Ep8 "How does your brain decide what to buy?"

Published May 15, 2023, 10:00 AM

What’s happening when you stand in the supermarket aisle and stare at the shelf full of options? It may not look like there’s much going on from the outside, but inside there’s a war of networks raging. How is your brain's decision-making influenced by price, emotions, and your group of friends? How would you choose between a nice candle and a chocolate bar in the shape of a computer keyboard? And what does any of this have to do with Starbucks or Tiger Woods or Burger King? 

So what's happening in your brain When you stand at the ice cream aisle at the store and you stare at all the different options. It doesn't look like there's a lot going on there, but inside there is a war of brain networks.

That are raging.

So how does your brain make its decision about what it's going to buy? And how is that influenced by price, by your emotions, by your group of friends. How do you decide whether you'd rather have a chocolate bar in the shape of a computer keyboard or a nice candle? Was an integrated match tickholder? And what does this have to do with Starbucks or Tiger Woods or Burger King. Welcome to Inner Cosmos with me David Eagleman. I'm a neuroscientist and an author at Stanford University, and in these episodes we say fail deeply into our three pound universe to understand why and how our lives look the way they do. Today's episode is the second part of a three part series.

We're looking at how the.

Brain is a machine built of networks that live in conflict. In the last episode, we saw that your brain is a team of rivals. You have different networks with potentially opposing opinions, and they all compete to steer the ship of state. And today we're going to see how these rivaling networks determine how we decide what to buy, like which ice cream brand or which car brand, how much should something cost? How do you get steered or manipulated by emotions? And does it matter if your friends think something is cool or lame. We're going to see how an understanding of the brain exposes how we make our daily decisions. As we found out in the last episode, different networks in your brain care about different things, and brain scientists all over the world have used imaging technologies to see what the brain is up to when we are faced with decisions like decisions about which fast food restaurant you're going to choose on the block, or which shirt to buy, or which internet service provider you're going to sign up with. So let's start with the field of economics. All of us who studied some economics in college learned how humans make decisions, or that's what we thought we were learning, But what we were actually learning was an idealized version. We learned about Homo economicus, which is a rational decision maker, and that decision maker always works to maximize gain and minimize loss, and he's objective, he's able to delay gratification. His decisions about what to buy are unswayed by his emotions. And by the way, if you put him in the same situation twice, he'll behave consistently. But imagine I offer you two generic courts of Rocky Road ice cream, and for one, I'm charging you two dollars fifty cents. For the other one, I'm charging you three dollars twenty five cents. As far as you can tell, it's the same ice cream inside. So if you're an economist, if you're homoeconomicist, the choice is easy. It's straightforward. But now imagine that I rotate the courts so you can see the labels, and one says Ben and Jerry's and one says Hoggen Dawes. So which one do you take?

Now, Well, it's not so straightforward for real humans, because suddenly there's branding and the emotions that you anticipate from eating these and what your friends think of these brands, and all your past experience with these brands, and all this has led, in the last thirty years or so.

To a new field called neuroeconomics. It's also known as behavioral economics, and it comes down to the fact that we have generally misunderstood how humans actually make decisions. So psychologists and neuroscientists have been running experiments for decades now to get a realistic understanding of the way people actually behave rather than the way they're supposed to behave. And what has emerged from this field is that real humans are irrational. We care about immediate gratification, We ignore consequences. Our decisions are massively swayed by our emotions.

We behave and.

Consistently not making the same decision each time. We're easily confused by calculations about risk. We're always influenced by branding. So this is what we're going to talk about today. How an understanding of the team of rivals in the brain gives a clearer picture of how we behave. As we talked about in the previous episode, you are not an individual. In other words, you're not a single program that's running. Instead, your brain is made of competing pieces and parts, a society of mind, and these are always battling to control your decisions. The outcome of the battle determines what you do in the world. So, for example, if I take some warm chocolate chip cookies out of the oven and place them in front of you, part of your brain says, great, that's a good source of energy. Another part of your brain says, don't eat them, you'll get fat. Another says, Okay, I'll eat them this time, but I promise I'll go to the gym tonight. And you can argue with yourself and eventually get mad at yourself for your decision. You can curse at yourself, cajole yourself, and as we'll see in the next episode, you can even make contracts with yourself.

