Lee Chan-wing: Beware the Sales Trap — You Think You’re Rational, But Maybe Not

This article is a rewrite of a report from November 2012.

In November 2012, veteran broadcaster Lee Chan-wing joked at a “Retirement MPF Tactics” seminar that he was hopeless at money — he didn’t even know how many MPF accounts he had or their balances. But from behavioural economics, he warned workers: don’t assume you’re rational; beware psychological traps. MPF companies’ advertising offensives exploit precisely human irrationality.

What is the “decoy effect”?

Adding an option nobody picks can change your decision. Lee cited MIT professor Dan Ariely’s Economist subscription experiment: three options — digital US$59, print US$125, print-plus-digital US$125 — and 84% picked option 3, only 16% option 1. Remove the ignored option 2 and repeat: 68% picked option 1, just 32% option 3. The same information, artfully arranged, steers people to wrong conclusions.

What has this got to do with MPF sales?

Advertising offensives are carefully designed “options”. Facing MPF companies’ blanket promotions — price cuts, rebates, star funds — workers believe they’re comparing rationally, but may be led by the nose by option design. As Lee warned: don’t blindly trust the data in front of you; first ask — was this option placed here deliberately for me to see?

How do you dodge psychological traps?

Slow down. Before switching, “stop and think”: put the leaflet down for a day and ask three questions — do I need to switch? What if I don’t? How much is this “perk” worth in a year’s time? Lee’s contrarian 2012 reminder remains the cheapest weapon against sales traps: admit you’re not fully rational.