Dan Ariely, author of “Predictably Irrational,” kicked off the festivities at the FPA Annual Conference in Denver with a keynote speech about how people frequently make mistakes because we rely on input from our senses that often give us biased information. This process is totally unconscious.

The Duke University professor of behavioral economics gave many examples of how we do this. One was a chart showing what percentage of people in different European countries who were willing to donate their organs.

“You think its something cultural,” he said, but pointed out that Sweden scored very high while Denmark scored very low. Likewise, only 12% of Germans were organ donors, while 100% of Austrians were.

Maybe it was a matter of information or education? The Netherlands launched a massive campaign encouraging people to become organ donors, and still only 28% of the population signed on.

What was the difference between the low percentage countries and the high? The enrollment forms.

The former were presented with a form that asked them to check a box if they wanted to be an organ donor, the latter were presented with a form that said check the box if you don’t want to be an organ donor. The fact was that no one checked any of the boxes because when confronted with such a important choice most people don’t know what they think and don’t make a decision. The information box was an environment in which doing nothing led to a decision by default.

Ariely called such environments or contexts “choice architecture,” and said it’s hard to see how much people are influenced by them. “Defaults influence behavior when decisions are hard,” he said, “People don’t know their biases very well, so they follow the form.”

The number of choices a person is faced with also will also unconsciously drive behavior. Ariely cites an experiment in California, where psychologists tested consumers at a market with a free jam tastings. One day there were six jams to choose from; another,  there were 24. All  the consumers were given a discount coupon to buy jam. While 30% of the those who saw six jams used it, only one or two who saw 24 jams did. “Twenty-four jams seemed too complex,” he said.

This is not unlike getting people to save in a 401(k) plan. You could offer people an opt-in to the plan, send them a letter saying this was the most important decision of their lives and offer lots of investment choices; or you could offer a target-date fund invested in stocks and bonds that rebalances regularly and an opt-out. The former would tend to drive them away from savings while the latter would encourage them.

He showed also that to the extent people don’t know their preferences, you can change their attitudes based entirely on the context. For example, you can ask one client how he felt on the days when his portfolio lost 5% of its value. He would think about this and get kind of depressed. You could talk to another client about retiring in the Bahamas and they would feel in a good mood. If you then ask them what their attitude toward risk is, the first person will be more conservative and perhaps go for an all-bond portfolio, which may not be in his long-term interests, while the person imagining themselves in the Bahamas is more optimistic and willing to take on more risk. “The question ‘What is your risk attitude is incredibly hard to answer and therefore they will be influenced by things in the background.”

Yet another example of how people are unconsciously biased is comparative analysis.

For example, the Economist magazine had a subscription offer of the Economist.com for $59, the print edition only for $112 and the print and online editions for $125. Twenty percent chose the first option, no one chose the second and 80% chose the third, but when you take out the print only option, the numbers reverse; 64% chose the Economist.com and 32% chose the combination. Once you take out the option by which they framed the combination decision—the two subscriptions are better than just one— it became a less popular option. People may not know what they want, Ariely said, but they do know the combination option is better than the single option.

Ariely gave many other examples of how context determines human behavior. One critical example was about the pain of spending money. There is pain involved in paying for things and you can help take that away where it makes sense or not. Someone who pays for a trip in advance enjoys the experience more than someone who gets the tab on the last day of the trip even though the cost is the same. Likewise, if given a choice between getting $1000 extra a month and a $12,000 bonus at the end of the year, who will enjoy the money more? The one with the bonus because the money won’t get eaten up in everyday living even though it’s the exact same amount.

Ariely concluded that the job of financial planners is partly to create systems that will maximize their their joy in life.

His ultimate message: question your own biases because they may well be wrong.

“You have to question your assumptions based on intuition and experiment with trying something different and seeing if another way might not be much better,” he said.