Saturday, February 09, 2013

Which circle is Bigger ? Relativity in decision making

In my earlier post, I had raised a question, which one of the black circles in the pictures were bigger ?


Most people think it is  the left one  but the answer is, both are of same size.

The reason why people get illusioned to think the left  circle is because of the way humans think.   We always compare two similar things while making decisions. In the above scenario, each of the center circles are compared with the surrounding circles. The center circle on the left is compared with the surrounding small circles, and similarly the right center circle is compared with surrounding bigger ones.    

The relativity in decision making says that

  • People assign value to things by comparing one thing to another. People do not possess an innate value meter that determines absolute value.
  • People are constantly comparing and contrasting physical things, people, experiences, and ephemeral things such as emotions, attitudes, and points of view.

If I visit a TV shop and there is only one TV, say 20 inch with a price tag of 500$.  It is rare that I make a buying a decision as I don’t have anything to compare.
However, if the shop keeper keeps a decoy TV, say 40 inch with a price tag of 600$, then there are more chances that you make a decision, most probably towards buying 40 inch TV.  Isn’t this a great idea for the shop keeper to push sales of 40 inch TVs by keeping decoy TVs around it ?

Coming to the Agile world, now you know, why relative estimation is a natural way for the teams to do estimation.

1 comment:

priyanka said...

hello, this is really a great post about relativity in decision making. this was topic is totally new for me but your describing blog made it easy to understand. i agree it is the tendency of human to compare things and then take a quick decision, but i think this blog will help and improve in our decision making power.