s valuation and those of independent appraisers and potential buyers. Katy explores this disconnect with Nobel Prize–winning economist Richard Thaler, who describes his inspiration to identify and measure the bias that can cause people to overvalue things they own. Richard Thaler is the co-author of Nudge: Improving Decisions About Health, Wealth, and Happiness. Sally Sadoff of the Rady School of Management at UCSD joins Katy to discuss her research on performance bonuses for teachers. She explains how the effectiveness of these incentives can change dramatically depending on whether teachers are given the bonuses at the beginning of the school year or at the end. And it all has to do with how teachers perceive ownership of these bonuses. Finally, Katy harkens back to the first episode of the season to explain some simple strategies to reduce the negative aspects of this bias. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. (0219-8W35)

Netflix recommendations, Amazon suggestions, Google searches, airline ticket prices, your social media feed. All of these things are driven by algorithms—computer models that crunch massive amounts of data to generate useful results. These types of online algorithms are commonplace and so, generally speaking, we’re used to them. But what about the algorithms behind self-driving cars or airplane autopilots? What about algorithms used to predict crimes or to diagnose medical conditions? These are domains in which it often feels uncomfortable to let a computer model make what could be life-or-death decisions. In this episode of Choiceology with Katy Milkman, we’re exploring the places where algorithms and computer models bump up against resistance from their human users. Seeing as it’s Super Bowl season, it seemed like a good time to revisit last year’s contest as a case study in decision making. The 2018 Super Bowl champion Philadelphia Eagles played incredibly well against the formidable New England Patriots. The game could have gone either way, but the Eagles had a secret weapon that gave them an advantage. We speak with Michael Kist from Bleeding Green Nation on the Eagles’ integration of computer models for decision making both on and off the field. You’ll hear the story of how those models were temporarily abandoned and the team struggled before re-embracing them. Next, we explore the way self-driving cars make split-second decisions on the road, with results that can make their human passengers squirm. We test whether or not giving people a small amount of control over how a self-driving car behaves gives those people a bit more confidence about the technology. Then Katy speaks with her Wharton School of Business colleague Cade Massey, who explains some of the fascinating ways that algorithms have improved decision making and looks at some of the scenarios where algorithms face an uphill battle for acceptance. Cade Massey is a partner in Massey-Peabody Analytics. Finally, Katy recaps the ways that people designing—or simply using—algorithms can work to overcome our human tendency toward machine mistrust. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. (0219-8M84)

Have you ever seen a cloud overhead that looks very much like, say, a rabbit? Or maybe you’ve found a potato chip that had an uncanny resemblance to Elvis, or a cornflake that was almost exactly the shape of the state of Texas. What are the chances? In this episode of Choiceology with Katy Milkman, we explore curious events and mysterious patterns in order to reveal the human habit of ascribing meaning to randomness. Andy Marocco of the Naval Air Station Fort Lauderdale Museum joins Katy to revisit some of the most famous and enduring unsolved air and naval mysteries that have occurred inside the “treacherous” Bermuda Triangle. You’ll hear about several famous disappearances, with a focus on the harrowing tale of Flight 19 in which several planes and airmen vanished without a trace. Next, we conduct a simple experiment--or is it a magic trick?--involving a series of coin tosses. Our game master will attempt to identify a truly random list from a pile of imposter lists, using nothing but mental prowess. (If you’re still skeptical about how “lumpy” randomness is, just notice how many possible outcomes of four coin flips include either three heads or three tails in a row: HHHH, HHHT, HHTH, HHTT, HTHH, HTHT, HTTH, HTTT, THHH, THHT, THTH, THTT, TTHH, TTHT, TTTH, TTTT.) Then we hear from Cornell University psychology professor Tom Gilovich about randomness as it pertains to iPods, jellybeans, faces, and canals on Mars. Finally, Katy Milkman offers tips on how basic statistical analysis can help you make better decisions. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. (0119-8TSV)

For many people, the start of a new year is an occasion to re-examine their lives, to set new goals and to give up old habits. Making New Year’s resolutions is something of a social ritual, but we see similar behaviors around other significant dates, as well--such as birthdays and anniversaries and the changing of seasons. And while it can be argued that all of these dates are arbitrary, studies show that they can still give you a head start in achieving your goals. In this episode of Choiceology with Katy Milkman, we examine the common but not always rational phenomenon whereby people divide their lives into chapters. We look at ways to leverage this phenomenon to make better choices. The episode begins on a riverbank, with a religious rite symbolizing rebirth and renewal. Next, we hear about Ray Zahab’s life changing New Year’s resolution. What began as a simple plan to live a healthier lifestyle ended up taking him on incredible adventures all around the world. Ray is the author of the book Running For My Life. From Ray’s story of personal transformation around an auspicious date, we pivot to a related tendency for people to separate their money into mental accounts. Money, like time, is fungible--one dollar is as useful as any other dollar--and yet people often divide their money into different categories. Why? Nobel laureate and best-selling author Richard Thaler explains the value of this cognitive bias and explores some of the peculiar behaviors people exhibit when they earmark their money for different purposes. And John Beshears of the Harvard Business School describes a study that exposes this bias in the way people perceive the value of grocery store coupons. Finally, Katy Milkman offers additional tips on leveraging these temporal landmarks and personal budgets to help you stick with your resolutions. Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast. If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts. Important Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. (0119-8C4W)