2005-12-08

Disappointment Psychology

Assume I buy a lottery ticket with no hope of winning any money on that ticket. If I win prize money of INR 10 Million, the second prize, and lost out the first prize of INR 20 Million by just one digit, what would my reaction be? I will be happy no doubt. But I will be equally disappointed that I lost out the first prize by one single digit.

If a person applied to Mckinsey with the only ambition of just getting into Mckinsey. Did not matter what position. Assume, he got in as junior associate, but later on discovers that he could have actually gotten in as associate. Far from being happy for having made it to Mckinsey – which was the goal he had set for himself - he would be more disappointed and depressed by starting to compare the lost opportunity.

Though this may appear quite commonplace, it is only recently that research on disappointment psychology has proved that we do not necessarily judge the outcome of some of our action / some incident against our expectations which we had set before the action / incident took place. Once the action / incident happen, our mind judges the outcome against all other possible outcomes that could have been in our favor. So, it is not possible to prepare the mind to be insulated from the outcome. Even if the outcome is favorable, the lost opportunities hurt us more.

It was not without reason that Milton said, Mind is a place in itself; it can make hell out of heaven, and heaven out of hell.

5 comments:

Kapil said...

Dear VKM

What you have noted is absolutely correct. Though there could be subcases to your point. This is a normal way for most people.

I would give you more examples.

During Class XII - I just hoped that I would gain admission to any good engineering college. After making it to a premier college in North India, I was disappointed that I did not make it to IIT.

Now again somoeone who makes it to IIT would be disappointed at not having made it to IIT-D

There is nothing new in the above pattern. If you consider stock investing. There is one school of thought that advises booking profits at regular intervals. But what happens if say you bought Indiabulls right after IPO for RS 25 and sold it off a couple of months later at 45. You would have been happy for a day only to see the stock hitting 20% upper circuit on each of the subsequent days to end up well above 100 and a couple of months again going upto 250. (Although it is currently at 160 is another story)


The disappointement psycology has been studied by economists and psychologists for a long time now.

Anonymous said...

As usual one more great post. Vijay, I pray that you blog daily so that we readers get so much of ideas and perspectives.
One thing that interests me is how do you think of so many different subjects? Is it based on your everyday experiences or is it based on random thoughts?

Keep blogging....

FutureAlumni

Anonymous said...

Vijay,

Nice thoughts as always., esp. Words of Milton.

Keep blogging..

Cheers,
Pani

itheabsolute said...

bbird

sure. the research has been going on for a long time. new evidence has been found which conclusively proves what was stated. as i had written, it is commonplace, but scientists need many years to prove what is commonly known or understand.

thanks for you comments.

FutureAlumni

Thanks for your comments. One good habit i religiously try to guard is reading. earlier when internet was not around it used to be limited to books. now i spend good amount of time on the net too.

Pani

thanks. long time.

cheers

Anonymous said...

the comment of milton was superb! (from Ragh)

2005-12-08

Disappointment Psychology

Assume I buy a lottery ticket with no hope of winning any money on that ticket. If I win prize money of INR 10 Million, the second prize, and lost out the first prize of INR 20 Million by just one digit, what would my reaction be? I will be happy no doubt. But I will be equally disappointed that I lost out the first prize by one single digit.

If a person applied to Mckinsey with the only ambition of just getting into Mckinsey. Did not matter what position. Assume, he got in as junior associate, but later on discovers that he could have actually gotten in as associate. Far from being happy for having made it to Mckinsey – which was the goal he had set for himself - he would be more disappointed and depressed by starting to compare the lost opportunity.

Though this may appear quite commonplace, it is only recently that research on disappointment psychology has proved that we do not necessarily judge the outcome of some of our action / some incident against our expectations which we had set before the action / incident took place. Once the action / incident happen, our mind judges the outcome against all other possible outcomes that could have been in our favor. So, it is not possible to prepare the mind to be insulated from the outcome. Even if the outcome is favorable, the lost opportunities hurt us more.

It was not without reason that Milton said, Mind is a place in itself; it can make hell out of heaven, and heaven out of hell.

5 comments:

Kapil said...

Dear VKM

What you have noted is absolutely correct. Though there could be subcases to your point. This is a normal way for most people.

I would give you more examples.

During Class XII - I just hoped that I would gain admission to any good engineering college. After making it to a premier college in North India, I was disappointed that I did not make it to IIT.

Now again somoeone who makes it to IIT would be disappointed at not having made it to IIT-D

There is nothing new in the above pattern. If you consider stock investing. There is one school of thought that advises booking profits at regular intervals. But what happens if say you bought Indiabulls right after IPO for RS 25 and sold it off a couple of months later at 45. You would have been happy for a day only to see the stock hitting 20% upper circuit on each of the subsequent days to end up well above 100 and a couple of months again going upto 250. (Although it is currently at 160 is another story)


The disappointement psycology has been studied by economists and psychologists for a long time now.

Anonymous said...

As usual one more great post. Vijay, I pray that you blog daily so that we readers get so much of ideas and perspectives.
One thing that interests me is how do you think of so many different subjects? Is it based on your everyday experiences or is it based on random thoughts?

Keep blogging....

FutureAlumni

Anonymous said...

Vijay,

Nice thoughts as always., esp. Words of Milton.

Keep blogging..

Cheers,
Pani

itheabsolute said...

bbird

sure. the research has been going on for a long time. new evidence has been found which conclusively proves what was stated. as i had written, it is commonplace, but scientists need many years to prove what is commonly known or understand.

thanks for you comments.

FutureAlumni

Thanks for your comments. One good habit i religiously try to guard is reading. earlier when internet was not around it used to be limited to books. now i spend good amount of time on the net too.

Pani

thanks. long time.

cheers

Anonymous said...

the comment of milton was superb! (from Ragh)