Brain Hack: turn your Loss Aversion Bias on its head
petermichaud.com
petermichaud.com
The argument would be more persuasive if the example used had to do with something where it was a pure gain / loss as opposed to having a right / wrong component to it. I think the dating example was better, though that wasn't used as his central argument.
Edit, re: By the reasoning he gives we should just let criminals and murderers free because it costs more to jail them and give them a fair trial than it does to just let them be free and commit the occasional crime.
In some cases that does in fact make sense... 9/11 comes to mind. The price of living in a free society isn't $2 trillion plus incalculable collateral harm, it's losing a building and a couple of planes every once in awhile.
The Loss Aversion Bias is also behind one of the classic mistakes people make when investing in stocks: holding on to a loser while the price goes down and down, unwilling to sell and accept the loss before it gets any worse.
I'd expect the scammers to have a chargeback, which can be just the difference but is usually the total value and again can be more with an admin cost added. They also get a black mark from the bank which could with repetition lead them to having their account closed (but probably not if they're making good profits for the bank).
Banks don't like spending money that could be used for bonuses and so the admin costs are more significant and will turn the bank off their client quite readily.
Edit: there's Bystander Effect in there too - why should I complain as it probably won't do any good because other people won't complain.
That last sentence is an important point. He's increasing the costs of the scammers.
Your brain says "this is $11 that I wasn't supposed to spend that they took from me!" That's a loss. You want to get the money you lost due to their mistake back.
When dealing with these types of issues, I've personally found it helpful to calculate a personal dollars-per-hour and then weigh potential tasks against that.
Let's say a person makes or values their time at $30-$50 an hour. That's roughly a month of TimeSvr.com (or similar outsourcing services) for two hours of time.
In this example, even if the person felt wronged and was willing to spend $100+ (in dollars or time) addressing the issue out of principle, they'd still be better off outsourcing the task, or perhaps writing a negative review/blog post.
Some of my failed outsourcing experiments:
Task: Finding images matching a description (used asksunday.com) Result: Service ignored details of my request and gave me useless pics.
Task: Create personality tests for an OpenSocial app (rentacoder.com) Result: Hired several people. Some were unresponsive and didn't do anything. Some did eventually, but there were many spelling and grammatical errors. Some tests were in foreign languages and claimed to be native level, but upon checking with native speakers this turned out to be false.
Task: A content writing task (details escape me, but I directly hired some chinese outsourcing company) Result: Company copy & pasted content from other sites.
The issue is probably that I haven't been careful enough in selecting the people to outsource to, or haven't paid enough to motivate serious bidders for my tasks.
Successful ones:
Task: Accept packages I sent from Japan and bring them to a convention center in Wien. Result: Package delivered as promised. This was the one that saved me the most effort and money.
Task: Create a list of words starting with given letter combination. Result: List delivered as specified, but in the wrong format.
Task: Scan books and send images to me (this was OK because I was official translator for said books) Result: Images delivered as promised.
Usually the only reprographic copying rights, over fair use exceptions, are those retained by the publisher. Authors don't generally even have duplication rights to their own works so it would be unusual for you to have those rights as a translator. More unusual if your contract allowed you to transfer that right to someone else. You probably committed copyright infringement by proxy, FWIW.
You're correct that the example and the title aren't a perfect match, but wasting four hours because you feel aggrieved isn't really any better for you than wasting four hours to save yourself losing a small amount of money. Sometimes you just ought to let go.
Alas, I happen to be the poster child for this particular bit of irrationality. Notably, I spend a lot of time and mental effort agonizing over fairly small purchases. I know it's a mistake in the abstract, but that doesn't help the aversion to spending money in the moment.
Joe didn't set out to spend hours to get his $11 back. He thought it'd just take an e-mail to resolve it - easy. After that was unsuccessful, he thought it'd just be a phone call to resolve it - easy, no?
Once he got far enough down this road, the sunk cost issue sank in (pun fully intended) because if he'd already spent an hour or two trying to get $11 back, he might as well not let that time spent "go to waste" and instead fight until he achieved success.
http://www.petermichaud.com/essays/sunk-cost-fallacy/
And I have a post coming up that ties it together. Look for that next week sometime.
The results: people weigh losses and gains with "1) a value function that is concave for gains, convex for losses, and steeper for losses than for gains, and 2) a nonlinear transformation of the probability scale, which overweights small probabilities and underweights moderate and high probabilities." This does little to convey the soul-crushing horror you will feel when you see these preferences demonstrated experimentally.
A good summary of these findings can be found in http://www.hss.caltech.edu/~camerer/ribe239.pdf, the intro to Advances in Behavioral Economics (2003)
Two of the the examples ($11 and the work overtime) are sunk cost fallacy since people don't know beforehand how long it's going to take and what the total gain/loss is going to be (how does one know beforehand that all the overtime will become a 10% wage increase?)
I would discuss some more but it makes no sense to dissect so little material that seemed to be more confusing than enlightening to me.
Of course, all this comment could be replaced by a downvote which doesn't exist here.
There are people who prefer to punish others that in their opinion misbehaved event at their own expense.
Pleasure from punishing misbehaving one is greater for these people than loss that was necessary to deliver punishment.
Money is no less virtual than pleasure from single person point of view.