"Authority, scarcity, consensus, social proof--these are relatively primitive decision-making strategies we deploy," says Robert B. Cialdini, a professor of psychology at Arizona State University. In other words, we are all susceptible to suggestions by influential people; we gravitate to something if it seems to be unavailable to everyone else, and we trust stangers who appear to like us.
How well do these "weapons of influence" works? One of Cialdini's students ran an experiment in which customers of a meat wholesaler were exposed to 3 different stories:
1) standard sales pitch about high-quality meat
2) the beef prices were rising because of a drought in Australia
3) the wholesaler heard from a confidential source within Australian weather service that a drought was expected and that could drive up beef prices
Think what's the difference of sales between 1st group and 3rd group? Sales result of 3rd group is 6 times more than 1st group!!
The perception that somebody has the inside track "creates this irrational desire to jump at what's scarce or rare," says Cialdini. One of the most effective--and potentially dangerous--shortcuts is relying on someone's family background and pedigree as proxies of reliability.
Often, we are just too naive and ignorant to believe that there is a free lunch in this world. Whenever we invest, we often look out for the "The Biggest Fund", the fund carrying a label of operated by a Nobel Economics Prize winner, "the value of properties is always up"...etc. We want short cut yet there is no short cut for the success of investment. Do your homework, be a critical and independence thinker, with firmness characters and let's time growing your nest eggs are the only way for your investment success.
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