The transcript from this week’s MIB: Robert Cialdini, author of Influence, is below.
You can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Stitcher. Our earlier podcasts can all be found at iTunes, Stitcher, Overcast, and Bloomberg.
This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, and for those of you have enjoyed our prior conversations with the behavioral psychologists like Bob Shiller and Richard Thaler and Danny Kahneman and Meir Statman and any of the other folks who work in that space, I think you are going to find this conversation to be absolutely delightful.
Robert Cialdini is a professor at Arizona, he is also the author of what everybody I know who works in any form of marketing or sales calls their “Bible.” He wrote the book “Influence, The Psychology of Persuasion” and he tells some just absurdly delightful stories of spending time working undercover at used car sales places and infomercial sorts of shops and fundraisers, he also explains how Charlie Munger of Berkshire Hathaway was so taken by the book that 30 years ago he sent Bob a single share of Berkshire Hathaway stock and as you can imagine, turned out pretty well when everything is said and done.
I found the conversation absolutely delightful and I’m sure you will also. With no further ado, my conversation with Bob Cialdini.
My extra special guest is Dr. Robert Cialdini he received his PhD from the University of North Carolina and did some postdoc work at Columbia. He is currently the regents professor emeritus of psychology and marketing at Arizona State University. He is perhaps best known as the author of the book “Influence, The Psychology of Persuasion” that book has sold 3 million copies in over 30 languages, he is also a co-author of “50 Scientifically Proven Ways to be Persuasive” his latest book is “Presuasion, A Revolutionary Way to Influence and Persuade.”
Robert Cialdini, welcome to Bloomberg.
ROBERT CIALDINI, REGENTS PROFESSOR EMERITUS OF PSYCHOLOGY AND MARKETING, ARIZONA STATE UNIVERSITY: Thank you, Barry, I’m very glad to be with you and your listeners.
RITHOLTZ: Same here I’m excited to talk to you because everybody I know who works in the field of sales and marketing when I just casually mentioned, “By the way my guest this week is going to be Dr. Cialdini, Professor Cialdini.” they were like “What? From Influence?” So they were very excited to hear we were having this conversation and I have to begin with the story of the original research you did for the book “Influence.” It almost sounds like an urban legend, you spent three years undercover working as a used car salesman, a telemarketer, a fundraiser, what was that period like and how instructive was it?
CIALDINI: It was the most instructive and most entertaining research enterprise I’ve ever engaged in because not only was it fun to mix up the — mixup with the ideas of people who were actually practitioners who were in the business of getting us to say yes not just the study of it, but also I’ve learned so much as a consequence of how they employed psychology, which is my field, to move others in their direction.
RITHOLTZ: Did you go into that research expecting I’ll get a book out of it or was it really let me get some practical grounding in the field before I become a pure academic?
CIALDINI: You know, that’s really a good question, I went into it to get some ideas for doing research in my laboratories where I would say something this way versus that way and see how many people agreed with it, it was the same thing I would just say it in different ways but I realize that by staying located in a laboratory with college students as my subjects I was missing the power of these techniques to really make a difference outside of the laboratory in the real world. Well there were professions dedicated to getting others to say yes to them and it seemed to me there was a lot to learn if I infiltrated their training programs and learned what they were teaching their prospective professionals.
RITHOLTZ: When did you decide, hey you know, there could be a book in this?
CIALDINI: Well, that’s exactly what happened to me about three months in because what I was learning was telling me there are universal principles of persuasion and a limited number, not just hundreds or thousands of tactics they could be the could be categorized under six basic categories, tendency, human tendencies that inclined people toward yes. And so I thought I could put each one is a chapter in a book and tell the story of what are the fundamental reasons that people say yes to requests.
RITHOLTZ: As I was rereading “Influence” and reading “Presuasion” I couldn’t help notice the parallels to behavioral finance, so you are doing your work in the early 80s around the same time as some of the early work in behavioral finance. When you were doing your research or the academic side of it, did you ever come across the works of Kahneman, Tversky, Thaler, Shiller, all the behavioral scientists of that era or were these two completely different paths?
CIALDINI: They were parallel paths that converged about five or 10 years later when I realized, oh wait a minute, the work that was coming out of the practitioners who were in the streets was comparable to the work that was coming out of the scholars who were in the avenues, what I did was to move from the — from my university position, the avenues, into the streets, that was the smartest thing I ever did.
RITHOLTZ: So there are some examples that are just simply amazing and I want to give a few examples. Can we increase voter turnout simply by surveying people and asking them not who they are going to vote but asking them to make a prediction whether or not they are going to vote, what’s the impact of that?
CIALDINI: In fact there is research to show that that’s the case because people then set a path in their mind and a time in their mind and they then use those features as cues that spur them into action, where if it is just left ambiguous, there are really no cues in their mind that send them into a behavior change.
RITHOLTZ: So simply asking people and when you ask people, hey do you think you’re going to vote this year? Most people are going to say, yes I expect to vote, that simple act then gets them committed to actually vote.
CIALDINI: And if you say where and when will you vote, that doubles it?
CIALDINI: That doubles it.
RITHOLTZ: So my local polling place is the library or the school around the corner and just read and it’s November 6 hypothetically this year, that has an impact.
CIALDINI: That does.
RITHOLTZ: That is quite astonishing.
So when you were writing the book after your three year experience in the trenches, did you have any idea how successful this was going to be as a book? Did you have any idea to the sort of reaction this was going to engender?
CIALDINI: I could not have sensibly known, Barry. Because there were no books like this and…
RITHOLTZ: Did you have an — so sometimes I’ll wrap — sometimes I’ll write a column and I’ll say oh this is the greatest thing ever and just lands and nobody cares.
RITHOLTZ: And every now and then I’ll put something out, and I’m like, that’s not bad and it just goes viral.
CIALDINI: It goes crazy.
RITHOLTZ: I’m curious if at a book length you have so much — did you had a sense at the very least this is very different than the academic literature that’s out there?
