Optimizing for Humans

Working in Vegas is full of contradictions. Of course we’re a city built around entertainment, amusement, and fun. People come back to Vegas because they create emotional connections to the city – whether it be the neon lights, the glitzy showgirls, or the action on the casino floor.

Behind the scenes, countless hours are spent trying to analyze nearly anything we can get our hands on. But creating a narrative that makes sense through analysis and data sometimes omits a truth of Las Vegas that gets forgotten: People are participating in an irrational activity. A typical Vegas vacationer therefore is already behaving completely outside the realm of “normal” econometric thinking.

Consider the ”normal” econ described in nearly any economics textbook. You’ll see someone who would abhor gambling and various other vices of a party-fueled city. It wouldn’t make sense, and so therefore it would be thrown by the wayside. This isn’t like a CPG product manager trying to figure out how to sell more dish soap by creating a fusion of brand awareness and loyalty combined with product features that fill a market niche. It’s not even a pseudo-rational activity like buying the extra upgrade on the car you were already going to buy – so why not upgrade the rims and the entertainment package while you’re at it? Oftentimes consumer-focused sales and marketing makes a plea for both emotional and logical decision-making.

But in Vegas, we have to optimize against an irrational behavior.

How might your business also be in the irrational behavior business? I think any travel & hospitality company really has to imagine itself in the irrational behavior industry. Sure, lots of travel is done for purely utilitarian purposes, but even there, people become irrational almost immediately upon leaving their home’s front door. Ever watched a group of perfectly normal-looking people absolutely lose their minds when told an airplane flight is excessively delayed, or even cancelled? Poof – there goes your utility-optimizing “Econ” and enter your irrational human.

Optimizing for humans requires spending a little extra time within your analytical model trying to unwrap the boundaries of their irrationalities. Again – Vegas is a great place to watch people because you see so many different kinds of unexpected behaviors. People smoke more. They drink more. They gamble. They stay up late. They spend too much time in the sun. They are drawn to blaring music and ridiculous architecture and scenery. So when trying to create an optimal path, the straight line may not be the ideal solution.

Take a line, for instance. I absolutely hate lines. I want nothing to do with lines while I’m on vacation. I imagine most people don’t either. But something interesting happens in Las Vegas when lines form — people are drawn to the queue. So yes, the people standing in line are suffering the obnoxiousness of standing there; but they can also serve a powerful social signal to other people wandering by that something interesting is going on. If whatever is at the end of this line isn’t interesting, people wouldn’t be standing in this line – so I better stand in this line so I catch whatever it is! Sure – you can make the case that this is utility maximization, but really it’s just humans being humans. The things that sound silly in a business meeting may turn out to be just fine in the real world.

Optimize for humans and don’t be surprised when their irrational behavior turns out to be the most powerful part of your marketing plan.


By the way I strongly believe this is part of what makes the crypto universe so hard to dismantle at this point. I’ve heard it dozens of times even from people I truly admire (like Kara Swisher and Scott Galloway on Pivot podcast, for instance) – pronouncing ”there are too many smart people working on this, there must be something there.” That’s just like people in Vegas walking past a hot table and imagining that the gamblers on that one have figured it out. Their dice are working extra well today, so today’s the day we all get our money!

There’s simply the possibility there isn’t something there. Just irrational humans behaving predictably irrationally.

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