The more competitors, the less competition

Variety can change your mind; and it's true, your dog relaxes you

(Wesley Bedrosian for The Boston Globe)

IF YOU'VE EVER had to take a test in a room with a lot of people, you may be able to relate to this study: The more people you're competing against, it turns out, the less motivated and competitive you are. Psychologists observed this pattern across several different situations. Students taking standardized tests in more crowded venues got lower scores. Students asked to complete a short general-knowledge test as fast as possible to win a prize if they were in the fastest 20 percent completed it faster if they were told that they were competing against 10 people rather than 100. Students asked how fast they would run in a race for a $1,000 prize if they finished in the top 10 percent said they would run faster in a race against 50 people rather than 500. Similarly, students contemplating a job interview or Facebook-friending contest said they would be less competitive if they expected more competitors - even if "winning" only required finishing in the top 20 percent. The authors conclude that competitiveness was curtailed because the larger the group, the more difficult it is to compare oneself directly to others.

Garcia, S. & Tor, A., "The N-Effect: More Competitors, Less Competition," Psychological Science (forthcoming).

Profiting from the honor system

DESPITE THE OLD saying that the customer is always right, businesses generally assume that they must dictate prices to customers. But a team of marketing researchers wanted to see if the opposite extreme - "pay what you want" - could also be profitable. They conducted experiments in Germany at a restaurant, a movie theater, and a delicatessen where customers could pay whatever they wanted for a buffet lunch, tickets, or hot drinks, respectively. Every customer paid something, and only a few customers paid very low prices. In fact, the average price paid for drinks at the delicatessen was slightly higher than normal. Although the average price at the restaurant was somewhat lower than normal, it sold so many more buffet lunches than usual that the owner retained the new approach and said he planned to replicate it at another restaurant. The authors note that "pay what you want" pricing doesn't just apply to face-to-face situations: The British rock band Radiohead released an album online, in exchange for whatever price people wanted to pay, and it was later reported that 2 million copies were downloaded and that the album was profitable. The authors suggest that such a pricing strategy is most applicable to products with high fixed, but low variable, costs.

Kim, J. et al., "Pay What You Want: A New Participative Pricing Mechanism," Journal of Marketing (January 2009).

Variety can change your mind

WE LIKE TO believe in personal responsibility and freedom, but, in reality, choices are often guided by subtle external forces. Marketing researchers have found that the sheer variety of options is one of those forces - in other words, variety itself can affect our decisions. Across several experiments, the researchers tested the hypothesis that people would choose a more justifiable, or virtuous, option when making a choice among many options rather than just a few options. The percentage of people choosing low-fat over regular ice cream almost doubled when they made that choice among five potential flavors rather than one. People who passed by a self-serve tray filled with fruit and desserts were more likely to choose the healthier fruit if there was a greater assortment of both items. Likewise, people chose a printer over a music player if there was a greater assortment of either one.

Sela, A. et al., "Variety, Vice, and Virtue: How Assortment Size Influences Option Choice," Journal of Consumer Research (forthcoming).

It's true, your dog relaxes you

THE DOG MAY indeed be one of man's best friends. New research suggests that people get the same hormonal reaction from bonding with their dogs as with humans. The hormone oxytocin, which is secreted during childbirth and breastfeeding, has been shown to facilitate human bonding. A study in Japan had dog owners sit in a chair and give commands to their dogs. Some owners could look at their dogs, while other owners couldn't. The owners who could look at their dogs, especially owners who spent more time looking at their dogs and had a closer relationship with them, were found to have significant increases in oxytocin levels in their urine after interaction with their dogs.

Nagasawa, M. et al., "Dog's Gaze at Its Owner Increases Owner's Urinary Oxytocin During Social Interaction," Hormones and Behavior (forthcoming).

Aren't we great (and wrong)!

ONE OF THE most famous phenomena in social psychology is groupthink, the tendency of a group to converge on a consensus without much critical evaluation, even if the consensus is wrong. Various remedies have been proposed over the years, but some management researchers are presenting an interesting new angle on it. They invited a couple hundred members of fraternities and sororities to participate in a problem-solving experiment. The students were given 20 minutes to read a murder mystery and deduce the most likely perpetrator out of three suspects. Individually, only 44 percent of the students got it right, which is slightly better than chance. The students were then sorted into groups of three, all from the same fraternity or sorority, and were given 20 minutes to come to agreement on the most likely suspect. After a few minutes, a fourth member was added to the group - sometimes from the same fraternity or sorority, sometimes from a different one. If the new member came from a different fraternity or sorority, the group performed objectively better then the totally homogeneous groups (75 percent vs. 54 percent correct), and members with incorrect guesses were much more likely to change their minds. Nevertheless, the homogeneous groups perceived themselves as having more confidence, consensus, and effective interaction.

Phillips, K. et al., "Is the Pain Worth the Gain? The Advantages and Liabilities of Agreeing With Socially Distinct Newcomers," Personality and Social Psychology Bulletin (forthcoming).

Kevin Lewis is an Ideas columnist. He can be reached at kevin.lewis.ideas@gmail.com.