CIALDINI: Right, but I didn’t know that it was going to be adopted outside of the academic community which it has. I was in Poland recently and I have a colleague from Poland, Professor Vilhemina Volsinska (ph), she said to me, “You know, Bob, your book Influence is so famous in Poland, my students think you’re dead.”
RITHOLTZ: That’s fascinating. You wrote the book in the early 80s. How has the state-of-the-art on psychology and persuasion changed since then?
CIALDINI: The tendencies that people employed to decide whether to say yes have not changed, those were evolved over eons, they are still in us hardwired. What’s changed is the channels available for using or tapping those tendencies in the biggest change is the Internet. We now have available to us information about what other people like us have done, are choosing to do, have opinions about from around the world, chat rooms, interest groups, various kinds of review sites and so on, we know what thousands of people who have similar interests as us are thinking and doing and reacting and if we follow that lead which is what I call the principle of social proof, we are much more likely to be successful because we’ve essentially beta tested with all these people the proper response.
RITHOLTZ: So I’m going to go out on a limb here and say, of all people, you are probably not very surprised about the role of Facebook and fake news possibly having an influence in the last election.
CIALDINI: I am not surprised because of that principle of social proof, we look around us, what are the people around us doing and then there’s a second dimension, what do the people around us like us doing? Well that’s Facebook.
RITHOLTZ: So you talk about social proof, there’s an example in several of your books that I’m just tickled by. Somebody was selling something on an infomercial and they changed three little words on the tagline. You normally hear “operators are standing by, please call now” it’s almost a throwaway line.
RITHOLTZ: They changed it to “If operators are busy, please call again” and that simple change broke all sorts of sales records going back 25 years, is that simply a case of social proof that the lines are going to be busy, lots of people are buying it therefore I should buy it, are we that easily manipulated?
CIALDINI: It can’t be anything else, Barry. Because think about it, to say if a lot of people — to say you might be inconvenienced if you try to call us is like death in almost any other sense, right? Don’t try to access our product because you might not be able to get access, this is saying if a lot of people, if the lines are busy calling, that means a lot of people just like me are doing this. I better get on this train.
RITHOLTZ: Do you think they had any idea in advance how successful that simple little change was going to be?
RITHOLTZ: It just, they just got lucky.
CIALDINI: This is what they do with — they try out a lot of different things and then when they hit on one they realize, oh this works but they don’t realize why it works, it’s not their job to know why it works, that’s my job, that’s what I do for a living.
RITHOLTZ: So let me bring up one of my favorite stories from “Influence” it just cracks me up, there are these two old tailors Sid and Harry Drubeck, one of the whom is hard of hearing and the first one has a customer trying on a suit and he asked the other one was across the room stitching something up, “how much is this is this suit?” And the answer comes back — 40 — “That’s a very fine wool suit, it’s $42.”
CIALDINI: This is during the Depression.
RITHOLTZ: Right, way back when, and the hard of hearing one turns to the customer and says “He said it’s $22” and the customer thinks he’s getting a deal, immediately buys it, again is it that easy to fool our wetware that oh, it’s a $42 suit, I’m getting at $20 off, let me get it before anybody realizes.
CIALDINI: It is that easy because we are so hardwired for these principles. They just cause us to leap into a choice when one or another of them is present.
RITHOLTZ: Let me give you a quote from the book which I find fascinating, “We all fool ourselves from time to time in order to keep our thoughts and beliefs consistent with what we have already done.” Why is the desire for consistency such a motivator of behavior?
CIALDINI: Two reasons one is we prefer to have our — for reasons of self concept to be consistent within ourselves, right? We want to see ourselves as reasonable, as logical, and rational individuals would be — would say one thing that would fit with the next thing we say, the other is the people around us want us to be consistent too.
And so for both of those reasons, internal status and external status, we want to be consistent and appear to be consistent in our environment.
RITHOLTZ: So let’s talk about the status of social primates in a group, why is reciprocity such a strong influencer? Is this just the result of our evolutionary biology, becoming the dominant species as part of the a social group of primates that lived and worked in teams or what how do you explain that?
CIALDINI: Yeah, I think — I think it’s both hardwired in us over a long period of time if we give back to those who give to us first, that’s the rule of reciprocity. We have to do that. Then people will want to be with us, will want to work with us, will want to exchange with us, if we don’t do that, we have very nasty names for people who take without giving in return, we call them moochers or takers or teenagers actually, and nobody wants to be labeled like that so we will go to great lengths to give back after we have received.
I just saw study in a candy shop if a manager greets the people who come into the store warmly and then invites them to the counter, that’s the control group, if instead he greets them warmly and gives them a piece of chocolate, they by 42 percent more candy.
RITHOLTZ: Really, that’s amazing…
CIALDINI: They are giving back.
RITHOLTZ: Astonishing. The other reference you make is and in one the books and they’re all kind of a blur in my head but if when you hand the check to somebody at a restaurant, when the waiter brings the check, if you include a mint or a chocolate with the check, what does end up doing versus having a mint at the desk on the way out?
CIALDINI: It means the server has given you something personally and the server’s tip goes up 3.3 percent if there is a mint on the tray. Now here’s the interesting thing, if there are two mints on the tray, his tip goes up 14.1 percent.
RITHOLTZ: Really? That’s amazing. And let’s do another social proof which is I’m fascinated with? What’s a simple way to avoid hung juries?
CIALDINI: Don’t let people vote preliminarily by raising their hands.
RITHOLTZ: It can’t be in public in other words, you need a secret, your right to vote down, you take a test straw poll right but no once you raise your hand in public, you are now …
CIALDINI: You’re committed.
RITHOLTZ: Now is that social proof or is that consistency?
CIALDINI: It’s consistency. You will now resist changing your mind even in the face of evidence because you’ve made a public commitment to that choice.
RITHOLTZ: Quite, quite fascinating. The example of the smoker who handwrote a bunch of notes, I promise you I will never smoke another cigarette and gave them out to coworkers and friends and a now former boyfriend, but at the time of a serious boyfriend, that smoker said the only thing that prevented her from ever smoking again were those notes. Is that commitment and consistency or social approval and social proof.
