Designing For Trust | Dan Ariely | TEDxPorto

Designing For Trust | Dan Ariely | TEDxPorto

Translator: Ellen Maloney
Reviewer: Peter van de Ven Very happy to be here,
also a little sad. I’m very happy to be here because it’s a wonderful city
and it’s a wonderful event. I’m a little sad to be here because Ron, who’s sitting
in the back there, Moran, and myself a few years ago decided to spend a month
travelling together every year, and this is the end of our trip together. So it’s a little sad that we have to wait
another year to start our next journey. One more comment: you might
have noticed that I have half a beard. You might have wondered why. It is not because
I did not wake up in time. Many years ago, I was badly burned,
most of my body is covered in burns, including the right side of my face. So I just don’t have hair
on this side of my face. I didn’t plan on this. It looks symmetrical, but it’s because
of how the explosion happened, and if you’re wondering,
I’m not recommending half beards. Let’s talk a little bit about trust. One of the amazing things about trust
is how much trust we have and how little attention we pay to it. Think about banks. You put your money in the bank, and generally, you think
you’ll get it back. You get a babysitter for your kid. Some 15-year-old you’ve never met before,
and you give them your kid, and you expect them
to be healthy when you come back. My phone is in the back room back there; my passport and money
is in a room in a hotel – I’m not going to tell you which one. We have tremendous trust,
and like many other things, when trust works, we take it for granted. We notice only when it goes badly. I’ll give you one example
of something that went badly for me. I was in a country in South America –
I will not tell you which one – and I was going to buy a pen. I went to a store,
and there was this glass cage, and there were little pens underneath it. I point to one of the pens that I wanted, and the person behind the counter
wrote me a little note and pointed to another
corner of the store. I went to that corner
of the store with the note, and I gave the note to a person, and he told me how much to pay him. It was about $12. I paid him $12,
and he gave me another note and pointed me to another
corner of the store. I go to this third place,
and I meet another person, I give him the second note,
and I get the pen. Now why do you think you need three people
to sell a $12 pen in an empty store? I was the only client. Because the owner of the store
didn’t trust anybody. He didn’t want anybody to have the money
and the pen at the same time, so he created this incredibly
elaborate and expensive system. And if you think about it, every time we have trust,
society benefits, and every time trust breaks,
we pay a lot for it. And I’ll give you my favorite
analogy for trust. And this analogy is something
called “The Public Goods Game”. The Public Goods Game:
it’s not really a game, it’s an experiment that economists play. Here is how it works: Imagine that we play the game in Porto,
and we pick ten random people. We wake them up
in the morning, and we say, “You are one of the players, you are one
of the ten players of this game, and every morning, we are going
to wake you up and give you ten euros. You can do one of two things
with those ten euros: you can keep the money to yourself, or you can put it in
a public pot, in a central pot. All the money in the central pot will grow
throughout the day by five times. In the evening, it will be
equally divided by everybody. The other players,
you don’t know who they are, you’ll never find out who they are. And we’ll play this game
day after day after day.” So imagine we play this game. We start on day one, we wake up ten people,
and we tell them the rules of the game. What happened? Usually, they all decide
to put the money in the central pot. Ten people, each person
gets ten euros, multiply, it’s 100 euros. During the day, it grows five times. In the evening we have 500 euros,
equally divided by everybody, everybody gets 50 euros. Life is good! Right, you wake up
with ten euros, you go to sleep with 50. This continues and continues
and continues until one day, one person decides
to betray the public good. One person keeps the money to themselves. What happened on that day? On that day nine people
put ten euros, 90 euros. Multiply five times, 450 euros, in the evening, it’s equally
divided by everybody, including the bastard
that didn’t put money in. Everybody gets 45 euros, right? But the bastard has 55 euros:
they have their 10 euros from the morning, plus they get the money
from the public good. That person betrayed the public good
for their own selfish benefit. But here’s the question:
what happens the next day? What do you think? Nobody puts any money in. And this is the situation,
this is a game with two equilibria. There’s one equilibria that is good: everybody participates,
everybody benefits. This is what a good society is:
we all put money in, volunteers, people participate, people help,
and everybody benefits. But when somebody starts betraying
the public good, What happens? More and more people
betray the public good. There’s no equilibria where five people
participate and five people don’t. It’s either everybody or nobody. And the nobody participating
is a terrible equilibria. But there’s another point. The good equilibria, the one where
everybody participates, is very fragile. It’s enough for one person
to betray the public good, and everything deteriorates. The bad equilibria is very stable; imagine that nobody puts money,
nobody puts money, then one day three people put money in. What happened the next day? Does it go back up? No. Goes back to zero. And that for me is the issue with trust. When we have trust,
we can create the good equilibria, but then things can really
deteriorate, and we all suffer. So now the question is,
How do we increase trust? How do we engineer things
in society to increase trust? I’ll give you a couple of examples. The first example is
an example from an insurance. Now think about insurance. We have an insurance company
and we have customers. Customers pay the insurance company,
they pay the insurance company. At some point, something bad happens. And the cusomers want what? They want the insurance company
to pay them for their damage. And the insurance company wants what? Not to pay, right? It’s very simple. There’s a pot of money; if they pay more
