Behavioral Economicsas a Lens forInteraction Design

Paul Whitmore Saspaul_sas@intuit

BayCHI general mtg Valentine’s day 2012

4

Framing the bridge from Psych to Behavioral Economics

Contextual cues, situational aspects, environmental associations shape/structure

perception

6

Behavioral economists view Designers/Product Managers as CHOICE ARCHITECTS

“Many features, noticed and unnoticed, can influence decisions. The person who creates that environment is, in our terminology, a choice architect.” (Thaler & Sunstein)

Option A

Option B

4

Imp of the Perverse - Moishe Pipik

Impossible to command self reliably

Irony in inner drive of any productivity guru

Behavioral Economics honors our inner Snoid

We do not resemble a Spock-like intelligence

Whatever we tell ourselves,we are largely strangersto many of our impulses & motivations

Can we trick the Snoid intodriving when tendencies are frequently unstable?

6

Can we make ourselves GTD (get things done)?

Structured procrastination Assemble a stack of to-dos, & recognize that #1 will rarely be the task getting done.Self motivated to dither on #2+, simply in order to avoid making any progress on #1.

BJ Fogg’s 3 Tiny Habits, whittling down our ambition to epsilon

Goals help, but what helps the self set goals?

6

People fail to form goals for most important areas

When asked to describe personal priorities, people provide more articulate & explicit goals for lower priorities

Delmore Effect - http://www-psych.stanford.edu/~wit/PhDraft.pdf

15

Eliciting Goals that Matter requires delicacy

Recalling past successes just

makes it worse

Distracting people by

asking them to think about

irrelevant topics doesn’t

help either

To recall a success, not connected to most important goal, can help overcome the Delmore Effect

Many sites/apps demand explicit expression of a preference

Notwithstanding inchoate & tender essence

It’s typical to front-load cognitively demanding & emotionally challenging tasks

Next week I will want things that are good for me…

Choosing for tonight Choosing for next Thursday

Choosing for second Thursday

Don’t Assume Participants Know Themselves

slide adapted from Prof Russell James III,  Texas Tech U

How can interaction designers solicit the revelation of preferences?

1- Make it possible to accumulate info without deliberate action

2- Enable answers to “quiz” like questions to create small successes to build greater engagement w/o triggering anxiety

Much of the hobo’ing invasions by FaceBook, PATH, Angry Birds, et al involves stealing a look at predictors of useful actions to perform for the invaded privacy. When caught, the services point to the favors generated from the theft.Perhaps we’ll get used to being abused this way

Understanding Preferences

Building a better Eliza (1966 computer program)

ELIZA mimicked a therapist by returning whatever user typed with a question

> How does that make you feel?

> Tell me more about …

Beware that Q&A can just be pesky

Eliza tricked people into thinking that we are talking about my self

Microsoft “Clippy” had much more computational intelligence than Eliza, but it only directed attention to Clippy

New feedback methods transform our dialog with technology

Smart Phones are becoming scary Smart Instant Heart Rate

“Revealed preference” increasingly intimate

Attention & Performance (Kahneman ’73): Pupils dilate when doing cognitively demanding work

QSelf streaming a panoply of signal detectors

Being in a good mood (actual or induced) improves ability to selectively attend & process more accurately

Affdex Affectiva (MIT MediaLab) measures mood through video camera monitoring: smile, surprise, confusion

The fight for self control

Herrnstein’s rats (acc. to Dan Ariely)

Lever A: Small pellet now, but then it blocked greater reward

Lever B: Larger pellet, delivered after a delay

Rats couldn’t resist the quick fix A

But, if given Lever C (which disabled A), rats succeed in choosing bigger/later,

Can we delegate self-discipline to a mechanism?

Automating Choice

Subscription aims to reduce friction of decision-making

Theater subscription / Gym membership

Amazon: 2 ways – PRIME & 15% off if a purchase is transformed from a one-off purchase to a subscription

Medical insurance –Seems irrational to choose high premium, low deductible, yet many don’t want to make repeated calculations about trade offs

Implausibility of micropayments has been due to the impossibility of shrinking a “decision” to micro-size

Diminishing Returns (Weber-Fechner Law)

Response starts big, and with each additional increment, gives less and less bang

Psychophysics of Value

20

Move from framing where response is flat into framing where the payoff is still increasing.

Games do this by slicing infinite horizon into smaller intervals

The reverse occurs with Subscription, and explains how friction reduces:

Move many short, sharp shocks toward one smooth flat perspective.