CIALDINI: It’s commitment and consistency because of social approval, violating your promise in the face of the people you care about means you lose their approval and so that’s the thing that people don’t want to do. So if they make a public commitment to people they really care about, that will hold them steady to their choice more than making that a private commitment to themselves.
RITHOLTZ: So I thought about doing, when I read that in the book, I thought about doing that exact thing and I have to tell you honestly it really scared me because once you write it down and commit to five or 10 people, that’s a powerful, powerful thing hanging over your head, you have to decide do I really want to fill in the blank go to the gym lose weight whatever, once you make that commitment, that is just really strong.
CIALDINI: And it’s remarkable how small the commitment can be, there is a study done in Chicago by a restaurant owner, he had his receptionist change two words in what she said when she took an order a reservation, excuse me, from “please call if you have to change or cancel your reservation” to “will you please call if you have to change” and then she waited for people to say “Yes, I will”
It reduced no-shows by 64 percent.
RITHOLTZ: Wow, that’s amazing.
CIALDINI: I have to ask you about the way you use the term compliance officials and compliance agents, it really is a question of getting people to comply with your goals, desires, or requests, isn’t it?
RITHOLTZ: Right. And it’s different from persuasion. I don’t have to persuade somebody that we should see this movie that I prefer if I just say you know you chose the movie last time so I’ve changed them, I’ve influenced them, I’ve gotten them to comply with my request without changing their opinion about the movie at all.
CIALDINI: Very interesting.
RITHOLTZ: So there was a 30 year period between “Influence” and then “Presuasion” which is almost like a prequel to that book. I know you’ve done other writings in between but really focusing on a big bold idea and expanding it to a full book, why did you take three decades and what motivated this book?
CIALDINI: I think the key is that these are the — my only two solely authored books, first “Influence” 30 years later pre-suasion and the reason I waited is that I didn’t want to just plant a series of bushes around the tree that “Influence” had become, I wanted to wait until I had the seed for another tree and that didn’t come along until the idea for “Presuasion”.
RITHOLTZ: And “Influence” is a giant redwood we were discussing earlier, this is a tremendously influential book amongst marketing and sales professionals, who do you think the audience for “Presuasion” is going to be? Similar or possibly different?
CIALDINI: It will also be “Influence” professionals but I hope it will also be citizens who want to know that they can resist certain kinds of influence that they never recognized before, it’s the influence that comes before they receive a persuasive appeal.
RITHOLTZ: And you give a number of examples of that including some of my favorites were a little bit infuriating that the minor commitment for something small and then later they ask for something big or the underpricing of something you get somebody to agree to buy something for much less money than it perhaps should’ve been, or a couple hundred bucks off a car or something and then by the shockingly when oh somebody caught it, my manager at the bank, somebody caught the mistake “Hey this car isn’t 24,000, it’s 25,000” they still seem to go along with the purchase. I can’t imagine tolerating that. Do most people put up with that or I would lose my mind in a car dealership.
CIALDINI: It’s so common, it’s called the low ball technique, it actually has a label in car sales.
RITHOLTZ: This is not an accident, this is done on purpose.
CIALDINI: This is done on purpose, they do it and very often it’s done where they will give you a price on your trade in that’s way too high and then the used car manager comes in with the blue book and says I’m sorry our salesperson made a mistake, it’s really, then it shows you the real price and you say okay caught me, you never realized that they caught you.
RITHOLTZ: That’s amazing.
What other things can we do to shield ourselves from these sorts of techniques other than read the book?
CIALDINI: Yes, if you read the book and by the way if that ever happens to you, use the term lowball, call it a lowball. That’s against the law in most …
CIALDINI: Yes, I mean it’s against the regulations…
CIALDINI: State rules, they will start backpedaling like a quarterback on a fly route.
That’s interesting, so you also mentioned the scantily clad lovely woman who came to your house trying to sell you the book of entertainment stuff and you said if only I had revealed that I understood the technique and called her out on it, she would’ve been out of there fast as can be. Is it are these techniques that effective that as soon as people know you’re using these techniques, they back away from them?
CIALDINI: Well that’s a crucial question because if they’re being used dishonestly, yes then when we call them on them, we’ve caught them in the lie and then they back away but if they’re being used honestly, if for example the last time I bought a television set, I was in a appliance store, I wasn’t really looking for one, the salesman came up to me and said “I see you’re interested in this set over here that I was looking at but it’s our last one.”
RITHOLTZ: Oh really?
CIALDINI: “And I just got a call from a woman who said she might come by this afternoon to buy it.”
CIALDINI: Barry, 20 minutes later I’m wheeling out of the store with that television set in my cart and I’m supposed to be the doctor of “Influence.”
RITHOLTZ: If you get suckered by these things, what hope do the rest of us have
CIALDINI: Well here’s the key, was I a sucker? I went back the next day to see if that if there was an empty spot on the shelf.
CIALDINI: There was.
CIALDINI: And so I went back to my office and I wrote a glowing review of that store and then salesperson, but if there had been another one, I would have written a very negative review, that’s how we have to defend ourselves not just look at reviews from others who’ve experienced this store or that salesperson, we have to contribute to that so that they don’t get away with it in the future.
RITHOLTZ: I have to ask you about a Benjamin Franklin quote that you referenced that I’m also tickled by quote “He that has once done you a kindness will be more ready to do you another than he who whom you yourself has obliged” tell the story if you would about the person Franklin was having a hard time with who had a fairly substantial library, what happened there?
CIALDINI: So this was a guy that Franklin was in conflict with regularly on a lot of the political issues, they didn’t like each other, and so Franklin asked the sky to lend him a book, the guy did.
RITHOLTZ: The guy had a fairly substantial library of rare manuscripts and of course was deeply proud of that library.
CIALDINI: Correct and he gave Franklin the book. And Franklin said in commentary, now he has to think of me differently, he has to think of me as someone who’s worthy of receiving one of his prized books, I’ve changed his conception of me now.
