Watch Out.. Your Getting Tricked!!!

Ever wondered , why you acted in the manner you did ? Why you ordered that wine when you were clear of staying off spirits today ? Why you bought that stock when you had no research to back it up ? Why you lent that person the money , inspite of knowing that his credibility is weak ? Why you sold that product knowing that the buyer will lose money on it ?

You ain’t different from executives at Wirecard that did not blow the whistle when they found out about the USD 2 billion missing in Philippines ? Or the EY Auditors who wouldn’t raise the red flag inspite of having no trace or valid proof of these funds ? Or Wilhelm Schulz employees that would fake receipts to ensure that the company does get sold to Berkshire Hathaway’s Precision Castparts for EUR 800 million with no glitches.

Though the act is completely immoral and corrupt on the part of Wirecard / Wilhelm Schulz employees behind the deceit and that isn’t the point in discussion here. What I’d like to bring out is the EY employees that would not put their foot down for genuine proof for the funds, claimed to be in Philippines. Or you for acting on tip or for lending the money to a dodgy person or doing a favour when you didn’t want to or being part of a deal that you disliked .

What if I told you that you are being tricked into complying to one’s request / wishes and many a times and you have no control over your impulse to act that way. It is only in hindsight that you realise you did a mistake . And it’s ok if its once and it’s ok till your not caught . But you will regret it big time when your caught or lose your money or reputation as it had become a pattern with you, leaving you vulnerable to making a dumb decision .

Warren Buffet has stated often “The one with the behavioural edge stands to gain more than the one with the information edge”. With advent of technology , everyone has access to information, loads of it. But few can be on top of their own emotional biases and read others well , driven by their own respective biases. If you could get these two right, you could be a force with a charismatic ability to influence others and avoid getting sucked into others trying to influence you .

The most powerful statement used in this scene was not the ad pitch , but it was the line used by one of the Madmen “Good Luck with the next meeting”. What do you think this statement would do to the prospects who came to the office to see/hear the pitch ? The statement was a follow up to the pitch which was extended to them for free as a part of their work but without any payment demanded in return ? The Madmen didn’t ask them to keep this idea a secret . And it left no obligation on the part of the prospects to buy into the idea but they still would have a debt of obligation hanging on them to respond with a YES .. It could be a full blown YES or a partial YES with few tweaks to the ad but it does the job of getting the prospects to say YES !!

And that’s exactly what makes you say YES many a times and this is called Principle of Reciprocity !!! This is the 2nd chapter of the book I mentioned in the last blogpost called INFLUENCE by Robert Cialdini. And this is a powerful concept for those using it and a dangerous one for those on whom this gets used time and again.

As stated in the book, “You and I exist in an extraordinarily complicated stimulus environment, easily the most rapidly moving and complex that has ever existed on this planet. To deal with it, we need shortcuts. We can’t be expected to recognise and analyse all the aspects in each person, event and situation we encounter in even one day. We haven’t the time, energy or capacity for it. Instead, we must very often use our stereotypes, our rules of thumb to classify things according to few key features and then respond mindlessly when one or another of these trigger features is present.”

“Civilization advances by extending the number of operations we can perform without thinking about them.”

Discount Vouchers make you go shopping. Free Trials/Session make you beat the traffic and reach your Yoga Class. SALE Sign Board makes your knees weak. We expect these to save us money, give us a new experience of a trial product, get us to meet new people and all of this increases the probability of you walking in the store and making a purchase. These are well known by marketers and hence used against you very successfully. These make us terribly vulnerable to anyone who does know how they work. But the most potent of these is Reciprocity Principle !

The rule says that we should try to repay, in kind, what another person has provided us. If a man sends us a birthday present, we should remember his birthday with a gift of our own; if we get invited to a couple’s party, we should invite them to one of ours; if someone does us a favour, we should do one in return. By virtue of the reciprocity rule, then, we are obligated to the future repayment of favours , gifts, invitations and the like.

