Monday, April 14, 2008

What gets stolen from refrigerators in MIT's dorms?

Coke cans, or dollar bills? An MIT press release on Dan Ariely's work on behavioral economics, and its implications:

Here's how the test worked: Ariely and his students went around and left six-packs of Coke in randomly selected dorm refrigerators all over campus. When he checked back in a few days, all of the Cokes were gone.

But when he later placed plates of six loose dollar bills in those same refrigerators, not a single bill was missing when he checked back. Even though the value was comparable--and thus the situations were supposed to be equivalent--people responded in opposite ways. Why is that?

Ariely says that when he started reading about the Enron case, he was struck by what he calls some bizarre contradictions. "They didn't seem like career criminals," he says of the Enron officials. "They gave money to charity. This is not the image of people who are purely evil." And there were 10,000 people working for the company; obviously those were not all bad people. "Could it be that there was something in the structure of the company that allowed normal people to act this way?"

Over at his own blog, the author of Predictably Irrational speculates on how these findings may explain the recent melt-down of Wall Street's Bear Stearns.