In this podcast, Motley Fool contributor Rich Lumelleau and Shannon Jones, The Motley Fool's head of strategic operations, talk with author MichaelAaron Flicker about his new book, including topics such as loss aversion, sunk costs, and the power of pratfalls.
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A full transcript is below.
This podcast was recorded on Dec. 21, 2025.
MichaelAaron Flicker: One thing that all the listeners can think about is humans are much more emotionally driven than rationally driven. Nobel Prize winner Daniel Kahneman said, thinking is to humans like swimming is to cats.
Mac Greer: That was MichaelAaron Flicker, co author of Hacking The Human Mind, the Behavioral Science Secrets behind 17 of the world's best brands. I'm Motley Fool Producer Mac Greer. Now, we recently talked with Flicker about his new book. We talked loss aversion, the power of Pratfalls, the rational, and the not so rational.
Rich Lumelleau: Welcome to Motley Fool Conversations. I'm your host, Motley Fool contributor Rich Lumelleau, along with Motley Fool, head of Strategic Operations, Shannon Jones. Today's guest is someone who sits at the crossroads of business consulting, advertising and technology and has spent his career helping some of the world's most influential brands understand how people really think and make decisions. MichaelAaron Flicker is the author of the compelling new book Hacking The Human Mind. He's worked with companies ranging from Nike and Chubb to Evan Williams, JP Morgan, and AstraZeneca. His work zeroes in on the psychological forces that shape markets, shape brands, and ultimately shape investor behavior. Michael, it's a pleasure to have you here. Welcome to Motley Fool.
MichaelAaron Flicker: Hi, Rich, thanks for having me. Excited to be with you all today.
Rich Lumelleau: Excellent. Well, Michael, for listeners who may not, you kind of know you or be familiar with your work yet, what's kind of the short version of your professional journey, a little bit of background?
MichaelAaron Flicker: I started my company when I was 14-years-old in my parents' basement, and it was a time in 1997 when the world believed that the Internet was a great equalizing force and maybe high school kids knew more about the Internet than anybody else. In that moment of opportunity, the kid I grew up with across the street and I formed our company, and we said, We're going to do Internet programming. We're going to do computer programming on the Internet and that was really innovative at the time, almost silly. Real computer programming rich belonged in the domain of mainframes and big corporations. The idea that anybody could do meaningful computer programming online was just unusual at the time and just crazy enough that they let a bunch of high school kids work for these big companies. The story of the last 28 years for me has always been at the intersection of thinking about how can we come up with smart ideas to solve problems? How can we solve things that others haven't been able to solve before? It's led me now to I own nine companies. We have a number of them in our professional services, a number of them of our own brands. But what connects them all and what's been so interesting is that behavioral science has been a key to understanding why people do what they do and to really understand how they act in the real world. So much of what we learned in our years was you would run these studies and ask consumers, would you be open to buying this brand or would you be open to taking this medication? When you ask them that, they give you an answer, then you go into market, and they do the exact opposite. How could that be that people don't follow what it is they say they're going to do? Academia has built this body of research in academics that helps explain how consumers actually behave, rather than how they claim they will behave. This is a fascinating field for me. I got involved in it about 12, 13 years ago, and it's been a passion of mine ever since.
Shannon Jones: Yeah, I always love to hop in because in my role in strategic operations, I'm really at the intersection of our product teams and also work really closely with our CEO who is a wonderful visionary, lots of ideas, but he's super passionate for our members, especially as they go through market cycles, market downturns and everything. To really realize this is a long term investing journey and to really ride the waves of those journeys, knowing that the market cycles come and go, you'll have good days, you'll have bad days, and it really is about staying the course. I'd love to get your take. How does, I think the emotional reframing in your mind, empower people to take like braver actions to stay the course, especially when it comes to finances or really in anything as it relates to investing? Like how do you connect the dots there?
