Who would you trust right now? Which bank would you trust? Which investment would you trust? Do you really want to put your money; do you want to suffer more of these losses that we just had? You know, these volatility that we see is just unexplainable by any rational standards. Nobody has any clue about how to explain this, and nobody wants to experience that. So, we hold more money back, we don't necessarily want to invest in the market and by default, people are saving more.
Dan ArielyImagine you have six loans, small to huge. People want to close loans and because of that, they try to pay off the small loans, but that's not the right strategy. The right strategy, of course, is to pay the loan with the highest interest rate. People make this mistake and it costs them lots and lots of money, it's a very expensive mistake because interest rates accumulate and become very, very expensive very quickly.
Dan ArielyThe people that lend you money basically give you an answer based on the risk that they are willing to take. But just because a bank is willing to take a particular risk doesn't mean that that is the right amount for me to spend.
Dan ArielyThe most difficult thing is to recognize that sometimes we too are blinded by our own incentives. Because we donโt see how our conflicts of interest work on us.
Dan ArielyInteresting thing that is happening in American society is that people are starting to talk about money. I don't know how you feel about this, but for a long time, nobody was talking about money. It was a secret. And it's kind of very interesting because we do lots of stuff to portray to people about how much money we have, the clothes we wear and the cars we have and the house - they all kind of depict to other people, signal how much money we make, but we don't talk about it specifically.
Dan ArielyThe bad news is that ignoring the performance of people is almost as bad as shredding their effort in front of their eyes. Ignoring gets you a whole way out there. The good news is that by simply looking at something that somebody has done, scanning it and saying "Uh huh," that seems to be quite sufficient to dramatically improve people's motivations.
Dan Ariely