The Dilution Effect

I recently watched a TED Talk entitled “The counterintuitive way to be more persuasive” – the talk was about the Dilution Effect. In this talk, organizational psychologist Niro Sivanathan discusses this cognitive quirk that weakens our strongest cases, and he reveals why brevity is the true expressway to persuasion.

Source: sketchplanations.com/the-dilution-effect

Sivanathan starts the talk describing an experiment by Christopher Hsee at the University of Chicago. In this experiment, he compares two buying options of a dinnerware set, with another larger dinnerware set which also included some broken items. In actual fact, buying the larger set with broken items still yielded a better outcome in terms of items bought – but the mere presence of a few broken ones decreased the set’s perceived value. In fact, the participants in the experiment said they would be prepared to pay nearly half for the set with broken items, compared to the intact set!

Another interesting example was an experiment in the comparison of two people. The first is Tim, who studies for 31 hours per week outside of class. The second is Kevin, who studies for 31 hours a week outside of class, has a brother, often visits his grandparents, once went on a blind date, and shoots pool once every month. In this experiment, participants in the study judged that Tim was more likely to have a higher GPA than Kevin – yet, they both spend the same amount of time studying outside of class.

Diagnostic information is knowledge that is useful in making a particular judgment. Non-diagnostic information is knowledge that is not relevant to the judgment being made. In the previous example, only the study times were relevant, and the rest was non-diagnostic.

When both kinds of information are present, people tend to under-rely on diagnostic information in making judgments. Thus, the presence of non-diagnostic information dilutes the impact of diagnostic information on judgment. The dilution effect results in less-extreme judgments than those made using only diagnostic information.

Sivanathan suggests this is due to averaging. In terms of evaluation of information: Our minds don’t add these pieces of information together. It averages them. In the previous example, if Kevin had been described as “chair of the science society, and captain of the debating team etc” rather than his family details and his hobbies, then the result might be different.

Outside of this TED Talk – different explanations have been proposed for why the dilution effect occurs. It could be happening because people can’t distinguish between diagnostic and non-diagnostic information. So when people are given information and asked to make a judgment, it is they assume that all of the information they have been given is useful or diagnostic, and therefore give both kinds of information equal weight. This is actually related to a previous post where I described how people have trouble with decisions because the brain has two distinct systems, “automatic system” (intuitive) and “reflective system” (conscious).

That being said, the ability to distinguish between the two kinds of information does not seem to prevent susceptibility to the dilution effect. Even when people know that some of the information they have is non-diagnostic, it still influences their judgments.

Again, not a topic covered in the TED talk – but other research connects the dilution effect to “stereotyping” – or the process by which people categorise others. I have lifted some of this info from a psychology website – but summarised it a little. When making a judgement, people might be comparing what they know about the person being judged to what they know about the “possible category” to which that person could belong. The more similar a person is to a category, the more likely that person is to be perceived as belonging to it. As a side note, we see this all the time in our daily lives (e.g. the repeated police brutality cases against black people). Diagnostic information helps in identifying a person’s similarity to a possible category. Conversely, nondiagnostic information can make the person seem distinct from typical members of the category. When non-diagnostic information is present, the person seems less similar to what is known about the possible social category, and thus categorisation is weakened (e.g. it’s a small watch so it must be vintage or a ladies’ piece).

So what?

Simply speaking, the dilution effect is a cognitive bias which relates to many real-life situations in which we make judgements, and we need to be mindful of this effect when evaluating options or when presenting them.

Studies of financial account auditors have indicated that auditors are susceptible to the dilution effect in assessing the risk that accounts contain misstatements. Auditors’ judgments indicate that they take into consideration non-diagnostic information, such as the company’s field of business. This information weakens the effect of diagnostic information, such as previous misstatements in the company’s records, or a director’s prior convictions for fraud.

In his final example during the TED talk, Sivanathan described how when displaying possible “serious” side-effects of drugs such as heart-attacks or strokes, if you were to add another minor one like ‘itchy feet’ – the overall perception of the risk of the drug is much lower.

Trying to connect this to watches

I must say, I struggled to nail this section down, because to a certain extent, how I draw parallels to the watch-collecting hobby is inherently “in my own eyes”. I will share my thoughts nonetheless.

My takeaway is to be mindful of your own preferences and tastes, before beginning to make judgements of your own. This is something I have said before, but here, it’s driven by a purpose.

For example, if you see a new watch which intrigues you because of its design/aesthetics – as it invariably happens for most of us – how do you decide whether it is indeed one for you to purchase?

In relation to the dilution effect, you need to know in advance, what are the criteria that matter to you most? If it is a dive watch, can you live with 100m resistance? Do you care that the bezel is aluminium, and not ceramic? Do you hate the bracelet – if so, who cares, when you can swap it out for a strap? What I have found is that people tend to get too engrossed in technical specs which are nice for a head-to-head comparison between two or more watches… but who the heck buys a watch ONLY because it’s technically better than the next alternative? A fool.

Anyone who has been through this experience will tell you – the one which speaks to your heart, is the one to get – EVEN THOUGH it might ‘technically’ be inferior… hell, the Rolex vs Omega debate is founded on this basis (although Rolex being the one which ‘speaks’ to people is itself a result of other biases, but that’s a separate topic!). So yeah, be clear with yourself about your own diagnostic information, and be clear about what is non-diagnostic, and discard it – don’t let it dilute your decision making process.

Look forward to your thoughts and feedback!

-F

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