#168: Nirvana Fallacy, Cover Band Effect & Status Quo Bias

3 Ideas in 2 Minutes on Attaining the Unattainable

I. Nirvana Fallacy

When someone rejects an argument or a solution because it doesn't achieve an unattainable standard of perfection, they fall for the Nirvana Fallacy. It was coined by economist Harold Demsetz, who wrote:

The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing "imperfect" institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements. In practice, those who adopt the nirvana viewpoint seek to discover discrepancies between the ideal and the real and if discrepancies are found, they deduce that the real is inefficient.

—Harold Demsetz, Information and Efficiency

The informal fallacy establishes a false dichotomy between the status quo and an ideal. A classic example would be to oppose a proposed law against burglaries because it doesn't completely eliminate the crime.

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II. Cover Band Effect

The Cover Band Effect is my term for a phenomenon related to the Nirvana Fallacy.

Picture your favourite rock band playing your favourite rock song (assuming you have one). Now imagine the band playing it live. Chances are they don’t sound as polished on stage as on the studio recording. You may even find that, without tuning, the lead singer sounds like a cat being strangled.

But that doesn’t keep the audience of a cover rock band from expecting them to play the songs live on stage the way they remember the songs from the album. In other words, cover bands are expected to achieve an ideal not even the original band can attain.

The Cover Band Effect goes back to an observation made by my late friend and cover rock band bassist Martin. (He passed away several years ago, was notoriously tardy and enjoyed making terrible puns.)

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III. Status Quo Bias

There are plenty of delicious options, but we still end up in the same restaurant eating the same dish every time. We don’t change jobs even though we’re stagnating at the place where we’ve been working for the past 10 years. We haven’t updated our wardrobe since then either because venturing into uncharted fashion territory is too risky.

Status Quo Bias describes our psychological preference for maintaining the current state of affairs, even when change could be beneficial. We tend to see change as more risky and significant than the risks of maintaining the current situation. It’s similar to the Action Effect, the idea that we perceive actions leading to negative outcomes as more regrettable than inaction. 🐘

I’ve shared a resource on cognitive biases, misapplied heuristics and intuitive traps with Patreon members. Check it out and support my work for as little as $3.

Have a great week,

Chris
themindcollection.com