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“Learn how to master mysterious mental phenomena like reactivity, self fulfilling
prophecy, reactance, hyperbolic discounting and placebo effect to your advantage in
business, career, personal, and investment success, even while steering clear of equally
intriguing phenomena like gambler’s fallacy, halo effect, herd mentality and escalation of

The human mind is a wonderful thing. Cognition, the act or process of thinking,
enables us to process vast amounts of information quickly. For example, every time
your eyes are open, your brain is constantly being bombarded with stimuli. You may
be consciously thinking about one specific thing, but your brain is processing
thousands of subconscious ideas. Unfortunately, our cognition is not perfect, and
there are certain judgment errors that we are prone to making, known in the field of
psychology as cognitive biases. They happen to everybody regardless of age, gender,
education, intelligence or other factors. Some of them are well known, others not,
but all of them are interesting. I am sure everyone will find that one has happened
to them, and now will recognize when they are making an error in the future.

Gambler’s Fallacy
The Gambler’ fallacy is the tendency to think that future probabilities are altered
by past events, when in reality, they are not. Certain probabilities, such as getting a
heads when you flip a (fair) coin, are always the same. The probability of getting a
heads is 50%, it does not matter if you’ve gotten tails the last 10 flip. Thinking that
the probabilities have changed is a common bias, especially when gambling. For
example, I am playing roulette. The last four spins have landed on black, it has to
be red this time right? Wrong! The probability of landing on red is still 47.37% (18
red spots divided by 38 total spots). This may sound obvious, but this bias has
caused many a gambler to lose money thinking the probabilities have changed.

Reactivity is the tendency of the people to act or appear differently when they know
that they are being observed. In the 1920s, Hawthorne works (a manufact uring
facility) commissioned a study to see if different levels of light influenced worker

I think my relationship with my significant other is going to fail. and you eventually make it happen because you think it will. The common element is that the stimulus is neutral. productivity levels decreased to their regular levels. the media reports a possible recession. Reactivity is a serious problem in research. I believe that I am going to do poorly in school. Unfortunately. For example. Interesting Fact: Economic Recessions are self.fulfilling prophecies. at the first sign of decreasing GDP. changing the light caused productivity to soar! Unfortunately. so I decrease the effort I put into my assignments and studying. when individuals know they are being watched. . you cannot know you are in a recession until you are at least 6 months into one. Self-fulfilling Prophecy Self-fulfilling Prophecy is engaging in behaviors that obtain results that confirm existing attitudes. and has to be controlled in blind experiments (“Blind” is when individuals involved in a research study are purposely withheld information so as not to influence the outcomes). Pareidolia Pareidolia is when random image or sounds are perceived as significant. Because of my actions. pulling away emotionally. a diety on a hot pocket. Responses are analyzed to discover the testee’s hidden thoughts.productivity. they are motivated to change their behavior. generally to make themselves look better. and I end up doing poorly. This is a powerful tool used by “psychics” they impact an idea in your mind. or hearing message when a record is played backward are common examples of pareidolia. This demonstrated a form of reactivity. it does not have intentional meaning. people panic and start a chain of events that actually cause a recession. Testees are shown images of ambiguous pictures and asked to describe what they see. Interesting Fact: the Rorschach Inkblot test was developed to use pareidolia to tap into people’s mental states. Another common example is relationships. Seeing clouds in the shape of dinosaurs. but to the workers being watched. so I start acting differently. when the study was finished. A self-fulfilling prophecy is a prediction that causes itself to become true. What they found was incredible. just as I thought. This was because the change in productivity was not due to the light levels. Because a recession is 2 quarters of Gross Domestic Product (GDP) decline. the meaning is in the viewer’s perception. I actually cause the relationship to fail.