MichaelAaron Flicker: When I was growing up and learning my first economics classes, my first business classes, we learn these models that humans are rational actors, and given the choice of one good option and one bad option, they're going to choose the good option. And the challenge in my career and in my life has been that's not always proven to be the case. They don't always choose the thing that's in their best interest. They don't always choose the thing that seems like the best option for them. I think one thing that all the listeners can think about is humans are much more emotionally driven than rationally driven. Nobel Prize winner Daniel Kahneman said, thinking is to humans like swimming is to cats. They can do it. They just prefer not to. And so there's something about the human experience that if we can take a mental shortcut, if we can not have to work as hard to get to that outcome, we're not going to fascinating fact, the human brain is only 2% weight of your whole body but consumes 20% of all your calories. Literally, over hundreds of thousands of years, the development of humans has been a survival of the fittest to use as few calories as possible, and we're going to use these mental powers we have to make these shortcuts. Your question, Shannon is, how do we teach people to stay the course. How do we teach them to invest in the long game rather than the short game? The first thing is to understand that the rational, logical argument may not be the most compelling one. It may be the one that the data shows you to take, but there might be a lot more going on behind the scenes. When you think about investing, we want to reveal these behavioral science, insights, these psychological tricks to help people analyze brands, businesses that they might invest in, but also analyze their own motivations and their own actions to better understand what might be at play, because the more that you understand how the human mind works, the more you can work with it rather than against it. The more you work with it, the more effective you're going to be.
Shannon Jones: I love that. I would love to keep going along those same lines. You explain in your book Hacking The Human Mind, which I love that title, by the way. Got a lot of looks at Thanksgiving for my in laws, walking around with that book, by the way. But you explained in the book that loss aversion is really one of the strongest forces in human behavior. Use the Got Milk campaign just to show how powerful that is. The ad didn't sell milk's benefits, I was really the fear of running out. At the Motley Fool, obviously, we see loss aversion every time members will panic sell or freeze during those downturns. My question is, why is loss aversion so dominant and how can companies like ours really help people make better long term decisions without really exploiting that fear at the same time?
MichaelAaron Flicker: Absolutely. First of all, the definition by the social scientists would say loss aversion is the tendency to feel the pain of losses more intensely than the pleasure of equivalent gains. That can lead, as you're saying, to holding losing investments for too long or being too risk averse on new opportunities because that fear of loss. The academic study that backs up is actually fascinating. Let's start there, and then we can talk a little bit about the impacts. Israeli psychologist Amos Tversky and Daniel Kahneman it's 1979, and they think up this experiment. What if we offer people a bet on a coin flip? Tails, they lose and they have to give us $10. Heads, they win, and they win $10. The researchers wanted to know the amount people would need to be offered before that win was worth the loss bet. How much would they have to get paid? In order to be worth a $10 loss and the key finding was that most people wouldn't gamble unless they were set to win at least $20. Meaning they'd rather not risk losing ten unless the potential reward was double that, $20. Other studies have shown similar real world situations and outcomes. What we learned from that is it's human nature to want to hold onto things more than they want to gain new things. That psychological barrier of being afraid of losing something really has an outsized impact on our actions. Shannon, you mentioned the Got Milk example. The book goes through great brands and how they've taken advantage of psychological insights into how we act and how that's led to good business outcomes for them. Got Milk could have very easily said, think about how amazing Oreos would be and Chips Ahoys would be with milk. But they don't say that. What they say is, how bad would those Chips Ahoys and Oreos be without a delicious glass of milk with it? That fear of not having it is a much stronger sensation. That's what drives people to act because of loss aversion.
Rich Lumelleau: If I can follow up. From kind of a psychological standpoint, do you think that that is the bias that investors underestimate the most, that fear of loss?
MichaelAaron Flicker: I think there's probably two major psychological impacts that are driving investor decisions as a marketer. One, I would say, is loss of virtue, without that rich. The second is this concept called the sunk cost fallacy. It's really an interesting insight. Let's pair it with loss aversion. Loss a version says the pain of losing is more intense than the pleasure of an equivalent gain. In fact, I need to have twice as much gain to be worth the risk of that loss, so that's loss aversion. Cost fallacy is this idea humans have a tendency to continue investing simply because they've already done that before and we call it the sunk cost fallacy because it's not necessarily rational. It's not necessarily logical. Because I have an inclination to match my past behavior, if I've already started investing in one type of investment want to continue to see that through. I've already started down that path. I want to see how it does. I've already made $100 investment. Even if it loses a little, I've already got my $100 in. I want to see what it does. That fallacy that just because I've put something in, I have a first on cost drives a lot of future actions. There's actually some fascinating academic studies on this. There's a lot to choose from. I'll just pick one that's really interesting. This is a study from 1985, it's Arkes and Blumer. They give a thought experiment. To a group of people. Let's say, on one hand, you're looking for a ski trip for your family, and you go and you spy $100 ticket to a Wisconsin ski weekend, and you're set, you're excited, and that's going to be a very good ski weekend. Then, a few weeks later, buy a $50 ticket to Michigan to a great ski weekend. That's going to be an even more enjoyable ski I get. Then, no, you realize that they're both on the same weekend and you have to make a choice. Should you go with the average $100 ski weekend or the much better $50 ski weekend? 54% of people choose the less enjoyable trip just because they had spent more on it. Because you want to be consistent with your past behavior, even though you know you're going to like it less, you choose the more expensive option and that's just not logical. It's just not rational. It really challenges us to think, are we being more emotionally driven in our actions or we truly being more academically, logically focused, and being able to spot those things when they're happening can make us smarter investors. They can make us smarter humans.
