On a jog last week I listened to a Freakonomics podcast hosted by Stephen J. Dubner. The episode, “How to Make a Bad Decision,” featured Yale economist Toby Moskowitz, co-author of a paper titled “Decision-Making Under the Gambler’s Fallacy,” which examines how the order in which decisions or events occur can shape the choices people make.
In the episode Moskowitz explains the gambler’s fallacy: people often expect random sequences to alternate, but randomness does not behave that way. For example, when flipping a coin 10 times you theoretically have a 50/50 chance of tails on each flip, but outcomes like 10 tails in a row remain entirely possible. Many people find that counterintuitive, and that misconception drives poor choices—such as believing past outcomes change the odds in gambling.
Moskowitz points out that this bias can distort otherwise sound judgment. “There’s all kinds of possible areas where the sequence of events shouldn’t matter, but our brains think they should, and it causes us to make poor decisions,” he says.
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Overriding human logic
Moskowitz tested these ideas using a very large sample of Major League Baseball games—more than 12,000 contests. His findings were surprising: umpires’ calls are influenced by the sequence of previous pitches. If an umpire had just called a strike, a similar pitch that follows is about 3.5 percent less likely to be called a strike. If the two preceding pitches were both called strikes, that drop grows to about 5.5 percent. In short, prior calls affect subsequent judgment even when they shouldn’t.
How does this relate to continuing care retirement communities (CCRCs), also called life plan communities? One related concept discussed in the podcast is sequential contrast effects: people’s evaluations of something depend strongly on what they experienced immediately beforehand. Moskowitz gives a simple example—if you read an exceptional book last week, the next book you read may seem less impressive even if it’s objectively very good.
An important feature of sequential contrast is that its influence fades with time: the longer the gap between events, the weaker the contrast effect.
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Now, let’s consider this in terms of senior living decisions…
If you work in management or sales for a CCRC: Be aware that human decision-making biases can shape a prospect’s impression of your community. Many prospective residents tour two or three communities in a short span. If you can influence the order of visits, does it matter whether your community is seen first, second, or last? If you believe your community stands out, are there reasonable ways to encourage prospects to visit you earlier in their itinerary? It may be tempting to assume sequence doesn’t matter, but research shows it can.
If you are a senior considering several CCRCs: Reflect on how the order of visits might affect your judgment. Are you evaluating each community on its own merits, or are sequential contrast effects nudging you toward a particular choice? Awareness of this tendency can help you keep an open mind and weigh each community’s features more deliberately.
>> To learn more about CCRCs in your area, try our online community search tool. It offers helpful information and is free to use.