But who is talking with whom? Here? It's all you, right, but it's different parts of you.

And this is the sense in which humans can be conflicted. Now, there are lots of drives that you have, but today we're just going to concentrate on three of the main networks that have come out of the last couple of decades of brain scanning experiments. And these three networks are among the biggest drivers of your decision making when you're standing in the store. The first network that we're going to talk about cares about the price of something. It's made of a couple regions that sit on the side of your brain in the northern part here above where your ears are. The second network cares about the emotional experience, or more specifically, the anticipated emotional experience. This is located on the part of your brain just above your eyeballs.

This is called the orbitofrontal cortex.

Because it's just above the orbits of the eye and the frontal lobe. And this network cares about things like what will these chips taste like compared to these Will they be delicious or gross?

Will this make me happy? Regretful? And the third network.

Responds to social context, as in do my friends think this is cool or lame? And these regions right along the midline of your brain between the two hemispheres near the top. So I'm going to tell you this story in three acts, one about each of these networks. So let's start with the first, which is about how much you think something is worth. A great book that summarizes the psychology of this is predict to Be Irrational by my colleague Dan Arieli, and I'll use some examples from that. So let's say you're in the market for a pair of Bluetooth headphones and you find it at a local store and they're charging twenty nine dollars, so you think great. So right when you're about to buy it, I ring you up on your phone and I say, hey, I'm two blocks away and I just found that headset you've been looking for for nineteen dollars, so it's ten dollars cheaper. The question is will you walk over to where I am to buy the nineteen dollar headset instead of the completely overpriced twenty nine dollars. Now, let's say you're in the market for a new cell phone and you find the one that you want at this store and it's for five hundred and sixty seven dollars, and right when you're about to purchase it, I call you and I say, hey, I'm two blocks away and I found that phone you're looking for for five hundred and fifty seven dollars, ten dollars cheaper. The question is are you going to walk all the way over two blocks to save ten dollars five hundred sixty seven dollars versus five hundred and fifty seven dollars. Now, the thing to notice is that these two scenarios are exactly the same. I'm asking is ten dollars worth the walk, or isn't it. It's the same ten dollars either way. But in the first case, most people will do it to pay nineteen instead of twenty nine. And in the second case, almost nobody's gonna make that walk two blocks just to pay five point fifty seven instead of five to sixty seven. And this illustrates an important point, which is that nothing is judged by itself. Everything is judged in context. You are not homo economicus. Okay, Now I'm gonna make you an offer. You can have one of two things. I'm either gonna give you a chocolate bar shaped like a computer keyboard or a candle with a little drawer built into it that holds magticks. So which one are you going to take? This is a difficult decision, right because how do you translate these into a common currency so you know which one has more value to you. The reason this is a challenge is because everything has to be converted into a common currency to make a comparison, and this has to happen at the level of neural activity, and that's tough when you have such different items. This is the same if I give you some other comparison like I'll give you three apples, or a case for your sunglasses that shaped like a hot dog? How do you convert that into a common currency to make a direct comparison. So what the brain is always looking for is context. It can't make a decision about the value of something unless it can do a direct head to head comparison. And this ends up being an important clue for people who are trying to sell you something because none of us know how to price something, so we need to be told. So here's an example. This happened with Williams Sonoma some years ago. They introduced a home bread bakery. It's like a large toast drub in that makes a loaf of bread for you. And they put a price tag on it around two hundred and seventy five dollars and it was a perfectly good product, but sales wise, it failed completely.

No one was buying it. Why.

It's because people saw it on the shelf and they thought, what is a home bread bakery anyway?

Is this a good one? Do I need it?

So Williams Sonoma took on a research firm who advised them to get a hold of a second homebread bakery a slightly bigger one that was more expensive and put it on the shelves next to.