Shannon Jones: Just to pick up on that, I think in the book, you actually use Amazon is a great example with sunk cost fallacy in their prime subscription model and obviously, they've done quite well with that model. I'm a huge prime subscriber myself, Amazon shareholder, like many of our members are. But taking that hat off and putting on my strategic operations hat and working across product and working with our marketing team here, I'm often thinking about we're always talking about with our subscriptions, with our products, how we price them, and how do we make sure we our members feel like they get value out of that? I think you also bring out in the book, Amazon even has, I think it's called charm pricing, where it's like 9.99. What do those examples teach us or what can they teach us here at The Motley Fool about how people perceive value and how can companies like ours use pricing psychology ethically?
MichaelAaron Flicker: Picking up on that thread, Shannon, of the idea that you're going to want to be consistent with your past behavior. Once you become an Amazon prime member, once you join any of these membership services, you're more likely to want to invest and use those services rather than be a switcher. One study shows that prime members spend $110 a month on their prime buying versus just $38 a month of non prime members on their shopping on Amazon. There's a lot more bulk buying when you already have invested in the service or in the membership. It's beyond Amazon. You see Uber has their Uber One product, 9.99 for $0 delivery freeze or famously Pret, which is a chain of sandwich and coffee shops in London and New York, they offer a plan $5 a month to get up to five half priced coffees. Now, if you're already a Pret member and you've given them that $5 each month and then you're walking down the road, you're much more likely to skip the Starbucks, skip the coast of coffee, and walk the extra hundred feet to go to Pret which isn't necessarily logical, but it's because you want to be consistent with that membership that you've already gotten. Lots of brands have now tapped into this. It's why subscription pricing is so prevalent. But what's really an interesting factor of subscription pricing that a lot of people don't talk about is, would it be better to charge them once a year for $139, that's the going rate of Amazon Prime or is it better to charge them $9.99 every month? Fascinating number of studies reveal that the pain of payment every month helps reinforce that consistent behavior and improves your chance of using the product because you're reminding yourself through your credit card statement that this is the type of buyer I am. I'm an Amazon Prime member. I'm a gym subscription member, and my gym bills me every month, I better get back to the gym this month.
Sometimes, you want to reduce the pain of payment. You do not want people to feel the size of that spend and other times, like in this bias, a little bit of reminding them the payment payment may help them use your product more frequently and more often. That's some of the big insights around how we use this sunk cost fallacy to get people to come back. Probably one of the most interesting studies that double underscores at this point is another study from Arkes and Blumer, but this time they're studying theater goers, so they line up, I think it's the University of Ohio, and they go to the campus theater, and they have people lining up to buy their season tickets for all the shows that the university is going to show and so they randomly divide up people that are coming up to the window. Some people are charged $15 full price for the tickets to the university shows. Some are charged $13 slight discount, and some are charged only $8 a ticket at deep discount. What's fascinating is they track the attendance at all the shows those who pay full price attended 25% more shows than those that got the discount at the deep discounted price. Those that were invested who paid the full amount of money were more motivated to get their money's worth out of their subscription. Fascinating to think about how when we sell things at discount, when brands go on sale, they might be driving up revenue in the moment, but they actually might be devaluing the experience with customers and they may have less coming back. It's always a balancing act. How do we position our brand and our products to really improve people's perception? Then, in some places, how do we not send the wrong signal and get less usage and less repeat buyers. Sunk cost fallacy works in a number of different ways.
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Rich Lumelleau: In your experience, are there signs that a particular company has a strong grasp of customer psychology? When you go into work with somebody, do you kind of sit there and go, these guys get it or no?