RITHOLTZ: And he sends the book back with a note “I’m deeply obliged and if I you ever need a favor please never hesitate to ask” the dynamic completely flips.
CIALDINI: Completely flips.
RITHOLTZ: Even though he’s the one who’s obligated.
RITHOLTZ: The person who is so difficult to him suddenly becomes much more flexible, malleable, pleasant.
CIALDINI: He did a friendly thing and he becomes a friend as a consequence.
RITHOLTZ: Is that the consistency?
CIALDINI: It is the consistency principle.
RITHOLTZ: Because you would’ve let that book to him, but it was the ego and the pride in the library that sort of…
CIALDINI: Right, you know there’s a way to complement people that fits with this, complement people to give them reputations to live up, give them a compliment so for example I’ve got a guy who delivers my newspaper every morning and I want them to put it in the center of my driveway so it doesn’t get wet when the sprinkler systems…
RITHOLTZ: Sprinkler, yes.
CIALDINI: So I wrote him a little note, thank you, Carlos for putting my paper in the center of the driveway which he would do 80 percent of the time. Thank you for that, that’s very conscientious of you.
CIALDINI: Since then, one hundred percent of the time.
RITHOLTZ: So you must be a dangerous person to be a neighbor with, people don’t even realize what they’re dealing with.
Let me get give you another quote from the book that I really like. “People seem to be more motivated by the thought of losing something than by the thought of gaining something of equal value” that’s kind of intriguing. Why is that? Is that simply the endowment effect? We put more value on that which we already have. Why does the prospect of a gain of equal value versus a loss sounds a lot like risk-aversion.
RITHOLTZ: But why is that?
CIALDINI: Well, you used the right term, prospect because prospect theory, developed by Daniel Kahneman won him the Nobel Prize in economics…
CIALDINI: A few years ago for the idea that the prospects of losing something are psychologically much more potent than the prospects of gaining that very same thing he demonstrated in a lot of ways and the reason I think is evolutionary. If we gain some unit of value, it’s like we’re on, you know, here we are, we’re doing okay, we gain something, now, we’re doing better. If we lose something we might be gone.
RITHOLTZ: It’s an existential threat as opposed to a temporary increase…
CIALDINI: We might see below the subsistence level, we might lose the ability to carry on so we’re much more interested in being sure we don’t lose and you’re right about loss aversion as the proper label for this.
RITHOLTZ: So let’s talk about authority a little bit there are some interesting things happening in that space. Where does authority come from and why is it so influential over us?
CIALDINI: It normally makes sense, now I’m thinking of authority as being an authority rather than being in authority, right? Somebody who’s an expert, somebody who’s knowledgeable, somebody who is an authoritative voice on a particular topic. It makes great sense to follow the lead of the people who know the most about that topic.
It reduces our uncertainty as to what we should do and allows us to get off the fence, stop dillying and dithering and move forward to something valuable because it is associated with the views of the true experts on the topic.
RITHOLTZ: So here is a another quote “Nothing in life is as important as you think it is while you are thinking about it” and that comes from “Presuasion” why is that the case?
CIALDINI: This is actually a quote from Daniel Kahneman and it has to do with the fact that when we focus our attention on something, we typically assign it more value as a result of that focus, and here’s why. If you go into a new situation, you know what you’re going to do? You’re going to size up that situation and look to the feature in it that is most important to you. So if a — but there’s a loophole in the system, if a communicator can get you to focus on some element in that situation you presume that because you are focusing on it, it’s more important to you.
RITHOLTZ: So in other words, by redirecting people’s attention you automatically get them to raise the priority level of what your — what you’re looking at or focused on.
CIALDINI: Yes because you’ve hijacked the norm of a typical system that works most of the time, you focus on the most important things, so if I can get you to focus on something, I will have caused you to misjudge its importance upward.
RITHOLTZ: What is it about writing something down that has a similar effect even if it’s a minor thing once you put pen to paper, suddenly it becomes a bigger priority. Is that, again, back to just consistency? It is consistency but also when you write things down, they typically become public, they are available for other people to see. So you want to be consistent in yourself but you also want to be consistent in the eyes of the people whose regard you care about.
CIALDINI: You tell the story and in “Influence” about the Chinese interrogators in the North Korean conflict of American servicemen and they weren’t brutal, they weren’t torturing people, they were doing these very, very subtle psychological nudges for lack of a better word.
CIALDINI: How does a small little thing — writing down something like America isn’t perfect become something as significant as it looks like you’re spouting communist propaganda, how do you go from that little thing to something as giant as that?
RITHOLTZ: So let me say what they did in Korea in the prison camps.
CIALDINI: This is in the 1950s.
RITHOLTZ: So right, so you would agree that America isn’t perfect, right? It’s nothing is and then they’d say that’s the steppingstone, and then they would say how is it imperfect? Can you tell us some of the ways?
CIALDINI: And then well, you know we’ve got some economic ups and downs, we don’t do the greatest thing with all of the that the members of our community and so on.
And then they say, well, this is your idea, could you write it down now for us?
And then after you have been written it down, they say, now will you be willing to speak to this, this thing that you wrote on the camp broadcasting system? And now you are giving aid and comfort to the enemy in public.
RITHOLTZ: It’s that subtle, it’s that nuanced, and the next thing you know, just by admitting the country isn’t perfect, suddenly you go down the slippery slope to where you are borderline violating — it used to be name rank and serial number.
CIALDINI: That’s right, it used to be that’s all you could give. But sure I meet every but no society is perfect, if you agree to that, that is the first step down that slippery slope.
RITHOLTZ: So let me ask something a little more pleasant the number one rule for salespeople is to show customers they genuinely like them why is this so much more important than the product they are actually trying to sell?
CIALDINI: Well if you see, I know for myself, if I see that a salesman likes me, I exhale a breath, good this person is going to take care of my interest, my flanks are protected, it’s somebody who likes me. It used to be that they said the number one rule of sales was to get your customer to like you, I have revised that to no, no come to like your customer so that when they see that you like them they will feel comfortable and they will be right to feel comfortable if you have really come to like them, you will take care of their interests.