This is common with rebellious teenagers. There are many possible reasons why Biff was late. Examples include parachute pants. or there has been bad weather. The problem is. Interesting Fact: things that are unattractive. Clothes. that is an ‘80s guy in the picture above). Herd Mentality Herd mentality is the tendency to adopt the opinions and follow the behaviors of the majority to feel safer and to avoid conflict. peer pressure. This becomes a self-fulfilling prophecy when attractive people are given privileged treatment such as better job opportunities and higher salaries. sea monkeys. Herd mentality explains why fads get so popular. Biff. cone bras. cars. at its most common form. The individual may not have a need to do the specific behavior. or that would never seem cool or popular now have had huge followings due to herd mentality. hobbies. This bias happens a lot in employee performance appraisals. such as happiness. and the 1980s (by the way. all it takes is a group of people who think something is cool. Reactance Reactance is the urge to do the opposite of what someone wants you to do out of a need to resist a perceived attempt to constrain your freedom of choice. styles. I notice this and conclude that Biff is lazy and does not care about his job. pet rocks. . tie-dye. Also known as “Mob Mentality”. success and intelligence. Interesting Fact: The Physical Attractiveness Stereotype is when people assume that attractive individuals possess other socially desirable qualities. because of one negative aspect that may be out of Biffs’ control. For example: my employee. I assume that he is a bad worker. but any attempt to resist authority due to perceived threats to freedom and/or choice is reactance. his babysitter did not show up. and it catches on.Halo Effect The Halo effect is the tendency for an individual’s positive or negative trail to “spill over” to other areas of their personality in others’ perceptions of them. perhaps his car broke down. this is. has been late to work the past three days. however the fact that they cannot do it makes them want to. mullets.

Especially common with medications. Placebos are still a scientific mystery. However. at this interest rate. the logical thing to do in these instances is to change the core strategy. expectation is what is most likely to happen) individuals expect the pills to cure their ailments. delayed payoff. sometimes individuals feel compelled not only to sick with their decision. the placebo effect has been observed when individuals given a sugar pill for a real ailment report improvement. Put simply. The logical thing to do would be to “cut your losses”. delay time is a big factor in choosing an alternative. as the value of a dollar is worth more today than it is tomorrow. Tell someone (particularly children) to do the opposite of what you really want. However. For example. so . Hyperbolic Discounting Hyperbolic discounting is the tendency for people to prefer a smaller.Interesting Fact: “reverse psychology” is an attempt to influence people using reactance. it is evident that the business is going to be unsuccessful. it is interesting how much less we are willing to take immediately rather than wait. After 6 months. due to the sunk costs of your life savings. It is theorized that placebos cause an “Expectancy Effect”. you feel committed to the original business plan and invest even more money into the project hoping that the additional cash will turn the business around. and many factors contribute to the individual decision making process. Normally it makes sense to choose a greater amount of money immediately than less in the future. most people would choose to get 20 dollars today instead of getting 100 dollars one year from today. and they will rebel and actually end up doing what you want. and change your strategy. However. (In case of uncertainty. a rational person would be indifferent to taking $91. Much research has been done on decision- making. immediate payoff over a larger.74 now. or $100 a year from now. Of course. or $50 immediately? How about $40 immediately? Where do you draw the line? Escalation of Commitment Escalation of commitment is the tendency for people to continue to support previously unsuccessful endeavors. say you use half of your life saving to start a business. but also to further invest in that decision because they have sunk costs. Placebo Effect The Placebo effect is when an ineffectual substance that is believed to have healing properties produces the desired effect. it is unavoidable that some will be unsuccessful. With all the decisions people have to make. Interestingly. Assume that the interest rate is 9%. would you rather have $100 a year from now.

SHRIRAM Fuel Injection Industries Ltd.they feel cured. did his Graduation in Commerce and has a Degree in Education with Psychology also a Diploma in Journalism. Kolkata and Faridabad. However..   SOURCE: Seasona Magazine. USHA International Ltd. December 2010.   Compiled By Hari Das Nair is a Young Masters in Public. Personnel Management & Industrial Relations from Osmania University. Hyderabad and is heading the Manufacturing HR & IR at Hyderabad. +91-98- 102-89047                 . Balanagar. He can be reached by e- mail hari. Volume and on his Mobile No.. Issue 12.Manufacturing HR. Interesting Fact: The term “Placebo” is used when the outcomes are considered favorable. the term is “Nocebo”. this does not explain how the ineffectual pills actually cause a reduction in symptoms.nair69@gmail. when the outcomes are negative or harmful. Currently he is at the helm of affairs as Head .