to the customers, they get to keep less. As customers, we know that the insurance
company doesn’t want to pay us. So what do we do? We exaggerate, we inflate our claim. And the insurance company
knows that we inflate our claim. So they make it difficult
and complex and so on. Now if you think about that system, it’s a system that is based
on conflicts of interest – the insurance company
prefers not to pay than to pay – and mistrust. Terrible idea. Who would
design a system like this? So at Lemonade – Lemonade
is a young insurance company – they said, “Let’s solve this problem.” How can we solve this problem? Let’s change it from a two-player game
to a three-player game. How does this help? Here’s how it works. When you join Lemonade,
imagine all of us join Lemonade, you get to pick a charity you really love;
let’s say the World Wildlife Fund. We all pick a charity we love. We pay, every month we pay Lemonade,
we pay for the insurance. Lemonade takes a fixed amount
and pays back claims, and if there’s money leftover
in the pool for all of us, it goes to the charity. So now Lemonade takes itself
out of the conflicts of interest. They say, “We don’t care
if we pay you or not; it’s a game between you and the charity. And if you now cheat us,
Who are you cheating? Your favorite charity.” Lemonade started a few years ago. About two weeks after we’d started,
the first interesting email comes in. That email says,
“You insured my apartment. I told you somebody stole my laptop. You paid me. It turns out I just misplaced
my laptop; nobody stole it. I made a mistake.
How do I return the money?” That was the email. On that day, I called all my friends
in all the insurance companies, and I asked them, How do you
deal with such cases? They never happened. This is, for me,
an amazing starting point. It says that if you create
a system that creates trust and you trust people, there’s a good chance
trust will come back. One more trick about increasing trust. Imagine I’m a waiter. I come to four people,
and I say to the first person, “What would you like?” And that person says, “I want the fish.” And I say, “Ah, the fish
is not so good today. Dont take the fish, take the chicken.
The chicken is cheaper and better. Cheaper and better.” And then we measure how much
the second person, the third person, and the fourth person take my advice and how much the whole table
takes my advice for what wine to get. That’s case number one. Case number two. I come to the first person,
“What would you like?” He says, “I want the fish.” I say, “The fish is not
so good today; take the lobster. It’s only three times
more expensive, but it’s amazing.” How likely are the second,
third, and fourth person to take my advice now? Not at all. How much are they likely
to take my advice for wine? Not at all. What’s the difference between
the first waiter and the second waiter? The difference is
that the first waiter showed us that they prefer
our benefit to their benefit. There was opportunity to say,
“Take something better and cheaper.” The second waiter, we don’t know. Maybe that lobster
is the most amazing in the world, maybe we’ll dream about it
until the day we die, maybe it’s a wonderful decision,
but we will never know. We will never know if they work
for themselves or for us. So the second advice about creating trust is think about the cases where you can show
somebody that you really care and show that you prefer
their benefit to your benefit. There’s a not-so-funny joke that says, “Why do women like diamond rings?” Why do women like diamond rings? And the answer is
“Because men hate buying them.” (Laughter) Now what is the point about this? The point is, imagine you buy
your loved one a digital camera. You come home and you say, “Darling, I love you so much:
here is a digital camera.” Who are you buying it for? Unclear. You are like the waiter with the lobster;
it’s unclear who you’re working for. But if you buy them something
that you clearly hate, now it’s a good sign of pure love. There’s no other explanation for this. (Laughter) So when you get a chance, think about how to show love and caring with something that is not
confusing as a signal. So we said that trust is important and we want to create
a high level of trust. But from time to time,
things are going to [go] wrong. The question is, How do we
not get into a deterioration? And I’ll tell you a personal story. I deeply trust everybody I worked with. I did a project with somebody, and at some point towards the end, I decided the project
was not going in a good direction, and I stopped it. That person told me she already had
lots of expenses she had to pay, and she’d spent a lot
of time and money on this. She gave me a very
expensive bill to pay for this. And I paid, and then I found out she’d spent
much less money than she told me, and then I found out that the contract
she had was different than she told me; lots of things about that
really upset me and offended me. My first instinct was
“I don’t want to feel like this again.” I don’t want to feel bad like this again, and then I thought, “Should I start
having contracts with everybody?” Because when I started working with her, I didn’t do any contract;
it was all a handshake agreement. I love working with handshake agreements. I thought, “Should I start
having contracts?” Think about what having contracts
with everybody means. It would mean that one bad incident would get me to start doubting
everybody I work with. But the thing about trust
is that when trust really works, we don’t notice it as much. And I thought about all
the wonderful relationships I have and all the wonderful people I work with and how much trust
is allowing us to behave better, how much trust is allowing us to get
to a much higher equilibrium. I decided that from time to time,
things are going to [go] wrong, and I’ll have the instinct
to try and protect myself and say that I never want
to feel like this again and to surround myself with security
and blankets and contracts, but I’m going to try and resist this. Because trust is wonderful. Trust is wonderful:
we need to recognise it; we need to work towards it; we need to create mechanisms
that [will] allow us to create trust. And from time to time,
things are going to [go] wrong. Then we need to fight our own instinct
to try and protect ourselves. But the good news is
that if we get to have higher trust, it is certainly worth it. Thank you very much. (Applause)