RITHOLTZ: So my last question, how can we work to protect ourselves from unscrupulous users of these various techniques?
CIALDINI: You used the right term, unscrupulous, right? We don’t want people not to tell us when there is true scarcity, when there is true social proof, when there’s true authority to move in a particular direction.
RITHOLTZ: Those things have become hardwired because they actually serve a purpose.
CIALDINI: That’s a great insight. That’s why they’re hardwired, they typically lead us in positive directions, but if somebody counterfeits them, those are the unscrupulous operators, those are the people we have to watch out for, and we can do it sometimes by looking at the message they present if they are fast talking for example, is a good — but I like the idea of looking at reviews and contributing to reviews for any organization, any individual that is trying to move us in a particular direction, we have to provide evidence of whether they were honest and genuine or whether they were duplicitous.
RITHOLTZ: Quite fascinating. Can you stick around a bit? I have a ton more questions for you.
CIALDINI: I can.
RITHOLTZ: We have been speaking with Professor Robert Cialdini of Arizona State University. If you enjoyed this conversation, be sure and come back for the podcast extras where you can hear where we keep the tape rolling and continue discussing all things persuasion and compliance. You can find that wherever your finer podcasts are sold.
We love your comments feedback and suggestions, write to us at MIBPodcast@Bloomberg.net, you can check out my daily column at Bloomberg.com/opinion, follow me on Twitter @Ritholtz, I’m Barry Ritholtz, you’re listening to Masters in Business on Bloomberg Radio.
Welcome to the podcast. Bob, it seems so fun to call you Bob.
Thank you so much for doing this, I have been looking forward to this for a while, I didn’t really mention, “Yes 50 Scientifically Proven Ways to be Persuasive” but this is one of those books that you could just randomly pick up, open it to any page and is a two or three page vignette that is so informative and oh, it just crystallizes something.
So I have to go, I just find it fascinating, I have to go back to the early days when you were undercover, so you worked at that fundraising organizations and infomercials and used car dealers, who do you think was the best at applying the techniques of persuasion and who you think you learn the most from watching?
CIALDINI: Of those professionals?
RITHOLTZ: Yes both those professions, an individual, you referenced Jim the guy who was selling the alarm, fire alarm systems…
RITHOLTZ: Who had a wonderful little technique, oh I left something in the car or whatever, would it be okay if I leave and let myself back in? And just that subtle little thing of you’re now imbuing him with trust to come back into the house.
CIALDINI: That is right. He said to me Bob, who do you a while back into your house with your own key, who do you give your own key to get back into your house? It is somebody you trust right? Man, and he said, I want those couples trusting me before I ever begin my sales pitch.
RITHOLTZ: That is really amazing. So that was the alarm business. The used car or new car business is one of the most frustrating shopping experiences of everything, what is that about and what did you learn from that group?
CIALDINI: You know what I learned is that they recognized over of many, many years, they found out what works, but they really don’t understand why it works conceptually, what or psychologically, what are the factors that make this thing work? When I would ask them about it they would just give me a circular answer.
RITHOLTZ: Well, this works.
CIALDINI: It works because they like it or they you know that they’ve come to like it because I’ve made them like it, that — it doesn’t, they don’t know what they did in some kind of psychological sense, that was the most fun for me, was to take something that really worked and unpacked it — unpack it in terms of the drivers of it not just the procedures that produced it but the psychological tendencies that accounted for it.
RITHOLTZ: And what about some of the infomercials, the examples you have given in the book are just — it’s, the takeaway I constantly come back to his we really that easy to manipulate and I keep coming back to the answer, yes, I guess we are.
CIALDINI: We are because these things are hardwired in us and we get — we get cues that trigger those responses that are essentially unthinking because most of the time, if one or another of these principles is really there, authority, social proof, they do steer us correctly, so these people are essentially hijacking our natural tendencies by counterfeiting the cues for when we should undertake action that’s consistent with those tendencies.
You used the example of the female predator firefly using a certain set of illuminations and dances that to a slightly different male firefly species appears to be a mating dance and instead they come to them and in which case they are devoured.
So that was too successful, they eliminate their food supply, and the other fireflies would eventually learn not to respond to that. Apparently this can work just when it’s on the margins, you can overreach as a species or as a salesperson.
CIALDINI: Precisely right.
RITHOLTZ: That’s quite interesting.
The other thing that really stood out in the book and I mentioned this during the broadcast portion it is the overlap in the parallels to some of the behavioral finance, things we’ve seen, what you find in that space to be interesting and do you ever go there thinking hey that’s something I should researcher or this is an area I might want to experiment with because there’s a lot of interesting academic work done on that side of the…
CIALDINI: There is, and of course people like Daniel Kahneman, Tversky, and Richard Thaler are superstars in that area and I certainly want to pay attention to what they’ve done, but there is another couple of guys who are not in that space, not academics, Buffett and Munger who’ve taught me because about 20, 25 years ago I went to my mailbox and opened up an envelope, it was a share of Berkshire Hathaway stock.
RITHOLTZ: Which by the way, this is another urban legend which as turns out to be true about you and Charlie Munger, tell us…
CIALDINI: It was sent to me by Charlie, he said I read that book that you wrote and it’s been so gainful for us here that by the rule of reciprocation, you’re entitled to a share of stock.
It was about $75,000 the.
RITHOLTZ: Back then.
RITHOLTZ: And what year was that?
CIALDINI: It was like 25 years ago.
RITHOLTZ: So 25 years ago $75,000 is real money.
CIALDINI: Well it’s $320,000 now.
RITHOLTZ: Not too shabby.
CIALDINI: But the thing is because I had that share of stock I was able to get the Berkshire Hathaway shareholders letter every year.
RITHOLTZ: The annual letter they put out, right.
CIALDINI: It is brilliant psychology, it is brilliant, and so that’s where I’ve been exposed to some of the connection between this stuff and finance by reading that letter and seeing how Buffett who is not just a brilliant investor, he’s a brilliant communicator about being a brilliant investor.
