Thursday, May 17, 2012

Cognitive bias: the "anecdotal" fallacy

Kobe Bryant subs out vs the Washington Wizards
Kobe Bryant subs out vs the Washington Wizards (Photo credit: Wikipedia)
If he endorsed a car, does the
car perform any better? No! 
MLMers are very fond of the "anecdotal fallacy", where they use either personal experience, or a single (or a few) instance(s) to "prove" that their "opportunity" is great.

Very often, this is used in conjunction with the "it paid me" argument, as testimonials. In other instances, it's to "prove" the prowess of whatever product or service the MLM is pushing. For example:
This product really works! I have been taking it for a month and I feel much better! I lost 20 pounds and my allergies are gone! I recommend this to all my friends! 
Not an actual comment, but you have all read or heard things like that. You probably see it on TV or hear it on radio every day. It is a normal propaganda technique.

The person advertising the item should not change the value of the item. If Kobe Bryant (NBA basketball star) or any other professional sports star (except race car drivers) is endorsing a car, it does not make it perform any better than without his endorsement.

(NOTE: This is DIFFERENT from "authority", where an expert like Kobe Bryant endorse a pair of basketball shoes,  he would be considered an expert on such shoes so his claim would count more. We will discuss "authority" or "expert testimony" later)

Same with a business opportunity. Just because one person say it's great doesn't mean it's great for EVERYBODY. There is no proof that you can replicate their "success", or their success is not an exception to the rule. You need a far larger sample size than "one" or "several" to prove anything. There can be a LOT of factors that affect the outcome.

A lot of MLMs portray their sales system as foolproof, just take the sales system and replicate it, and you'll be raking in the money. However, in a sales system personality would definitely be a factor. If a person is not very sociable and can not really sell things, then the selling system doesn't apply to this person (unless there are additional training). On the other hand, a very sociable person can just pick up the system and run with it, no additional training required. The factor of "sociable" "sales" and such personality is very important, but rarely if ever mentioned in MLM presentations.

So if a sociable person, master salesman, took the system, and got great success, and told a group of people "you can also succeed like me, just follow the system", is he telling the whole truth? No! He didn't mention his OTHER qualities like his salesmanship, his charm, his ability to read body language, his ability to close the sale, and so on. What's worse, he may not even be aware of his other qualities that actually contributed to his success, INSTEAD of the system! He may attribute his success to the system, but that would be a false causation fallacy. You don't really know WHAT is the secret of his success, unless you study how he applies the system for a while, or you study effectiveness of many different people (of multiple backgrounds and personalities) using the same system, then isolate the different factors, before you can determine whether it's the system, or the person wielding the system, that is the cause of success.

Yet we, as human beings, are swayed by personal testimony. We are social animals. We react to mood, body language, voice, and other cues when we are supposed to be evaluating just the facts. We react to sex and beauty, which is why only the most beautiful people are used to advertise things, when we should be studying the things themselves.

The person advertising the item does not change the value of the item. If Kobe Bryant (NBA basketball star) or any other professional sports star is endorsing a particular piece of sports gear, it does not make it perform any better than without his endorsement.

Same with a business opportunity. You evaluate a business opportunity on its own merits, not on the merits of the presenter (or his level of success with it).  It is YOUR business, not his.

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