The first one. So they did that, and you know what, the first bread bakery started selling. Why.

It's because people did have to make a decision in a vacuum. Now, now they could think, okay, well, I don't know much about home breadmakers, but this one seems to take up less counter space and it's less expensive, so that seems like it's the right choice.

So the customer's brains were given something that they.

Could compare and that allowed them to secure a decision. And this trick of giving context, by the way, is an old trick in real estate. So let's say you're an agent and you're trying to sell someone a medium sized traditional home.

But the prospective buyers.

Are torn between that one and some modern home, and they're stuck because these two homes are as different as the chocolate keyboard and the candlestick. So what do you do as the real estate agent to get them unstuck. What you do is you show them another mid sized traditional home, one that's a little bit worse. Maybe the kitchen is outdated, or it's covered in wood paneling. So This is known is the decoy effect, because you don't expect them to buy this other home you've just shown them. But what you're doing is you're giving their valuation systems something it can understand. The brain can now compare the slightly worse traditional home against the slightly better traditional home, the one where the kitchen doesn't need an update.

So they see this in context.

Now and it allows them to lock down a decision. In general, everything in your brain is priced by comparison to other things that are like it, and this is because the brain stores its knowledge by association what is related to what and how. So you're not going to pay twenty five dollars for a bag of chips because you have lots of experience with bags of chips and they're not supposed to cost that much. But interestingly, there is a way that companies can change where an item sits in your network of associations. So, for example, some of you may remember a time where you could drive anywhere the na should and get a cup of coffee for fifty cents. But when Starbucks launched, they didn't want to sell their coffee for fifty cents, so they built Starbucks to feel like a continental European coffee house, and they had the place filled with the smell of roasted beans, and they sold coffee presses and piscatti and croissants, and they were creating a different experience, so different that we wouldn't use the prices of the diners as an anchor anymore for the price of coffee. So yeah, they even changed the sizes they sold, so small, medium, and large became tall, grande, and venti. And this made it so that in your network of associations, you didn't link Starbucks coffee with diner coffee, but instead with something different and fancier, and therefore your valuation of the cup of coffee doesn't feel off. So I was in Seattle a while ago, and I saw a McDonald's billboard that was taking a shot at Starbucks. The sign said four dollars for a coffee is done. And what struck me as funny is that homoeconomicists totally gets McDonald's message supply and demand and so on, but real humans simply don't care. We get something out of our experience with Starbucks, and therefore we're willing to value a blonde vanilla latte differently. So now I've told you how the brain thinks about value, how much is something worth? But as I said at the beginning, this is only part how the brain makes decisions. There are other competing areas involved, and we turn to the second act now, which is about emotions. Economists used to think that all decision making in humans was a rational process ua costs and benefits, and that tips your decision. But recently the importance of emotions has come into the spotlight because emotions are a critical part of the language of the unconscious. It's not all about logic irrationality. We're not just information processing devices. Our lives are richly painted by emotion, and these influence decision making. So one basic example is that you will make harsher moral judgments when you're in a room that smells bad. This shows the role of emotions like discuss in decision making about things that you might think are higher level concepts. Okay, now I'll give you another example, one that's been making the rounds in philosophy for a little while. In part one of this series, I mentioned the trolley dilemma.

Here's a quick reminder.

A trolley is barreling down the train tracks out of control. Five workers are making repairs way down the track, and you, a bystander, quickly realize that they're all going to be killed by the trolley. But you also notice there's a lever nearby that you can throw, and that will divert the trolley down a different track where only a single worker will be killed.

So what do you do?

If you're like most people, you pull the lever, because it's better to have one person killed than five. Now, in the second scenario of the trolley dilemma, the same trolley's barreling down the tracks. The same five workers are in harm's way, But this time you are a bystander on a footbridge that goes over the tracks, and you notice that there's a large man standing on the footbridge, and you realize that if you were to push him off the bridge, his bulk would be sufficient to stop the train and save the five workers.

Do you push him off? Now?