MichaelAaron Flicker: I think it's so right the way you phrase the question, Rich, because a lot of times in business, you will find a rare individual in the organization that just seems to get human psychology more than others. They just have a sense of what's going to activate the customer or what's going to activate the buyer. But a lot of times they're either a great strategist or they're a great creative person and they use that to make a promotion work or make a sale work or make a product work. But they don't know why. They have the insight. They have the reason to believe in this, but they're not really sure what's driving it. The practice of behavioral science, the reason I wrote the book was so that we can reveal these and understand the underlying reasons why this exists. This is a fascinating, one of my favorite stories in all of behavioral science, and it's called the Pratfall effect. This is a study in the 1960s. They record someone answering a live quiz. He gets to ask a question, and he responds, asks a question, he responds. He scores 93% correct and then right before the recording ends, he spills his coffee on himself. Now they have this recording, and they show it to two separate groups. One group of people are asked to watch the recording with the spill included and rate how likable the contestant was in answering the question. Then the second group is shown the same exact video except they clip off the end where he has a small blunder, what we call a small Pratfall, where he spills on himself. How likable is the contestant in both scenarios? People rated the contestant 55% more likable when he has a small blunder when he spills the coffee on himself. Now, that's not logical. Why? The same questions, the same answers, 55% more likable. It drives home this point that brands who can think about how to use these human insights can really make a difference. Who's taking great advantage of that Pratfall insight? Think about a great line by Guinness beer. Good things come to those who wait.
That's a nod to when you order a Guinness at the bar, you have to wait longer than everybody else to get your beer because the head of the stout is coming down and the bartender has to refill it or famously in the 1960s, Avis said, we're Number 2. We have to try harder when they were competing against Hertz. They admit their flaw and because of that, they become more likable, more believable. Listerine has a great one. The taste you hate twice a day, meaning it's so astringent, it must be working. They're accepting the flaw that srine is hard to gargle for 30 seconds. In doing that, they're proving a mirror strength, which is that it must be very effective. Did Listerine, Avis, Guinness Beer know the pratfall effect? Probably not. In fact, the Avis ads came out seven years before this study that I'm talking about was ever run. But the people who made the Avis ad had that insight into humanity that they took advantage of. As investors, we can be looking at where brands do this, where they either through their product or their service meet a psychological need of consumers. That's a great one to look for. Nir Eyal in his book Hooked, talks about any brand that meets a psychological need is going to be more successful than others or in these examples, where a brand is using a communication and marketing, advertising that seems to get the human instinct in a way that others may not realize, and that's a really great thing to look for as investors to think about what brands may be ahead of the curd. I don't think it's a leading indicator, but I think it's a pretty good bet that if they're doing that and doing it well, they can be really successful.
Shannon Jones: I have to ask the million dollar question, then, MichaelAaron. In the age of AI, when it comes to human flaws, ability? Humanity. Who wins in this case? Is it the brands that are out there showing their humanity or is it really AI is just going to level the playing field? Where does this all shake out?
MichaelAaron Flicker: We're talking at such an interesting time. We're recording the show right after Black Friday Cyber Monday. I saw a Reuters report this morning that said $3 billion of Black Friday spending was influenced by AI assistants or AI agents, meaning you go to Amazon, you ask Rufus. What's the best deodorant and now comes out a lot of options. AI is guiding you to your choice. The game is changing quick and those brands that have a strategy to be optimized for AI search, we used to call it Shannon and Rich SEO, search engine optimized. We now have a whole field called AIO, artificial intelligence optimize so that your brands and products are recommended by AI agents when it comes time for that. But let's say that's on the bleeding edge. Let's say that that's the very small percent, but a good leading indicator where we're going. Today, most buying decisions are still made by humans and in so far, as the buying decisions are being made by humans, we are susceptible to our natural human instincts. Brands and businesses that understand those human insights, those psychological biases are going to be more likely to get people to buy their products and buy them more often. In so far as we are listening to this podcast in 2026, I feel real good that we are having people make their buying decisions for the most part, and these human biases are at play. Once we have AI agents and others really giving us a wildly curated down set of options or maybe saying, this is the best compression sock money can buy, how much decision making are we doing as buyers and that's a very exciting and interesting place for brands to grow into?
Rich Lumelleau: Well, MichaelAaron Flicker, thank you so much for the time. Thank you for coming on Motley Fool Conversations. The book is Hacking The Human Mind by MichaelAaron Flicker and Richard Shotton. Thank you so much for your time. On behalf of Shannon Jones, I'm Rich Lumelleau. Thank you for listening to Motley Fool conversations.
Mac Greer: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for our gifts, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money team, I'm Mac Greer. Thanks for listening, and we will see you tomorrow.