RITHOLTZ: So I have to ask a little bit about the Munger story, you’re home and a letter comes, what’s going through your mind when you open up this package with a stock certificate and I assume there was a cover letter from Charlie?
CIALDINI: Yes, there was a cover letter from Charlie?
RITHOLTZ: What was that moment like?
CIALDINI: It was disbelief it was because as you say 25 years ago $75,000, that’s a — that was a lot to me and I think this is a joke, one of my friends has done because they know how much of a fan I am of Berkshire Hathaway, I never could afford it at that point to buy but it turns I checked it out and it wasn’t and then there was a phone number there.
RITHOLTZ: Come on.
CIALDINI: No, and Charlie said could you give me a call because we — I’d like, and to ask me to do some things for him and with him, and now we’re friends.
RITHOLTZ: That’s an amazing story. I’m a huge fan of their work, their writing, and I always use Munger’s admonition to invert anytime you’re looking at something and it’s a little perplexed, ask yourself what would happen if the counterfactual, what would happen if the opposite were true?
RITHOLTZ: What does that mean and very often it’s pretty clear that oh, I’m looking at this from the wrong angle once I flip it, it becomes very, very easy to do and perhaps the greatest little bit of social proof right in the middle of the financial crisis in ’08 ’09, Buffett pens am op-ed in I don’t remember if it was the New York Times or Wall Street Journal but it was one of the bigger mainstream papers saying “Buy America, I know I am” and said “hey I’m a long-term investor even at 84, whatever he was back then, late 70s and I’m buying stock here and you should also.
That’s potentially enormously influential, another example of social proof.
CIALDINI: Yes, coupled with authority.
RITHOLTZ: Huge authority, perhaps the most successful investor of all time.
CIALDINI: Maybe all time.
RITHOLTZ: He had an advantage that good genetics and longevity allow compounding and the last couple of decades certainly hasn’t hurt their reputations, what else have you done with Munger and Buffett? It seems like that’s an interesting crew to hang with?
CIALDINI: Well you know, Charlie has a dinner every weekend before the Berkshire Hathaway annual event and …
RITHOLTZ: This is in Omaha.
CIALDINI: This is in Omaha, my wife and I are invited along with other people and we get to hear his latest piece of wisdom and he said something a couple years ago, I really liked it, he said the way I hope myself avoid mistakes is I keep a list of inanities to things not that I have done wrong because I will protect myself from believing they were mistakes, this is human psychology…
CIALDINI: But I keep a list of the inanities of the people around me who have made terrible mistakes and before I make any choice I consult that list and make sure I’m not falling into the same mistake territory that they strode through in making that mistake.
RITHOLTZ: That’s hilarious, figure out what somebody you don’t respect would do and then just do the opposite.
That’s fascinating. Their body of work and their philosophy is going to live on for a long, long time. Before I get to my favorite questions. I just want to go through the other questions to see what I might have missed. There were two in particular I wanted to ask you about and then we will jump to our favorites.
So you have consulted on several political campaigns as a behavioral scientist over the past couple of decades, I have a couple of questions on this the first is have the modern techniques of political campaigning, how much better have — has this group gotten at figuring out what voters really want, what motivates them and how to reach them, is that now on a dark art or is it becoming a science or somewhere in between?
CIALDINI: It’s a science, it’s big data and big data churning and crunching and extracting that kind of information but what we’ve learned I think the biggest difference in modern life is that here in the United States, we’ve become partisan, we are not really susceptible to persuasion attempts anymore to change our opinions, our beliefs or attitudes toward various candidates, what they have focused on is getting out the vote from your base, if you would do that, you win.
RITHOLTZ: Whoever gets more of their base out…
RITHOLTZ: Is the victor. Now I remember reading a Wired magazine article about the former Google employees who had joined the Obama campaign and apparently the iteration in the big data analysis that you are referring to, they became tremendously successful at knowing how to word the request for donations, where to put it, is at the top left, is at the bottom right, that even the font and the color in the size, they just test, they had so many page views, they would just test an ABA BAB test over and over again eventually they just kept tacking towards what worked.
RITHOLTZ: That’s the big data.
CIALDINI: So that that’s right, so now you’re not really talking about persuasion, you are talking about influence, getting people to donate getting people to register, getting people to vote.
RITHOLTZ: So the choir that you’re preaching to as opposed to converting.
CIALDINI: That’s right, you are not converting, but they’ve figured out ways to make that more successful so for example during a campaign there will be a lot of volunteers who are canvassers, they call, they try to get people to donate or register, what they have found is if that person can say to the recipient of the message, I’m your neighbor or I live here in town too”
RITHOLTZ: So it’s not like bringing people in from out of state isn’t as successful as saying, hey I live in the same town as you and here’s why this is important.
CIALDINI: That’s what they’ve learned. You bring in these people from someplace else because you need to staff a particular office and you are…
RITHOLTZ: Not effective.
CIALDINI: Not nearly as effective.
RITHOLTZ: It’s the connection that allows you to say oh this person is like me, I can move in this direction, so let me reference the current White House occupant, and you said something now that puts Donald Trump into a little more better context, I always thought that he was a very unpersuasive sort of politician because we know he has a tendency to not tell — be a straight shooter, not tell the truth, he kind of makes stuff up on the fly, but what I’m hearing from you is he’s not trying to persuade me to switch your vote or to come to — go from a centerleft progressive New Yorker to let me support someone who’s very right of center.
What you’re suggesting is he wants to motivate his base, he wants to take the people who believe as he does and get them out to vote.
RITHOLTZ: While we’re having this conversation, there’s the caravan from Guatemala he’s talking about, he is talking about tax cuts, he’s talking about our friends the Saudi’s all sort of stuff that I would imagine the opposing party and even people in the middle would disagree with but his base just eats up.
CIALDINI: Right. He does a couple of things very well. One is to speak with confidence and certainty.
RITHOLTZ: Regardless of whether or not it’s deserved or not.
