Story@BFBV: The Story of the Three-Legged Stool

I love this story of Cialdini’s Three Legged Stool. The stool is stable because it has three legs. Take one away and it will fall. However, this magical stool does not fall because when one leg is taken away, another one grows to replace it.

The human mind pretty much works like the three-legged-stool. You do something for a reason, and then more reasons are created in your mind to justify your decisions. And when the original reason for doing that thing is taken away, new reasons are invented to allow you to continue with the decision. You are never wrong this way because there are always enough reasons to maintain your prior beliefs.

Take an example. You buy a stock because you think its prospects are good. Then you learn that the company’s earning power will be hurting for the several years in the future. In the meantime, the stock has fallen 20% from your cost. You mind will now invent new reasons to hold on to the stock. You will start thinking that this is just a temporary adversity, or the drop in price has made it even a better bargain so you should buy more, or you have new cash coming in which you can invest in new opportunities so no point liquidating this position, or the company is developing a new product line and that will surely result in resumption of profit growth, or the company has become an attractive acquisition target and will surely be acquired at a large premium to the prevailing price, or blah blah blah – you get the point I think.

Is your mind the functional equivalent of the three-legged stool magically growing legs to allow you to be consistent with you past dumb calls?







One thought on “Story@BFBV: The Story of the Three-Legged Stool

  1. […] excellent blog by Prof. Sanjay Bakshi and came across the case of “three legged stool” [read it here]. I have suffered from this fallacy for a while […]

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