Ok, so let me begin by asking you, haven't you faced a dilemma when deciding

What to eat? A Pizza (you want) or a Salad (you should).
What to do with your money? Get an Ipod (you want) or Save (you should)
What to watch? An action movie (you want) or documentary (you should)

Perhaps you thought that you made a decision out of your volition, there is no observable pattern in your choices & it depends on your "mood". But, know that you are mistaken. It can very well be predicted what you would buy, what would you see and what would you do with your money.

Surprised?? Read On.

According to Human Psychology people behave as if they have multiple selves with competing interests. We have a should self and a want self. If both of them are left on their own the should self would do all the things in this world that are good (Salad, Charity & Books) and the want self will do everything that satisfies your visceral desires (Pizza, Ipod & Movies). This difference arises because the Should self tries to maximize your long term benefit and the want self seeks immediate gratification.

Well, now can you figure out the connection??

When making decisions people weigh the interests of their want self lesser relative to their should self when the impact of that decision would be felt in future rather than immediately.Couldn't get that? Let me give an example. You are more likely to donate when the money gets paid from a future pay check rather than a paycheck in your pocket (i.e. immediately). On the other hand you are much more likely to have a Pizza if you are to eat it just now compared to a Salad (which you would have most likely chosen if your decision to consume could have been delayed).

What are the implications?? Well..............

It simply means people would order more fresh fruits and vegetables if the grocer delivers it 1 week later rather than tomorrow. If the grocer was to deliver tomorrow itself, probably people will order more cola, chocolates and Pizzas. Similarly if students are to choose what will they eat 1 week down the line, you are more likely to see salad as their choice.

For retail chains it has a even bigger implication.

One, they can smoothen their demand forecasts, planning & home delivery services if they pay heed to this phenomenon. From the customer data, they can make out how many customers want their order satisfied as early as possible and how many order much in advance. This can give them an excellent opportunity to manage inventory for different products. (Stock up decisions on junk food or healthy foods)

Second, to maximize & quicken the sale of perishable products like fresh vegetables, milk products etc they can place them near the entrance in their stores so that the buying those products is most widely separated from consuming those products (More the delay, more the chance that these products will get sold)

 

contributed by Hitesh Bansal