What is Dan Ariely’s Self-Herding and Long Terms effects of initial decisions?

What is Self-Herding?

Self-Herding is “our tendency to follow the same decisions we have made in the past (future decision are influenced by previous decisions).”

What about following the herd?

As an example to picture the idea we can imagine two exact restaurants. Restaurant A and Restaurant B, both have the same menu, same prices, etc. So imagine one person came, and chose one of them. He has not any previous information about them, so he chooses Restaurant B. Then other person arrives, and sees Restaurant A with zero people and Restaurant B with one person. Which would you think he would choose? He would choose Restaurant B, because he may think it is better because the first person is there. And so on people will continue arriving and Restaurant B is a hit and Restaurant A is a failure, where everything was a consequence of the initial decision.
But this is not a rational decision, it comes from our instincts. For a better understanding, there is another example about Exit doors. What would make you choose an Exit door? Imagine you are in a mall and there is a fire. You see all people running in one direction. Are you going to say, “Ok, maybe there is another way out, I should run the exact other way..?” NOO! People always follow the herd. We don't like to make decisions. As easiest as possible is the way, we are going to take it. 

“We remember our actions but we don’t remember why.”

There is another beautiful example provided by Dan and also my favorite one. And please remember this first sentence.

Starbucks Coffee or Dunkin’ Donuts Coffee?

As a kick-off question, please take some seconds to try this: How much would you pay for a coffee? How do you get to that conclusion?

Rational Theory explains that we internally make a trade-off between the value that coffee adds to ourselves vs its cost. If its value is more that its cost, we buy. Otherwise, we don’t.

It looks really coherent, but here we are going to try a different approach. Let´s say we always get a coffee before going to work in Dunkin’ Donuts for $0.40. Same routine every day. But one day we go out early from work, and we are thirsty, so thirsty and tired that we need a coffee imperatively. We run into a Starbucks (with no previous information about it) and we decide to buy. But when we look at the prices, the coffee costs $2.40. The Dunkin Donuts was far, so the cost was higher also, and we really need that coffee. So we buy. What happened next? Next time we run into Starbucks to buy a coffee our mind does not remember the emotional transient from the other time, it doesn’t remember how thirsty we were or how tired or wherever. It just reminds that we bought. So necessarily it should have been a good deal. And then, we repurchased coffee in Starbucks. This mind process keeps on and on defining what Dan calls Self-Herding Path. And when time goes on, we remember less our first emotional state and our bought become less judgmental.

But then, why Dunkin Donuts first decision does not impact on Starbucks? The main reason is the effort that Starbucks have been doing to appear as a different category. People’s mind tends to compare within category. For example when you go to a restaurant and you look at wine’s prices, do you compare with how much milk could you buy with that money? NO! You just check the prices between the wines. This is the same. Starbucks do not have donuts,  it have croissants. It do not have simple coffee, it have macchiato, cappuccino, etc... So people’s mind does not tend to compare.
Those are some examples the long lasting effects of initial decisions, and we can see how irrationality behaviors impact ourselves in daily basis.

Dan Ariely (born April 29, 1967) is an Israeli American professor of psychology and behavioral economics. He teaches at Duke University and is the founder of The Center for Advanced Hindsight and also the co-founder of BEworks. Ariely's talks on TED have been watched over 4.8 million times. He is the author of Predictably Irrational and The Upside of Irrationality, both of which became New York Times best sellers, as well as The Honest Truth about Dishonesty

Thanks for taking the time to read! Hope you have enjoy!