42 thoughts on “Designing For Trust | Dan Ariely | TEDxPorto

  1. When you design for aesthetics and efficiency, your design philosophy becomes a symbol of trust for the masses!

  2. It was a good talk but i have a few issues with it.
    You get good people, @ssh*les and everyone in between. The more you trust people, the more power you give to them and there's a high chance that a lot of them are going to be sociopaths (or just an "modern" person). You cannot go around trusting everyone blindly but if you do, you will be subjected to a lot of manipulation. People who have experienced "miss-trust" have learnt from their mistakes and now don't trust anyone until they have proven themselves to be trustworthy. That being said, sociopaths are so damn good at acting trustworthy that you might as well just not trust anyone.
    it was at this moment that i realized that this turned into a rant
    Long story short:
    Don't trust everyone you meet.
    Only trust people who have given you a reason to trust them.
    Most people are @ssh*les.
    Most people just want what's good for them.
    People are manipulative.
    People don't care about you or the next person.
    Consider yourself "alone" until you filter out all the @ssh*les.
    Don't get sucked into webs.
    Most people are @ssh*les.
    If you are a good person, you WILL get chewed up and spat out.
    Most people are @ssh*les.

    If anyone thinks I'm wrong… please correct me.

  3. So basically being a sucker sometimes is fine because in the long run being paranoid is more costly.

  4. This is why no one watches TED talks anymore.I understand we didn't watch this video and I don't need to cuz they just let anybody spout any sort of bulshit.

  5. Dan Ariely is THE MAN to speak on the topic of trust. He is a researcher to admire.
    Thank you for bringing him to us!
    "Every time we have trust society benefits" A M E N
    Good equilibrium is a VIRTUOUS CYCLE.

  6. 3 people to sell you a pin in a small empty shop!!!! 🤣👏🏻👏🏻 I loved this story so funny

  7. Thanks Very nice conversation. Trust Trust Trust
    Teşekkür ederim. Çok güzel bir konuşma. Güven güven güven….👏👏🇹🇷🇹🇷

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