Your SlideShare is downloading. ×
0
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Choice Architectures
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Choice Architectures

492

Published on

This presentation provides OnCorps' perspectives on critical research from Daniel Kahneman, AmosTversky, Richard Thaler and Cass Sunstein. …

This presentation provides OnCorps' perspectives on critical research from Daniel Kahneman, AmosTversky, Richard Thaler and Cass Sunstein.

Published in: Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
492
On Slideshare
0
From Embeds
0
Number of Embeds
5
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Choice Architectures 1 Research and diagnostic series Bob Suh, Founder and CEO August 2014 © Private and confidential. All rights reserved. OnCorps 2014.
  • 2. This presentation is derived from the theories developed by Daniel Kahneman, AmosTversky, Richard Thaler and Cass Sunstein 2 © Private and confidential. All rights reserved. OnCorps 2014.
  • 3. 3 © Private and confidential. All rights reserved. OnCorps 2014. When conditions change, default decisions can be mistakes
  • 4. 4 © Private and confidential. All rights reserved. OnCorps 2014. Avoiding the certainty of releasing bad data can result in fraud
  • 5. 5 © Private and confidential. All rights reserved. OnCorps 2014. Confusion over product differentiation causes products to lose A&W third pounder fails because consumers think it is smaller than quarter pounder
  • 6. 6 © Private and confidential. All rights reserved. OnCorps 2014. Decisions can be “nudged” to improve outcomes 1. Automatic 2. Reflective 2+2=? 32x11=? Whenever multiplying by 11, add first 2 numbers and insert sum between them Repeat insight Lean back when you fear falling Learn to lean forward Balance retained 32x11=352 Repeat insight Nudges
  • 7. 7 © Private and confidential. All rights reserved. OnCorps 2014. We are piloting a series of heuristic algorithms Belief Observation Reaction ABC stock will go up 200% ABC stock rises 210% Sell ABC ABC stock declines 20% Switch to XYZ Buy more ABC All shares Some shares • How convicted are you in your beliefs? • How do your beliefs influence what you observe? • How does what you observe change your beliefs? • How does what you observe change your actions? • How does your action or inaction change your observed performance?
  • 8. 8 © Private and confidential. All rights reserved. OnCorps 2014. Risk aversion drives many of our decisions Value GainsLosses Take a risk on possible loss versus accepting a certain loss Choose certain cash versus higher expected value Reference point or value function can change They can also change the perception of gains and losses: for example, gaining $10,000 from nothing is much more significant than gaining $110,000 from $100,000
  • 9. 9 © Private and confidential. All rights reserved. OnCorps 2014. Typical prospect theory behaviors Value GainsLosses Short-term profit taking in favor of long-term investments Not accepting a sunk cost or actual loss in favor of a delayed probable loss Risk averse Risk seeking Hypothetical value function curve
  • 10. 10© Private and confidential. OnCorps 2014. Prospect Analysis: Value Function Value GainsLosses Mobile Q: at what level would you sell to cut losses? Mobile Q: at what level would you sell to capture gains? Mobile Q: What is your target price for IBM? • Group 1 • Group 2 • Group 3 Threshold for selling to capture gains Threshold for selling to cut losses Bottom quartile Top quartile Median value Bottom quartile Top quartile Median value
  • 11. 11 © Private and confidential. All rights reserved. OnCorps 2014. Richard Thaler’s Nudges 1. Incentives: putting the right incentives on the right people. 2. Understanding mappings: helping customers understand the right categories and steps. 3. Defaults: helping customers avoid the “path of least resistance.” 4. Give feedback: provide customers data on how they are doing. 5. Expect error: anticipate common errors and make the process or product error-tolerant. 6. Structure complex choices: making complex choices easier to make through understandable structures.
  • 12. 12Private and confidential. OnCorps © 2014. © www.oncorps.org www.oncorps.io Cambridge, Massachusetts | Bristol, United Kingdom

×