Behavioural economics (and beyond: a presentation to Which? magazine
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Transcript of Behavioural economics (and beyond: a presentation to Which? magazine
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James Caig
Deputy Head of Strategy, MEC
@jamescaig
seewhathappensblog.com
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Classical
economics
Behavioural
economics
People are rational
beings always striving
for the best possible
outcome for the least
possible effort
Decision-making is
irrational, emotional, and
influenced by a range of
conscious and
unconscious factors
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use misleading rules of thumb
care disproportionately about what others do
respond to the way choices are presented
ALL
OF
US
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Framing
People make decisions based on relative not absolute information
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online ONLY
online AND magazine
magazine ONLY
$59
$125
68%
32%
16%
84%
0% $125
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Loss
aversion
People work
harder to avoid
losing things than
they do to gain
them
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Scarcity value
People perceive
things to have
more value the
more scarce and
harder to obtain
they are
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Chunking
People are more
likely to complete
tasks when
they’re broken
down into little
steps
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David Ogilvy
People don’t think how they feel,
they don’t say what they think,
and they don’t do what they say
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Marketing can help consumers
make the ‘right’ comparison, and
build a choice architecture which
makes the right choice easy
Nick Chater, IPA, Professor of Behavioural
Science, Warwick Business School
There is no pleasure gauge.
All we have is comparison
between similar things.
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How
brands
have
responded
Decision-
making and
the public
agenda
1
2
3 Where
next?
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How
brands
have
responded
1
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Challenging value
conventions
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Re-framing in Retail
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Dine in for two for £10
£10 off your next pizza
Waitrose Essentials
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New purchase
levers
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Context over content
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Brand stories and
simple actions
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Decision-
making and
the public
agenda
2
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This new approach represents an important part of the
Coalition Government’s commitment to reducing
regulatory burdens on business and society, and achieving
Applying behavioural insight to health,
Cabinet Office Behavioural Insights Team, 2011
We can give citizens more or better information.
We can prompt people to make choices that are in
line with their underlying motivation. And we can
help to encourage social norms around healthier
behaviours.
its policy goals as cheaply and effectively as
possible. It is also part of the Government’s
answer to how we can spend public money
more effectively.
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THE POWER OF THE CROWD
Consumers
working together
for a better deal
Better access to
performance and
complaints data
Protecting consumer feedback
and improving public sector
choice tools
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THE POWER OF INFORMATION
Making informed
choices easier
Richer information
for important
choices
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3 Where
next?
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As tools, technologies
increase people’s ability
to perform a target
behaviour by making it
easier, or restructuring it
BJ Fogg, Persuasive
Technologies, 2002
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The psychology of UX
http://uxmag.com/articles/the-psychologists-view-of-ux-design
1) People will do the least amount of work possible to get a task done
2) People have limitations
3) People make mistakes
4) Don't make people remember things from one task to another
5) People look to others for guidance on what they should do, especially if they are uncertain
6) People are easily distracted
7) People need feedback
8) Committing to a small action makes people much more likely to later commit to a larger action
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Making behaviour visible makes
participation more likely
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