Most people here just won't do it. Even now, the math is exactly the same. You're trading one life for five lives. The only difference is the issue of touching the person with your bare hands or not. And as I mentioned last time, when my colleagues did brain scanning. They found that in the first case, the networks that come online are just those involved with doing math problems essentially. But in the second case, you've got these emotional networks coming online too, these networks in the orbit of frontal cortex, and that entirely changes your decision. So the networks involved in emotion are very powerful drivers of decision making, and this plays a bit role in how we select products, how we make economic decisions. So when companies are interested in plugging into these networks, they don't use terms like we have an integrated approach or we give a comprehensive solution. Those things don't talk to these orbital frontal networks at all. Instead, companies say things like don't hate me because I'm beautiful, or are you man enough to eat this burger? And the idea is to plug right into the emotional networks to steer your decision making. And it doesn't have to be big and explicit, but also includes everything you've ever.

Seen in any ad.

Beautiful people loving the product being advertised, They smile beautifully when they touch or look at the product. If it's cereal, it's a family that's so happy and attractive and they don't have any problems if it's for an adult audience. The stars of the commercial are smiling at each other. The camera lingers for just a moment longer to make it clear that this is all a prelude to something that's inevitably going to happen between them. In other words, the appeal isn't to these networks that are concerned with valuation, but instead the networks that drive primitive emotions.

These have tremendous.

Power in the neural parliament that drives your decisions. So now I've mentioned the brain networks involved in valuation and those involved in emotion, and there's one more which brings us to Act three. Traditionally, we study the brain by looking at different regions and mapping what they're involved in, like this is the region for vision, and over here is where hearing takes place, and this area is involved in touch and so on. But an enormous amount of the circuitry of the brain has to do with other people, understanding other people. We have an enormous amount of circuitry devoted towards issues of trust or integrity, or the reputation of other people in our tribe or in modern life, it's others we meet all over the world, as well as celebrities we've never even met. Bizarrely, so much of our circuitry is devoted to social concerns. I can even ask you, hey, does that person in your thousand contacts that you know know this other person? And you'll pretty much know immediately whether they know each other? And how think about that? It's like a thousand by a thousand matrix of data that's being stored there that you can just call up in an instant And these sorts of considerations about how much our brains care about other people has led to a new subfield called social neuroscience. Now, something quite amazing, it's surprising that I studied in my lab with brain imaging, is that to the brain, companies are just like people. We evolved in small groups and developed this very rich social circuitry to understand each other and to understand issues of trust and integrity and reputation of every person in the group. But companies came along just in the last second of our evolutionary history, and obviously Mother Nature hasn't had time to rewrite the brain to understand companies, so we use exactly the same circuitry, as we do when we think about other people. So we study this in my lab by having people read a vignette about a person that does something something either good or bad or suspicious, and we measure how different brain regions respond to a person behaving this way. And then we show these same vignettes to other people, but we swapped out the name of the person with the name of a company, and the brain regions that respond are exactly the same. Evolutionarily, companies are something new and we haven't evolved new circuitry to understand them. So we understand a company exactly the same way with the same circuitry that we use to understand other people. Is that company trustworthy? Does the company have integrity? What is that company's social reputation? And you see this on Facebook where people are friends with people and they're friends with companies. And by the way, in the legal system, there's a legal fiction in which we treat corporations like individuals. So the corporation can be guilty of a crime, can be liable of a crime, and so on. In fact, the word corporation means body. Now it might seem hard to believe that companies and social reputation are tied so closely. But let's take a typical example. Look at what happened when one major company tied their reputation to a clean cut, admirable young man and they got all the benefits from that. I'm talking about Nike, who tied themselves to Tiger Woods. He was in their advertising and his superstar power directly lifted their economics because he was awesome, and so people felt like cool, Nike is awesome and same way. But then one day in two thousand and nine, the news hit Twitter that he was cheating on his wife. Now you can go back and look at a chart of Nike stock that day. The news of his infidelity hit Twitter at eleven forty am, and you can see the immediate effect on the Nike stock price, which continued to drop precipitously for the rest of the day and for the next six months.

