Tanker Decision: Predictably Irrational

Air Force procurement actions have a lot of us asking, "Why?"

As in, why did the Air Force select the KC-30 in a process that the Government Accountability Office ruled was conducted in a most biased and seemingly irrational way.

In our continuing search for answers, we believe we may have found something in the book Predictably Irrational by Dr. Dan Ariely.

When people make decisions they think they're in control, making rational choices, but as Dr. Ariely shows, often they are not. In an entertaining and surprising way, he unmasks the subtle but powerful tricks that our minds play on us.

We think that Dr. Ariely's research on the Power of FREE relates strongly to the tanker contract selection. FREE is a magical price, one that people don't evaluate in the same way as other prices. It is guaranteed to make us do strange things and go crazy with desire. FREE tricks our minds into thinking there is no downside, even though there may be hidden costs or the product is not what we really need. Here is a link to a video on the Power of FREE. Also, here is an article that explores the allure of something for nothing.

A variation on the Power of FREE is where people will agree to a bad deal because it appears to offer something extra for free. If you remember back to that fateful February 29th, during the KC-X contract announcement press conference when General Lichte had this to say about the reason the Air Force chose the bigger Northrop/EADS tanker over Boeing's tanker:

Well, I -- from a warfighter's perspective, and I know the team looked at a whole number of things, but from my perspective, I can sum it up in one word: more.

More passengers, more cargo, more fuel to offload, more patients that we can carry...

Many of the statements out of the Air Force since have echoed this more is better mantra. It almost seems as though the Air Force fell for the old marketing trick of advertising a product as getting 20% more free? In this case it would be closer to 18% more fuel hauling capacity free. (Remember this was before the Air Force figured out that the KC-30 was more expensive.)

We have begun to wonder if we should similarly advertise to increase our blog readership. So, we had TAnchorman, who has just returned from vacation, make us a new marketing slogan and label (on right) to put on Tanker War Blog. We are not sold on the idea, but we bet at least a couple of people in DoD will be.

They should not be too hard on themselves though. We wrote Dr. Ariely to ask about his thoughts on our More for Free Tanker Theory. He said that the situation was, "very sad but we all fall for this trap....".