The Volvo story
The late Amos Tversky, a Stanford professor who completely reshaped our understanding of cognitive biases, would sometimes use “the Volvo story” to illustrate the quirks of human decision-making.
Tversky had a colleague who was in the market for a new car. This colleague was a deeply analytical man, who over several weeks amassed a mountain of information on the latest brands and models. Eventually, Volvos emerged as the front-runner.
The case could not have been cleaner. Consumer Reports featured a number of independent tests that showed Volvos were among the best built and most reliable vehicles in their class. Customer satisfaction reports also revealed that Volvo owners were happy with their purchase even after several years.
These were plainly robust findings, based on tens of thousands of respondents. Any anomalies would have been easily muted by the immensity of the sample population. Statistically speaking, the data could not have been more decisive.
Yet, when Tversky later ran into his colleague at a party, the man explained he had decided against a Volvo and had chosen a lower-ranked car instead. Tversky was confused. Why this sudden reversal, when the evidence had been unmistakably pointing in a particular direction? Had one specific variable — price, color, design — been given greater weight in the final assessment?
No, it had nothing to do with that. The man had simply learned his brother-in-law had a Volvo, and that it was perpetually in the shop. This alone had eclipsed the results of his research.
We see versions of this phenomenon in corporate decision-making all the time. An ostensibly bullet-proof ROI analysis gets shot down because of a single testimony. Or the quantitative analysis falls short because it lacks an anecdotal component.
We are a social species. We are far more easily swayed by the vivid details of a first-person account — especially from someone we know, like, and trust — than we are by aggregate numbers.
It’s irrational, it’s preposterous, and at times unconscionable. But it’s inescapably true. How carefully are you considering the social dimension in your latest recommendation?