You are standing in queue to buy a certain product. The queue is long and you have been waiting for 30 minutes. You figure that it would take another 40 minutes to get to the till. Will you wait for your turn or will you leave the queue, assuming you can choose not to buy the product?

Your decision ought to be rational. That is, if you can engage in more productive work in the next 40 minutes, you should obviously choose to leave the queue. But of course, your decision may not be as clinical as classical economists would like it to be. You may decide to stay, having already spent 30 minutes waiting in the line, not to mention the painful 30-minute drive through the congested traffic.

There is another factor that you will consider as well – the number of people behind you. You will most likely stay if the queue behind you is long! Why?

Rational vs irrational

As humans, we live in a society that breeds comparison. Therefore, you will be comforted by the thought that you are more fortunate than the others behind you. And the longer the queue behind you, the more determined you would be to stay, even though the people in front of you may be moving at a snail's pace! Psychologists call this “Social Comparison”. It refers to how individuals take decisions by comparing themselves to others.

It is this “Social Comparison” that could drive one to refuse a Rs15 lakh per annum job in disgust but accept Rs 12.5 lakh per annum in great delight. Suppose you are offered Rs 15 lakh per year while your friend receives a substantially higher salary for a similar role in the same organisation. You “punish” the prospective employer by accepting a lower-paying job in another firm, even though a higher salary is economically better. You decision of “punishing” the unjust offer may seem rational to you, but may often seem obviously irrational to others.

(The author is the founder of Navera Consulting. He can be reached at >enhancek@gmail.com )

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