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Originally Posted by lumberjim

People do make decisions in their lives based upon what you might call emotional reaction. I had a customer the other day that chose to take the 0% loan over the $2500 rebate, even though I very clearly explained to him that it would cost him $240 more over the course of the loan. He understood. He saw that at the preferred rate of 3.24%, the total finance charge was $2260.
He just felt better knowing that he had ZERO interest. I think that was the wrong choice. I asked him if he felt it was worth $240 just to have the 0%. He said yes. So I wrote the loan his way.

He defines his satisfaction. Not me.

That goes directly what underpins Lola Bunny's question. Concepts were defined by Daniel Kahneman who (I believe) won the 2002 Nobel Prize for his work on this topic. Kahneman defined two types of thinking. System one is intuitive decisions based mostly on emotion. System two is described as a rational but lazy though process that may override system one.

From summarizes of his work, I suspect most (a clear majority) are system one type thinkers. Apparently this entire thread demonstrates that concept. For example, many just know four wheel drive increases safety because that was the impression that most have. Many believed anti-lock brakes make stopping on ice safer. Almost no one asked how or why. In part because the other decision making process is mostly done in a 'lazy' fashion. If not described (explained) in a sound byte, then many proceed no further and fall back onto what they know best - system one.

Procter and Gamble once advertised using a more rational approach. Advertising concentrated only on one aspect of the product - what the product does for the consumer. I watched when, for the first time, toothpaste (Crest) actually did something useful. They drilled the "42% fewer cavities" expression relentlessly until suddenly the public grasped it. Colgate, which had somewhere between 80% and 90% of the market, suddenly went to near zero suddenly - almost instantly.

This is example of system two thinking overriding system one. You could say system two (Toyota's reputation) has expanded to be viewed by many using system one thinking. Toyota's reputation no longer need be explained by numbers in Consumer Reports? Maybe. But this is clear - as even demonstrated by Saddam's WMDs. Most of us make decisions using system one thinking. It explains why brainwashing is so effective and more widespread that many believe.

Why did a majority know smoking cigarettes increased health? Advertising. Also known as brainwashing. In the 1950s, a majority had no idea how easily they had been manipulated. They knew, with certainty, that smoking increased health because advertising said so. My father's complaint (he was writing those commercials) was that the FTC (Federal Trade Commission) kept trying to make them tell the truth. That took all the fun out of it. Both fun and profitable is to brainwash the majority with advertising. Because so many people know only using their emotions - system one decisions.

Companies that predict the effectiveness of advertising dispute this. Citing, for example, passengers who buy discount airline tickets knowing full well the risk. Clearly Cogan Airlines is inferior to United. But still, some will overirde their emotions (and fears) to buy cheaper tickets. It is this rather subjective thinking process that makes advertising, marketing, and even selling a car loan so mysterious, challenging, and an art.

If Toyota and Honda are so good, then why did so many still buy Chryslers? It goes right back to a fundamental question that also resulted in a Nobel Prize in economics. Are markets rational or driven by irrational exuberance. I believe the two winners that year represented contrarian viewpoints.

Robert Sheller of Yale has recently asked same question about this economy. He believes another bubble exists. However numbers (ie Earnings per share) contradict what some believe is a revived emotional attitude (irrational exuberance).

These questions and concepts also apply to how and why people recommend or desire a car.

Another example. Do you plug your computer into a power strip surge protector? Most do. Why would anyone plug their computer into something that can make surge damage easier and in some cases create a house fire? How many first learned facts? How many just 'assumed' protector and protection sound alike; therefore must be same. Another example that demonstrates system one thinking. If using rational thought, then many would instead spend less money for something, also called a surge protector, that actually creates surge protection.

But again, how many really ask damning questions or automatically doubt their intuitive beliefs? How many realize that brainwashing is rather routine, subtle, and easy? I believe Saddam's WMDs demonstrates a ballpark number: a clear minority. Asking and answering these questions can get one a Nobel Prize.