CIALDINI: And that does move people into saying, oh here’s an authority, this person must know what he’s talking about, look at the confidence, the certainty with which he speaks is one. The other thing is he uses social proof brilliantly in his…
RITHOLTZ: Everybody knows, people are talking…
CIALDINI: Everybody I talk to says, but then in his campaign rallies he has the cameras, he says turn the cameras around, take a look at this.
RITHOLTZ: Big room filled with people.
CIALDINI: Social proof. If all these people think I’m legitimate, if all these people think I’m right, I must be right.
RITHOLTZ: I have had the debate with friends who think he’s dumb, and I argue with them you have to acknowledge his streetsmarts, you have to acknowledge, all right he’s not Reagan, we can’t call him a great communicator but he’s an incredibly effective communicator to that group of people and the people he wants to motivate to get out and voted. It’s — I’m always, I’m an independent I’m always astonished how the partisanship on the left, how the Democrats and I don’t really mean partisanship, how the faith in your own political beliefs can obscure some truths out there that would make you a more effective party, candidate, ideology, whatever but people have a hard time seeing past the end of their nose.
CIALDINI: That is right, once you’ve got a hard position, it is really difficult to move away from it especially if you’ve made it in an active public way.
RITHOLTZ: If you are going to give advice to either political party about either getting their base out to vote or persuading the independents in the middle, a lot of states are purple and if we hold aside the gerrymandered districts, what advice would you provide to try and win that great purple middle?
CIALDINI: It’s something that for some reason the two major parties have not employed systematically, it is something called the convert communicator, which is what somebody who used to believe the other side and now testifies and then I realized or I saw something or this happened to me, it could be for example in the healthcare issue, you know, as an opponent of this and then I got sick or my son got sick and then they say I used to be in your shoes, you can’t reject somebody, who was like you? All right.
And then they say but I flipped and you are willing to be open to this guy even though this person is saying something that is not what you currently believe because he or she used to believe.
RITHOLTZ: That’s quite fascinating, it’s too late for 2018 but hopefully people pay attention to that for 2020. So I know I only have you for a finite amount of time, let me get to my favorite questions that I ask all my guests, these are always interesting because I end up finding out a lot about people that that I wouldn’t have found out otherwise and let me start with what’s the most important thing that people don’t know about your background?
CIALDINI: I had a chance to play minor league baseball instead of go to school.
CIALDINI: I was a centerfielder and I wanted to be Willie Mays or Mickey Mantle and the scout who was going to sign me said to me, tell me are you any good at school? I said yes. He said did you go to college? Yes. Did you finish college? Yes. Go to school, kid.
CIALDINI: Go to school, kid.
He recognized something that — I couldn’t hit a slider, truth is I couldn’t hit a slider and he knew I wasn’t going to go up very high. And he said go to your strength, essentially he didn’t say it in those words, go to your strength, if you’re really good at school, go to your strength, kid.
And Barry, if I hadn’t taken that advice, I don’t know where I’d be right now, but I wouldn’t be in this room with you.
RITHOLTZ: You would’ve taken a very different path on your career. I had tremendous accuracy as a pitcher in high school and I could throw a wicked fastball, no breaking ball, that was it, can’t throw a curve, you’re done.
So similarly that’s interesting I know — were you a decent hitter?
CIALDINI: I was a good hitter and I could get a jump on the ball, but I couldn’t hit a slider.
RITHOLTZ: So tell us about some of your early mentors who influenced you either academically or professionally.
CIALDINI: You know once again, I got academic mentors but I’m going to go again to Buffet and Munger who just had been breathtakingly good at showing me how success can be maintained and augmented.
RITHOLTZ: That’s fantastic. What about psychologists, what psychologist influenced your approach to thinking about academics, behavioral psychology, sociology.
CIALDINI: I’m going to say, Kahneman, Tversky, and Thaler.
RITHOLTZ: You could do worse, I’ve had Kahneman in here, he’s delightful and nobody is more amusing than Dick Thaler, he’s just absolutely charming, also a previous guest, I will get a little social proof going.
RITHOLTZ: Tell us about books, what are some your favorite books be they fiction, nonfiction?
CIALDINI: I’m going to stay in the category of persuasion, social influence, compliance, I would start with “Aristotle’s Rhetoric” first…
CIALDINI: He took a systematic look, he was talking about orators right how do you make your case convincingly as an orator, that’s all they had then, and then do you remember a book in the 50s by a guy named Vance Packard “Hidden Persuaders”?
RITHOLTZ: Oh sure, I don’t remember that book but I’m familiar with the title.
CIALDINI: Yes, I don’t remember him, I was a kid at the time but I remember reading it in college and thinking this is the first time this guy really looks at the advertising industry and what makes these commercials successful psychologically, what is it about the psychological buttons that are being pushed?
RITHOLTZ: I remember something from that book, “Choosy mothers choose Jif” that was one of the examples, and I have to imagine there are tons of other examples, nobody systematically had looked at the psychology behind that within the industry.
CIALDINI: Not within the advertising industry.
RITHOLTZ: They just fling stuff against the wall.
CIALDINI: They fling it against the wall, they were doing the version of the AB test without really controlling them but just trying things out to see what worked.
RITHOLTZ: Any other books…
CIALDINI: Well, you know, I liked Dan Ariely’s “Predictably Irrational.”
RITHOLTZ: Love that book.
CIALDINI: You know, terrific insight that even though we seem to be irrational, it’s in a predictable way because these irrationalities are built into the to the way we function in modern life.
RITHOLTZ: You keep naming some of my white whales who I would love to get on…
CIALDINI: And then there’s “Nudge” I love “Nudge”
RITHOLTZ: Thaler’s book, Thaler and Cass Sunstein, yes. That’s another interesting book. “Nudge”, speaking of influence, apparently has become very influential around the world it a lot of governments have adopted the precepts for that.
CIALDINI: Not only that but so has corporate America recently, fundraisers, NGOs even ordinary citizens because we’ve developed on this new category called popular behavioral science so we’re speaking to the people whose tax money has paid for the research, they are entitled to know what we found out about them with their money.
