Star Wars and how behavioural economics helped the Rebels beat the Empire.

As i’ve gotten more and more into Behavioural Economics I see examples everywhere. That’s not surprising as it governs how we think. Our brain has many subconscious shorts cuts to help us navigate the thousands of decisions we have to make every day. A short cut is really a behavioural bias, an evolved subconscious tendency to act a certain way in a certain situation.

Over the next few articles i’ll show how people’s lives are massively changed through their behavioural biases. As I like to keep things simple i’ve picked examples we can all related to, so i’m going to use some of my favourite movies. Starting with…

…Star Wars

Knowing our biases, and how we react, helps us understand why people behave the way they do.

Early in the Star Wars saga, when Ben Kenobi suggests to Luke that he should join the rebellion, Luke’s initial response is:

“Look I can’t get involved, I’ve got work to do. It’s not that I like the empire, I hate it, but there’s nothing I can do about it right now.”

So why is Luke so reluctant, when everything in the movie implies he’s desperate for some action?

We like things as they are. We don’t like change. We’ve lasted as long as we have doing the same thing. We feel safer not changing. From an evolutionary perspective the reason for this is survival. As a prehistoric hunter gatherer, we may have wandered in a specific direction, done things in a specific way or lived in a specific area. This way of doing things has protected us, evidently as we’ve survived to pass on our gene’s. We’ve come to no harm so why change our approach and leave our path? That is why we have a bias for maintaining the status quo.

Ben Kenobi ” There’s nothing you could have done Luke, you’d have been killed too and the droids would now be in the hands of the empire”

Luke only joins the Rebellion when his Aunt and Uncle are killed by the Empire.

His world is changed, the path he was on is disrupted. When the environment changes it’s the prime opportunity for a third party to take advantage. In this case, Ben easily gives Luke motivation to join the Rebellion.

” There’s nothing you could have done Luke, you’d have been killed too and the droids would now be in the hands of the empire” — Ben Kenobi

And so Luke’s status quo bias is broken.

Status quo bias appears frequently in society. A commonplace is our choice of bank. We join a bank early in life, usually at University or even as a kid with a savings account, and we tend to stick with them for life.

In Australia the banking Royal Commission has created a disruption. The disturbance has forced some to question why they are with their existing bank. This has allowed small banks who promote a more ethical stance to take advantage and flourish.

But how do the Rebel Alliance benefit from Behavioural Economics?

Near the end of Star Wars the Rebel Alliance are launching an attack on the Death Star. Grand Moff Tarkin is asked if he would like his escape ship prepared, just in case the attack is successful. He refuses, saying incredulously:

“In our hour of triumph?!”

And we all know how that ends.

This is a great example of overconfidence bias. A bias which can help bring success as well as failure. So what is overconfidence bias and in what way is it useful enough that we evolved to need it? After all, if you read my previous post, behavioural biases are a product of evolution.

Well overconfidence bias is what it sounds like, it’s our mistaken belief that we’re more in control of something than we think. In everyday terms, we may feel we’re a better driver or know a subject better when arguing in a pub.

So why do we have this? Well, two reasons. We have mental short cuts so we can actually live our lives rather than be paralysed by every decision we have to make. In neolithic days we may have had to lead our tribe to a new destination. Therefore to lead others we had to be sure, or give the impression we were sure, even when we weren’t.

Psychologists believe that in those early days the best way for our brain to make sure we could convince others of our assuredness, was to fool ourselves. So that’s what the brain does, it gives us a false sense of confidence. Without this, we may never have taken a chance to lead the tribe to a new water source, find a cave or, more importantly, find a mate.

And that’s the other reason why psychologist believe we have overconfidence bias. To attract a partner. Those who have a strong belief in themselves are seen as more attractive and desirable. Confidence shows assuredness and that suggests you will protect your partner and children and be a better parent Therefore those with this bias tended to find a mate and pass on their DNA.

This helps explain why a soccer player scores a wonder goal from distance when they should have played a safe pass. In a rational world, they wouldn’t have taken such a risk. But, they have an overconfidence bias in their abilities which makes them take chances, and if you take chances it sometimes
pays off.

However, at it’s worst, overconfidence bias can lead to some dreadful mistakes, especially in the financial industry. Just look at the collapse of Lehman Brothers.

Other people’s overconfidence bias can also be used to your advantage. If you’re a small company you could try to make your business seem a lot bigger and more established. However it might suit you to actually play small so that an overconfident existing market leader will think you’re nothing to worry about, until it’s too late.

And that’s how the Rebel Alliance used this to their advantage.

Near the end of Star Wars the Rebel pilots are being briefed on their “suicide” mission to destroy the Death Star.

Pardon me for asking, sir, but what good are snub fighters going to be against that? — Says a concerned pilot

The Empire doesn’t consider a small, one-man fighter to be any threat, or they’d have a tighter defence. — Replies the general

And that’s how the Rebels defeated the Empire.

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