Behavioural economics (and beyond: a presentation to Which? magazine


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A presentation to Which? magazine covering the main ideas behind Behavioural Economics and the way advertisers are using it. The deck also touches on how the theory fits with current government thinking, and how technology is helping brands apply nudge theory even more easily

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Behavioural economics (and beyond: a presentation to Which? magazine

  1. 1. James CaigDeputy Head of Strategy,
  2. 2. Classical Behaviouraleconomics economics People are rational Decision-making isbeings always striving irrational, emotional, and for the best possible influenced by a range ofoutcome for the least conscious and possible effort unconscious factors
  3. 3. ALL use misleading rules of thumb care disproportionatelyOF about what others do respond to the wayUS choices are presented
  4. 4. FramingPeople makedecisions based onrelative not absoluteinformation
  5. 5. online ONLY $59 68% 16%magazine ONLY $125 0%online AND magazine $125 32% 84%
  6. 6. Loss aversionPeople workharder to avoidlosing things thanthey do to gainthem
  7. 7. Scarcity valuePeople perceivethings to havemore value themore scarce andharder to obtainthey are
  8. 8. ChunkingPeople are morelikely to completetasks whenthey’re brokendown into littlesteps
  9. 9. People don’t think how they feel,they don’t say what they think,and they don’t do what they say David Ogilvy
  10. 10. There is no pleasure gauge. All we have is comparison between similar things.Marketing can help consumersmake the ‘right’ comparison, andbuild a choice architecture whichmakes the right choice easyNick Chater, IPA, Professor of Behavioural Science, Warwick Business School
  11. 11. 1 Decision- 3 making and How the public brands Where agenda have next?responded 2
  12. 12. 1 How brands haveresponded
  13. 13. Challenging valueconventions
  14. 14. Re-framing in Retail
  15. 15. Dine in for two for £10£10 off your next pizzaWaitrose Essentials
  16. 16. New purchaselevers
  17. 17. Context over content
  18. 18. Brand stories andsimple actions
  19. 19. Decision-making andthe public agenda 2
  20. 20. 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.This new approach represents an important part of theCoalition Government’s commitment to reducingregulatory burdens on business and society, and achievingits policy goals as cheaply and effectively aspossible. It is also part of the Government’sanswer to how we can spend public moneymore effectively. Applying behavioural insight to health, