Behavior: We Do Not Change Easily
■Inertia
Inertia refers to the tendency to maintain the current state rather than change it.
Even when change could be a better option, we tend to choose what feels familiar.
When I was in charge of process improvement at a company, I frequently held meetings with frontline employees to identify tasks that needed improvement and to clarify possible directions for change. Whenever I asked why the work was done in its current way, the most common answer was, “That’s how we were taught from the beginning, and it’s how things have always been done.”
Although the employees themselves recognized that the process was inefficient, the familiar way of working did not change easily. This is a typical example of how, within organizations, the inertia effect leads people to continue existing practices even when they are aware of their inefficiency.
■Planning Fallacy
People tend to underestimate the time and effort required to complete a task.
As a result, they believe that “this time will be different,” yet the outcome is often the same.
I try to work by assigning a specific amount of time to each task whenever possible. However, things often do not go according to plan. Even when I think a task should take about two hours after lunch, urgent meetings may suddenly be scheduled or issues that require immediate attention may arise, and I end up missing my expected timeline.
This happens because of the planning fallacy: I fail to account for possible variables and instead make overly optimistic assumptions about future conditions.
■Sunk Cost
The sunk cost effect describes the tendency to continue a course of action because of time, money, or effort already invested, even when we know it is a poor decision.
Past costs end up constraining present judgment.
I once found another vendor that offered the same services at a lower price than a vendor we were currently contracted with. Nevertheless, the company continued the relationship, unable to terminate the contract because of the time and effort that had already been invested in the existing vendor.
This can be seen as a case of the sunk cost fallacy, in which people continue with a poor decision even while knowing it is suboptimal, simply because they are reluctant to let go of costs that can no longer be recovered, thereby creating future losses.
■Decoy Effect
When an additional option is introduced, a choice we previously hesitated over can suddenly appear more attractive.
Simply changing the basis of comparison can easily influence our behavior.
Individual performance evaluations are crucial when it comes to salary increases. At one company I worked for, I was told that among the five performance rating levels, the highest rating was essentially unattainable unless an employee had an extraordinary impact on the company, and that it should be considered virtually nonexistent. As a result, the realistic choices were limited to the second- and third-lowest ratings among the five options.
When the structure of the available choices is altered in this way, people end up making decisions that differ from what they actually need or deserve. This is an example of the decoy effect, in which the presence of an unrealistic option changes how the remaining options are perceived.
Emotion: We Judge After We Feel
■Loss Aversion
People experience the emotional pain of losses more strongly than the pleasure of gains of the same size.
As a result, they tend to focus more on avoiding losses than on obtaining gains.
Most of the Japanese companies I have experienced had very strict hierarchical relationships. In particular, the words of the president, executives, and supervisors were treated as absolute. In this kind of environment, even when good ideas existed, speaking up in meetings where a superior was present often felt risky. The fear of receiving a negative evaluation or having to take responsibility if an idea failed weighed more heavily, and as a result, silence was common even when opinions were requested.
This is due to loss aversion: even though people know that proposing good ideas benefits both the company and themselves, the sense of security gained by staying silent feels stronger than the potential gains from speaking up.
■Anchoring Effect
The first piece of information or number we encounter becomes a reference point for later judgments.
Even if that anchor is not rational, our feelings tend to remain tied to it.
I once achieved a particularly strong result in a task I was responsible for. At the time, it was highly praised, but that achievement later became the benchmark for evaluating me, and even when I delivered similar results afterward, I was expected to produce even greater outcomes rather than receiving positive evaluations.
The same applies to salary. Because one’s initial salary becomes a personal reference point, even after receiving a raise, it may still feel insufficient, or conversely, feel acceptable depending on that original benchmark.
■Mental Accounting
People do not view money or resources objectively as a single whole, but instead mentally separate them into different accounts.
As a result, the same amount can feel very different depending on its source or intended use.
Because company expenses used for work are not perceived as one’s own money, I often saw people dine at places or purchase items that they would be unlikely to choose with their personal funds.
Similarly, bonuses and various allowances tend to feel like money separate from one’s regular salary, which makes them easier to spend. These are examples of how mental accounting leads people to apply different spending rules depending on the source of the money.
■Confirmation Bias
People tend to accept information that aligns with their existing beliefs while ignoring information that contradicts them.
Once formed, emotions and judgments reinforce themselves and become increasingly fixed.
When working at a company, collaboration with other departments is very common. However, there are times when preconceived notions about a particular department lead people to interpret all problems that arise during collaboration as that department’s fault.
After listening to both sides, I realized that each party was dissatisfied with different aspects of the situation. This reflects confirmation bias, in which people tend to focus on information that reinforces their existing beliefs. It made me feel that, especially in such situations, a more objective effort to understand the situation is necessary.
■Hedonic Adaptation
Whether an experience is good or bad, our emotions gradually become accustomed to it over time.
As a result, even better choices do not lead to lasting satisfaction.
At one point, my salary increased by about 40 percent due to a certain opportunity. At first, I could hardly believe it and felt extremely happy. However, over time, the higher salary gradually came to feel normal, and even when my salary increased again later, the raise felt disappointingly small.
The joy and satisfaction I felt at the time slowly faded as I became accustomed to the change, leading me to seek even greater satisfaction. Hedonic adaptation turns even great happiness into an ordinary baseline.
Time: We Constantly Betray Our Future Selves
■Present Bias
People place greater value on immediate satisfaction than on future rewards.
As a result, even when they know a choice would be better in the long run, they tend to repeat decisions that favor the present.
In the early days after joining a company, many people make various plans, such as studying English conversation, reading, or working on self-development during their commute or after work. However, once work actually begins, immediate fatigue tends to feel stronger, and people end up postponing their plans until tomorrow and choosing rest instead.
As this choice is repeated day after day, a few years pass before they realize that time has slipped by without making much investment in themselves. That is why, whenever I feel too tired and want to rest, I try to remind myself of present bias and take a moment to reconsider my decision.
■Hyperbolic Discounting
As a reward becomes closer in time, its perceived value increases sharply, while rewards further away are heavily discounted.
This leads us to underestimate future benefits and overvalue immediate rewards.
For office workers, long holidays are much like school vacations are for students. Before a holiday begins, many people make various plans to use their time productively. However, once the holiday actually starts, the thought that they have worked hard and should finally take a proper rest takes over, and the holiday often ends without anything being done.
This can be explained by hyperbolic discounting. Even though one may be planned and rational before the holiday, once it begins, immediate gratification becomes more important, leading to a change in behavior.
■Delay Discounting
As rewards are delayed, the psychological cost of waiting increases, sharply reducing the attractiveness of the choice.
As a result, people tend to give up easily on rewards they cannot receive immediately.
Delay discounting seems to appear most clearly in the context of improving company tasks or systems. Even though people understand that such improvements lead to greater efficiency and productivity in the long run, they tend to postpone them, thinking they are not something that needs to be started immediately.
This is because the effort and burden required to prepare for improvements occur right away, while the effects and rewards only become visible later. As a result, people often delay actions they know are rationally necessary.
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