Even though Tiger.

Woods has nothing to do with the manufacturing or distribution or the quality of the shoes, his infidelity soiled the company's reputation in the social brain. If he didn't have integrity at that moment, then something becomes wrong with the shoes. Now, what I want to point out is this is not just an economic phenomenon, it's a social phenomenon, and fundamentally, it's a neuroscientific phenomenon. These social circuits evolved when we operated in small tribes. They weren't really built to operate at the level of multinational companies, and as a result, companies get to ride on this circuitry for free. But it also means that companies need to be aware that they're operating with these basic friend or faux circuits. It means that companies need to treat their customers like tribe members. And I'm not saying this just as a friendly business philosophy. I'm saying this because the same circuitry is being used and because of social media, these sorts of social exchanges have taken an unexpected evolutionary leap forward because they are unerasable now. So here's an example. Some years ago, there was a young man traveling on United Airlines and he had to check his guitar through the baggage plane. So he's sitting on the plane when they're on the runway and he's watching the guys load the luggage in and he sees the luggage handlers toss his guitar as they're loading it. And when this guy gets to the destination, he discovers his guitar is broken, so he complains to United Airlines, but they tell him they can't take responsibility for it and he has to pay for his own guitar. So he gets mad and he writes a guitar song and he puts it on YouTube and it's called United breaks Guitars, and this goes viral and the Economist magazine wrote an article into which they estimated that this guy cost United Airlines one hundred and thirty million dollars. Why because social reputation matters, and the Internet has made reputational issues fast and instant and uneasable, and all this ties into how companies use social media. So when Facebook first got introduced as a concept many years ago, all companies immediately started thinking about this as Okay, how do we start a Facebook account and post on our feeds and get people to buy our product? But this turned out to be a fail because people weren't going to Facebook with the intention of being sold to, So companies realize pretty quickly it's not about selling directly. But the reason I have a Facebook account was about branding. In other words, how could they develop a social reputation? How could they talk to these networks in the brain to make you feel like they are your friend? So I just looked this up. As of this morning, Burger King has over eight point six million people following them. That's more than Stephen Colbert. Now what sober adult clicks to be friends with a fast food restaurant. The key is that they're not selling on their feed. They're strengthening their connection with you, like you're a friend. They say chatty things like you like us, we love you. They're just like a living, breathing person. And this is what companies do to plug in to these networks. So I was in Texas recently and I noticed a billboard that said the most quote liked energy company in Texas. You can choose your own energy provider there. So I wondered, what is there to like about an energy In other words, why on social media would you click to light them? So I went and looked them up on Facebook. They had three hundred thousand friends. So a month ago, I was on an airplane and sitting next to a guy and we started chatting about this, and he says, oh, yeah, I'm a member of that company. So first I was struck that he didn't say customer, he said member. So I thought, I need to understand what exactly this company is doing that makes them so light. So I went to their web page, and on their site, they're hitting all three of these neural networks that I talked about. So in one part of their homepage, they're plugging right into the valuation networks. They say they're the least expensive company and they'll save you tons of money, and they have pictures of dollar bills snowing down. Now next to that, they have a picture that shows when you buy your energy from them, they'll give you points that can be turned into rewards, and they have pictures of airline tickets and coffee and cash. And this section plugs right into the orbit of frontal networks.

They care about reward. And right below that.

They have a section on the page that plugs into social context. It says, when you earn, your friends earn. And there's an attractive young woman holding a sign that tells us her name is Stacy, and behind us are a group of her attractive friends, and they're holding a sign that says friends of Stacy what you can read on their faces is that they're all so taken with Stacy because she's earning money for them. She's earning and everyone likes her, and they're happy and thriving and good looking and have a tight relationship, and they're cheering.

For Stacy with no hesitation. They really like her.