ISKCON devotees would gift a flower/book/magazine before seeking contributions . The beauty of the free sample in supermarkets or cafe’s also engages the reciprocity rule. Amway has seen tremendous success with leaving the BUG (experience kit) with the customer for 24–72 hrs in which the prospect can try the products as she pleases . Donations to elected members of the government, Travel trips gifted to agents of a company, free pass for attending a concert of your favourite artist — all these engage the rule of reciprocity in the person that would make him obliged to return the favour in time to come. It may not be clear how the repayment will be done, but it just might prove a costly deal for the recipient of the gift , when the time actually comes.

I remember being gifted my first Mont Blanc Pen by Zurich for selling their Insurance policies when I first joined Citibank in Dubai. It proved such a masterstroke from Zurich Insurance, that I kept doing Sales for their products even when Metlife with cheaper Insurance quotes was available in our suite of products . I wasn’t told to do so by anyone but I just felt right about doing it and felt good about doing it . That gift acted upon my psyche in the most effortless manner possible.

Whenever I am inviting someone for a breakfast or a meal together, 90% of the times it will be at Organic Cafe, SZR, Dubai and now when I think of it , its been so because of their gracious customer service that allows me an additional cup of coffee / gluten free bread with a slice of butter free of charge. It’s such a simple gesture/gift/generosity extended upon me that it acts upon me to return the favour by eating there almost thrice a week for years and even inviting my friends there for a meal together . Even tomorrow I am meeting a friend there for a cuppa coffee ;)

I have been promoting this journal called TINY CHANGE since the start of 2020 to everyone close to me and I believe that the product is outstanding and the best in its category. But what made me a super fan of their offerings was the Thank You Note I received with the product for trusting them and allowing them to serve me. It was such a simple gesture but it created huge payoffs for them as I would have directly and indirectly, led to 25 more people purchasing the same on Amazon.

Little wonder that the influential French Anthropologist Marcel Mauss has described the social pressures surrounding the gift-giving process in human culture and has stated “There is an obligation to give, obligation to receive and an obligation to repay”.

It’s all good when I reciprocate on my own terms i.e. for tiny change, I shared with all my friends; for Zurich Insurance, I sold more policies and for Organic Cafe, I dine there multiple times a week. But when the reciprocity principle is exploited by the one who extended the favour to you, it reduces your ability to choose whom you wish to be indebted to and puts the power in the hands of the other.

Eg. when your boss extends a favour to you and retains you in these tough times or backs you up inspite of negative feedback about you . Or when someone lends you money in times of need. Or when someone hides a fact about you , which if disclosed, will spoil your reputation. Or when someone goes out of the way and helps you out in solving an issue or a problem that you’ve been dealing with . In these scenarios, what if the person asks for a return favour of a kind and what if it is way more than what was offered to you , you still will be obliged to repay in the terms sought by the giver, NOT BY YOU .

Why do you think Wirecard employees wouldn’t have blown the whistle. Why do you think EY employees didn’t push strongly for the proof of the money in Philippines. Why do you thing Wilhelm Schulz employees crossed the line in making false receipts. So much of these actions come down to the obligation to repay — for the bonuses received, for the favours / gifts accepted earlier, for the personal secrets hidden, for the compliments awarded.

So much of the gifting / awarding / adulation showered upon you could become the very prison inside of which you are bound to repay , on someone else’s terms. This is called “Psychological Burden of Debt” and it weighs a lot, which makes you feel a strong urge to get rid of it. Hence you agree to return favours in manner that cost more than the gift accepted in the first place. What makes it even more tricky is that if you don’t , then you will be termed arrogant, selfish, free loader, leech, etc. Even in the video above, the person who was offered Coke costing 50 cents or so, returned the favour by buying Raffle tickets that may have costed more than USD 1 for sure . The payoff isn’t in the favour of the one who accepted the gift in the first place. The person who offered the gift walks away with a better deal , almost always !!

The urge to go dutch when we are eating in a restaurant with a few friends, is to avoid the indebtedness to the other person; or else it will weigh on one of us to repay the debt . A woman avoids letting a man pay for her drinks, as it may create the impression that she may be willing to return the favour in kind. Companies have policies drafted regarding acceptance of gifts only in certain cases and if within permissible limits, so that it doesn’t create conflicts of interests and avoid clouding the judgement of the employee receiving the gift.

Another consequence of the rule, is an obligation to make a concession to someone who has made a concession to us .

