We compare everything to a reference point from "summary" of Predictably Irrational, Revised by Dan Ariely
Our minds are constantly making comparisons. When we encounter something new, our brain automatically starts looking for a reference point to compare it to. This comparison helps us make sense of the world around us and determine how we feel about certain things. These reference points can come from various sources - past experiences, expectations, social norms, or even arbitrary numbers. For example, when we see a price tag, we immediately compare it to our internal reference point for that particular item. If the price is lower than what we expected, we feel like we're getting a good deal. But if it's higher, we might feel like we're being ripped off. Reference points can also affect our perception of value. In one study, participants were asked to taste two glasses of wine - one labeled as a cheap bottle and the other as an expensive one. Even though the wine in both glasses was the same, the participants rated the "expensive" wine as tasting better. This is because their reference point for expensive wine led them to believe it was of higher quality. Our reference points can also influence our decision-making. For instance, if we're trying to lose weight and we've already exceeded our daily calorie limit, we might justify indulging in a dessert by comparing it to our previous unhealthy eating habits. In this way, our reference point can either help us make better choices or lead us astray. Understanding how our minds use reference points can help us become more aware of the biases and irrational behaviors that influence our decisions. By being mindful of the comparisons we make, we can start to question our assumptions and make more informed choices.
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