Behavioral Econ explains one way that games hook into motivation

Experienced vs. Remembered Utility

Our mind does not make movies; it takes snapshots

Some aspects of an experience are immediately accessible, while others are very difficult to access because they’d require computing

Analogous visual image

Peak is obviousSum is not

Peak and End Rule (Kahneman)

Experienced vs. Remembered UtilityRather than guess the total amount of suffering, people recall the worst instant, and the last instant.

If you increase the amount of suffering, but arrange for the last minutes to be less intense, people report a longer period as less painful

Peak and End Rule for Designers

The last moment of contact makes an inordinate difference to the recalled value of experience

Transform the experience by giving something pleasant at close

DropBox spiffs new users an extra quarter gigabyte

Jared Spool's "Truth About Download Time"Nielsen concluded that users will be annoyed … by pages that take any longer than about 10 seconds to load. (Since most popular sites take 8 secs, and less popular take an avg of 19 secs to download)

No correlation between download times and perceived speeds. Amazon.com, rated one of fastest, really one of the slowest

Strong correlation between perceived download time & whether successfully completed task

More choice causes less purchasing (Iyengar)

Every other hour, a set of 24 jams/jellies to sample. On odd hours, only 6 jams available.

Choice of sampling any of 24 jams: 3% redeemed coupon.

Choice of sampling any of 6 jams

More choice causes less purchasing (Iyengar)

Every other hour, a set of 24 jams/jellies to sample. On odd hours, only 6 jams available.

Choice of sampling any of 24 jams: 3% redeemed coupon.

Choice of sampling any of 6 jams:

30% redeemed

Choice Overload shown in 401K participation

32

Power of Defaults

A study of 401K participation, 3 different conditions: Opt-in, Suggestion, and Automatic enroll

Fact 1. Most investors follow Default Plan

Changes participation

Also contribution level

Fact 2. ‘Suggested choice’ not very attractive unless default27

Can education/training overcome default?

28

In a word, No

Notice:

People said theywere 100%likely to enroll, yet only14% actuallydid

How to manage tendency to procrastinatePeople make “bold forecasts” but “timid choices”

The Procrastinator app. If you can’t make a choice by the deadline, it chooses for you.

Analogy for financial services:

Although rarely allowed to automate, customers who bail/pause can see what they have “lost” by not taking step37

Relevance to Designers

Ruthlessly simplify: Choices are pain points

Consider implementing the McKinsey 3X3

Provide broad options

Then hierarchically reveal detail

If it’s a brochure-ware feature, “provide but hide”

Rob Haitani, designer of Palm, BayCHI 2003

33

Descriptive Choice: Prospect Theory

General features of Prospect Theory

Status quo bias (connected to power of defaults)Disadvantages of change weighted more than the advantages

Hedonic twins can diverge over time

Losses weigh much heavier than foregone gains/opportunity costs

Save More Tomorrow program – Allocate future raises

Risk averse for gains

Risk impulsive for losses

Some consequences for designers

Showing data too frequently can cause stress

Amos Tversky didn’t read student evaluations, just avgs

// Marriage is in danger when negative info exceeds 1/5 of the total channel volume (Gottman)

Losses should be summed up into one bad ball

Wins should be sliced up into many small gains

Breaking up enjoyable task increases pleasure; sustained bad time less

Goals in Prospect Theory

Goals divide outcomes

into gains or losses

People approach losses

differently

Failure is more painful than

success is satisfying

What does Behavioral Economics Offer IXDN?

Via the example of these particular findings, BE should promote experimentation

Yet, Shafir’s work highlights our tendency to delay in face of uncertaintyMany QSelf attendees collect, but never take next step to experiment

People pay more for a restaurant meal than for a cookbook. The self that designs the experiment is not the same as the experimented-upon self.

Revealed preferences can be constructed in dialog with experimentally streamed data conversation

Union of empiricism & sensitive technology opens new vistas

Linda, the “prototype” who launched a cognitive revolutionLinda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discimination and social justice, and also participated in antinuclear demonstrations.

Please rank the following statements by their probability, using 1 for the most probable and 8 for the least probable

Linda is a teacher in elementary school.

Linda works in a bookstore and takes Yoga classes.

Linda is active in the feminist movement.

Linda is a psychiatric social worker.

Linda is a member of the League of Women Voters.

Linda is a bank teller.

Linda is an insurance salesperson.

Linda is a bank teller and is active in the feminist movement.

— Tversky, Amos; & Kahneman, Daniel (1983), "Extensional Versus Intuitive Reasoning: The Conjunction Fallacy in Probability Judgment", Psychological Review 90(4) (October): 293-315.

Copyright © 2007 by William J. Rapaport (rapaport@cse.buffalo.edu)

http://www.cse.buffalo.edu/~rapaport/575/F07/linda.html-20070830