Eg. What if your company HR asked you to volunteer in an old age home for 1 month at a stretch every year , as a part of their CSR Activity? Would you say YES; very high probability is that you will NOT . In response, and as a CONCESSION, what if the HR asks you to volunteer once a month at the old age home for next 12 months ? Now that would be a YES !!!

Just think about this for a moment, what if the original intention always was to get you to volunteer once a month for 12 months ? What if the 1 month stretch was just a stretched request made with 100% certainty that you would say NO to it. What if the request was gamed in a way that you would comply 100% and that too effortlessly . Think about it , YOU GOT TRICKED !!!

The funny part is that, subjects exposed to these kind of psychological experiments , have tended to feel responsible and instrumental for having brought down the nature of the request and the concession being accepted . NOT REALISING, that were tricked into believing so .

Though, Paul the Shop Owner in the video would feel that he was responsible in getting the concession of paying later i.e. 90 days and nothing upfront. It actually was Steve Jobs that played him and got the deal happen in the first place; with no system ready, with not much money, no parts at disposal to start assembling. Who gamed whom ? You know the answer.

When you turn down a Salesman approaching you and if he accepts your stance and gracefully requests for referrals, you might be obligated to give into this concession. When your friend asks you to pitch in for an AED 5000 Dubai Raffle and you disagree, he might offer you a concession for contributing AED 100 for Abu Dhabi Big Ticket and you may agree and feel obliged to say Yes. When you turn down the opportunity to make a killing for your company when someone suggests to you to sell this crap product along with the team, you might then be offered a concession to sell a product 1/2 as crappy as the original and you just might buy in and comply. When you turn down the request of your friend to loan him USD 25000, he might make a concession to accept USD 3000 for now and you cave in , inspite of not wanting to , YOU STILL DO !!!

This is what happens in many negotiations / discussions where the rejection — than — retreat technique makes you receive an offer and then feel obligated to repay or comply.

As Robert Cialdini says , it is in the interests of any human group to have its members working together toward the achievement of common goals. However, in many social interactions the participants begin with requirements and demands that are unacceptable to one another. Thus the society must arrange to have these initial, incompatible desires set aside for the sake of socially beneficial cooperation. This is accomplished through procedures that promote compromise. Mutual concession is one such important procedure.

.. Just as in the case of favours, gifts or aid, the obligation to reciprocate a concession encourages the creation of socially desirable arrangements by ensuring that anyone seeking to start such an arrangement will not be exploited.

:) Dennis always wanted cookies in the first place, he just gamed his mom’s response by mentioning the horse.

And you will get gamed too by someone who understands the psychology that makes the reciprocity rule work . And let me state, every sales and marketing organisation spends millions of dollars on consultants and companies to find ways to make you comply in a manner that leads to economic gains to the representatives of the company . And it all has to look so natural that you didn’t even realise that you got gamed.

The only way to avoid this is as follows #

1. Avoid Gifts / Favours of any kind. Seek no credits/accolades/appreciation of any kind from anyone. If it comes, great. But you don’t need to put any special efforts to gain these. Stick to doing your work damn well , rest follows. As Charlie Munger says “ “It’s the work on your desk. Do well with what you already have and more will come in.”
2. Draw boundaries for what you will do and what you just wont. I have a set routine with my eating habits, spending habits, investing habits, saving habits and it produces brilliant results when I stick to it. I almost always do. I haven’t been happy with results when I stepped out of this set routine.
3. Have a budget in place and have someone hold you to account on sticking to that budget.
4. Have an accountability partner that could act as a sounding board in your decisions. My wife does a damn good job with this .
5. Make a Pros / Cons List for all major decisions. Find an argument against your decision in consideration. Appoint someone to act as Devil’s Advocate. And unless the merits of your decision don’t hit you hard, prolong the decision.
6. Have a value system in place that doesn’t allow you to cross the line and do anything unethical or stupid, that you will then need to hide it for the rest of your life/career. As Charlie Munger says “We recognized early on that very smart people do very dumb things, and we wanted to know why and who, so that we could avoid them.”

This is my list. You could create yours. Think about this real hard, since someone at this very moment is thinking real hard about how to make you comply to their requests/agenda.

I will allow Sheldon from Big Bang Theory to sum up Reciprocity principle in the simplest manner possible ;)

Love

Manish