We all suffer from anxiety at many points in our life. It may be to a different degree depending on the cause of anxiety or on the person dealing with the anxiety. It is an unwanted but unavoidable feeling. Some do well to equate anxiety with irrational fears. In this post I am going to discuss one technique which works quite effectively. But before doing that let’s discuss a human folly: loss aversion.
In Sway: The irresistible pull of irrational behaviour by Rom & Ori Brafman, I was exposed to a fascinating human folly. The best way to explain this is through an example:
Prof. Bazerman’s Harvard MBA class starts with an auction. The prize is a $20 note. Rules: everyone can bid, increment is $1 and the second-highest bidder pays as well. Thus, in short, the second highest bidder is the loser.
As you would expect till about a bid of $16 many students participate in the auction but then by $18 there are only two people remaining, highest and the second-highest. A winner and a loser.
Till now students were in the auction to win but at this point, no one wants to lose. So the bid quickly spirals up beyond $20. As the prices climbs higher, the rest of the students roar with laughter.
From a rational perspective, the obvious decision would be for the bidders to accept their losses and stop the auction before it spins even further out of control. But it’s easier said than done. Students are pulled by both the momentum of the auction and the looming loss if they back down. The forces in turn feed each other – commitment to a chosen path inspires additional bids, driving the price up, making the potential loss loom even larger.
So the students continue bidding to a record of $204. All these years that Bazerman has conducted this auction he has never lost a penny.
The lesson? We, humans, are susceptible to care more about losses. Had the students stopped bidding at $21, the winner would have lost $1 and the loser $20. But in the case of the record of $204, the winner lost $184 and the loser $203.
As an observer, this seems completely irrational to us but at the time the student’s weren’t focusing on the prize, instead they were focusing on the loss: the shame of losing a simple bid. If you think about this for a second, you will realise that this human folly of loss aversion manifests itself in our everyday lives all the time.
One of the suggested ways of overcoming this irrational sway is to look at our situation from a larger perspective. If the students had stepped back for a moment and thought hard about where the bid is headed, they would have realised that it’s not something worth pursuing.
Of course doing this is hard because at that moment all you can think about is the loss. But as the Brafman brothers explain:
Our natural tendency to avoid the pain of loss is most likely to distort our thinking when we place too much importance on short-term goals. When we adopt the long view, on the other hand, immediate potential losses don’t seem as menacing.
So you may wonder what is this to do with anxiety. Well, we’ll get to that in a moment.
Imagine that you are driving to meet someone very important. The time and place for the meeting had been fixed quite some time in advance. When you are about 30 minutes from the place your car breaks down. A punctured tyre. You look at the watch and realise you have an hour before the meeting. All charged up you start fixing your car so that you can finish soon and drive to the meeting in time. It takes you 25 minutes to fix the tyre. Now you have 35 minutes to the meeting and you are about 30 minutes away. Although 5 spare minutes is plenty of time, all the time while driving you will be anxious. You will think about all kinds of situations that may never happen, what if you reach late? will he find your excuse of a punctured tyre too trivial? what would make for a substantial excuse? will your first impression ruin it all? will you lose that business deal? how will you answer your boss?
All through this process you are anxious. With the clock moving forward, your anxiety only increases. But what is it that you are thinking about really? You are thinking about a loss. You are worried about losing that impression which you could have made or that business deal that you could have got or your value in front of your boss because of a failed deal.
The problem is that your chances of failure have increased as compared to your chances of success. But because the human tendency to avoid losses, you will magnify the chances of failure. This will soon put you in the same loop as the students who were bidding for the $20 note. You will get more anxious thinking about the loss, that will make you think about greater losses which will in turn make you more anxious. In the process you may run over traffic lights or miss out on the correct turn you were supposed to make on the highway. Your potential losses will only increase.
The technique I am going to suggest to dealing with anxiety is simple: Think about gains and not the losses. Think about success and not the failure. Think about the positives and not the negatives.
And to aide you in the process, you can use the Brafman brothers suggestion to help you think about the positives: step back and look at the larger picture.
If you calmed down (step back) and did not worry about the loss of the business deal (bigger picture) then you will be able to focus on the driving. It could mean that you may reach there in 25 minutes, instead of 30 minutes, a good 10 minutes in advance (positive). It will get you that good first impression (gain), the business deal and your boss’ praises (success). The potential gains may not be as high as the potential losses but stepping back will help you think about the gains. And, more importantly, thinking about the gains will certainly make it less likely to causes the losses. Where as thinking about the losses will only make it more likely cause the losses.
This technique can be applied to any situation in which you feel anxious. Worried about what will happen if you don’t get the grade you need to? Think about what will happen if you do get a better grade. Worried about what will happen if you don’t get paid this week? Well, what if you get paid double this week. Worried about what will happen if you did not finish the project in time? Think about what praises you may get if you finish it before time.
Loss aversion is a strong force, overcoming that may just become easier if you jump to do the exact opposite: gain seeking.
5 thoughts on “Dealing with anxiety by overcoming a human folly”
Well you seem to be suggesting a very exciting solution which can be a potential new mantra towards a stress-free or at least reduced stress life! However the slightly tough part herein is that people will have to constantly nurture this as a part of the behavioural process to evolve to this level.
Also I think that it builds on the idea of positive thinking in quite an innovative manner. In essence a good job of reaching at one potential answer to a question that affects us all.
You are right that this might need people to put in effort to integrate it with their behavioural process, but anxiety isn’t an easy thing to overcome is it?
The bidding game is a fun example, thanks for describing it!
However, I’m not sure that stepping back and looking at the bigger picture is enough, because at the point that the bid is $21 and one person stands to lose $1 and the other $20, it is still in the loser’s best interests to make a higher bid. Sure, he can see where the game is going, and yes, he can see that they should both call it off, but (from his perspective) why call it off at this unfortunate point? Why not when he stands to lose just $2 (rather than $20) and the other person stands to lose $21? No matter how much you stand back and look at the bigger picture, it’s always in the loser’s best interest to bid higher, unless the two of them can agree to share the losses.
Actually, as far as I can tell, a true rationalist would never start bidding in the first place, but once you’re playing, you’re essentially stuck…
So assuming that the person who starts is not perfectly rational, what is the best point to quit the game if you have started bidding?
I don’t know actually. If you are allowed to bid anything then the first guy could just bid $19 and no-one else would go over him because no-one else has anything to lose, and no-one will gain anything by going to $20. But if you’re restricted to bidding in order $1,$2,$3,… then I really don’t know. There must be a Nash equilibrium somewhere but I can’t find it. If you make take turns bidding then perhaps you can predict who will land on $19 and the no-one else bids, but it’s not for sure. It’s a really tricky game to analyse!