RITHOLTZ: So that one of the interesting things that we use from “Nudge” anytime there’s a 401(k) account that opens, anytime a new hire happens they automatically get a 401(k) and in the choices for what they are invested is already set to a default, so the money comes out of the paycheck automatically, it’s invested automatically, if they want to change it, they have to actively go out and change it, because what we used what corporate America used to do is you are eligible for 401(k), fill out this paperwork, and once you do that, go pick some funds and some ungodly — and there is a match, it’s free money, here is six percent of one percent and half — I think it’s 50 something percent of the employees wouldn’t do the paperwork, who turns down free money? It is shocking?
Any other books before I move on to my…
CIALDINI: No, that’s a good…
RITHOLTZ: That is a nice collection to say the least.
What has changed in the psychology since you started in the profession, what you think is the most significant breakthroughs that have taken place?
CIALDINI: I’m going to go back to my previous answer and say that behavioral science, now, behavioral scientists and psychologists are now speaking to the public about their findings the things that actually could influence the outcomes of the everyday person as well as the corporate bottom line, the government’s likelihood of getting a good — a good policies and the fundraiser is getting more donation. So we’re speaking with books, blogs, YouTube channels, which we’re now speaking to the people who paid the bills for this research in the first place and are entitled to know how this can benefit them.
RITHOLTZ: Tell us what you’re really excited about right now?
CIALDINI: I just with some colleagues answered a question that I’ve always had about social proof, this is the idea that if the majority of people are doing something that this is the largest selling product, it causes people to want to say yes to the opportunity there is this study in China if you put an asterisk next to the items on a Chinese menu, that says this is one of our most popular items each one immediately becomes 13 percent to 20 percent more popular.
RITHOLTZ: Whether or not it was beforehand or not.
CIALDINI: You just tell people it’s popular, it becomes more popular. Now what if you are not the most popular, what if you’re a startup, what if you don’t have market share yet but you’ve got a great idea, right, that is getting some traction but it’s far away from being social proof, like the idea.
Here’s what we found ,if you describe a trend in it even though it’s in the minority, if only 30 percent of people are choosing this, right? And you tell people that 30 percent are doing this, we find you actually get them less likely to choose it, because they can do the math that means 70 percent are not, but if you say …
RITHOLTZ: Trending now.
CIALDINI: 12 months ago 20 percent were or six months ago 25, this month 30 percent, now they jump on the bandwagon because they see the trend is continuing, so that’s how we defeat the problem of low social proof by giving them evidence of future social proof.
RITHOLTZ: That is quite fascinating.
Tell us about a time you failed and what you learned from the experience?
CIALDINI: When I was first learning of the strategies of influence professions and I was taking training, at the end of the training I would say look I am not actually applying for a job at your place, I’m writing a book and I would like for you to allow me to use the data that I that I acquired in your training programs. They kicked me out the door.
RITHOLTZ: I’m not surprised.
CIALDINI: Yes, this is proprietary information and they thought I was an investigative reporter who was going to reveal…
CIALDINI: So after that, I decided to use my principles in making that request, I said I’m not actually a prospective employee of your company, I’m writing a book and I promise you that I will send you an early copy of the book I will pay you in the coin you are paying me that is information, so you know not only what works in your industry, you’ll know what works in all kinds of industry before any of your rivals will. That’s one thing. The other thing I said was and “I’m not just writing a book, I’m a university professor, and I’m learning from you” and they would look at me and say “You’re a professor and you are our student? You mean we are teaching you?” And they would puff up their chests and say of course.
RITHOLTZ: So the quid pro quo and the appeal to ego.
CIALDINI: Appeal to ego. What is it — if you’re the teacher, teachers don’t have proprietary information, what the role of teacher areas is to dispense information, and so they did.
RITHOLTZ: That’s fascinating. What you do for fun out of the office, what do you do to relax or for enjoyment.
CIALDINI: I have three grandchildren who are the light of my life and I spend time with what one is a dancer, one is a soccer player, and one loves horses and so I go with them to all of their activities and I couldn’t be happier.
RITHOLTZ: What sort of advice would you give to a millennial or someone just beginning their career in psychology and a recent college graduate, what would you suggest to them?
CIALDINI: Anyone? Here’s what I would say going to every new situation where you don’t know people and expect the best from them, what that will allow you to do is to be generous and there are two enormously consequential downstream effects of being generous one is people are generous back to you…
CIALDINI: Right. The other is they like you and they want to do business with the people they like.
RITHOLTZ: Interesting. And our final question what you know today about psychology that you wish you knew 30 years ago before you were had written “Influence”?
CIALDINI: You know, I’m going to answer that by telling a story of a friend of mine who had the question that I didn’t know 30 years ago, he decided to study it, he is a marketing professor and he said he wanted to find the single most effective influence approach, the one that would — he should use in the situations that faced them because that was the one that was most powerful. And he went on a two-year search for this and I saw him at a conference, he caught me by the elbow and he said “Bob, I found it. I found the single most effective influence approach, it is not to have a single influence approach.” That’s a fools game to think that the same approach is going to work for all audiences in all circumstances at all times. No you have size up that situation, those conditions and then you move with the appeal that best fits the circumstances.
RITHOLTZ: Quite fascinating. Thank you, Bob, for being so generous with your time, this was really quite fascinating.
We have been speaking with Professor Bob Cialdini author of “Influence” and “Presuasion” and “Yes” and numerous other papers about the fields of psychology, influence, and compliance.
If you enjoyed this conversation and I have to think you did, be sure look up an inch or down an inch on Apple iTunes, Overcast, Stitcher, Bloomberg.com wherever finer podcasts are sold and you could see our other, I’m going to ballpark it at 250 or so previous conversations.
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I would be remiss if I did not thank the crack team that helps put together these weekly conversations. Atika Valbrun is our project manager, Madena Parwana is our producer, Taylor Riggs is our Booker, Michael Batnick is our head of research. I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.