Possibly some of them are in love with her. And this plugs right into the social networks that tell you that your friends think this is cool. So this company is doing a textbook job of hitting all the appaxis to align these networks in your brain so you don't have to feel like, yeah, they're inexpensive but they're boring, or they're socially cool but they're too expensive or whatever. They're firing on all cylinders and that's how they're able to attract so many likes. Now, I'll mention something else. When I went to their page, it told me that two of my friends like this energy company. Now, who spends their time liking an energy company? But I want to point out that this has been one of the most important tools of social media, not just the like button, but the notification that your friends like this. Because brains are so social, we really care about that situation. We buy what our friends buy. We care about what our friends care about. We are social animals, and things have enormous sway. If our friends like it, that little message plugs right into these networks telling us that it's cool. And this is why social marketing is so effective. Think about it this way. Would you pay one hundred and twenty nine dollars for some weird new earbuds that were green and hung halfway down your face? Maybe we could be more likely to do it if your friends were all doing it. If when you saw the ad for those you saw that Bob and Tonica and Wag. We're all doing it because we're social animals and we care what our friends do. If they like it, we like it. This is the basis of all trends, which are almost always things that we look back on after a decade and we can't.

Believe what we did or what we wore or what we bought.

But at the time we did it, everyone was doing it, and that was the basis of the coolness. That was what plugged into these networks in the midline of your brain. Here economists talk about faith in the market, but the reason this all has so much influence on our behin behavior is because of faith in the social market. We can't possibly have time to research everything, but we assume, almost always erroneously, that if our friend has bought that thing, it must be because he or sheet has invested the time researching it and weighing all the options and selecting the killer perfect brand or model. So that gives us faith and we can save time because our friend, who we like because they're smart, or simply good looking, or simply because they like us back, if that person has chosen this brand, then it must be awesome where they wouldn't have done it, And that's why the social brain is so critical to our decisions. So zooming out, we make our purchasing decisions based on these three networks, price point, the emotional feeling, and social context. And there are other networks involved as well, but these are some of the biggies. And the key is that these are all running as a team of rivals. These systems are always battling it out under the surface, and it's all unconscious, which means you don't have access to the details.

So when you choose to get.

A burger at one fast food place over another, you don't ask, am I buying this because of the price point, because of the emotional salience of the salt and fat and the colors used in the restaurant, or because their ads feature beautiful young people in love and that reminds me of my friends and my social life, or what I wish it were. When you're at the store choosing between ice cream brands, when you're scanning the ben and Jerry's and Bluebell and Hoggin'daws, you don't have access to the details of the battles going on under the wood. You simply wait for a feeling to get served up to your consciousness, and then you reach out and grab one container off the shelf and not the others. So keep this in mind the next time you're choosing between brands. Why are you choosing this one? What are the elements that are influencing your decision? Might you make a different choice if you become aware of the parts that are influencing you. You can't change the wiring of your brain, but you can become more aware of what steers you. Okay, So the previous episode was called how is the brain like? A Team of Rivals? And in this episode we dove into specific examples of different drives that pull our behavior in different directions. So I hope you'll join me for the next episode, Part three, where we will discuss how we can take this knowledge and use it to navigate our own behavior. Because you have systems in your brain that deal not only with what is right in front of you, but also that do you long term thinking. So how do you get yourself to do the right thing in the moment? How do you balance networks that care about the now with networks that care about who you are and who you want to be? How do you forego temptation that's not aligned with your long term goals? How is your decision about eating that cookie related to the hero of the Trojan War. I'll see you there in the next episode for the culmination of everything that we've been talking about so far.

That's all for this week.

To find out more and to share your thoughts, head over to Eagleman dot com, slash Podcasts, and you can also watch full episodes of Inner Cosmos on YouTube. Subscribe to my channel so you can follow along each week for new updates. I'd love to hear your questions, so please send those to podcasts at eagleman dot com and I will do a special episode where I answer questions until next time. I'm David Eagleman, and this is Inner Cosmo

Inner Cosmos with David Eagleman

Neuroscientist and author David Eagleman discusses how our brain interprets the world and what that  
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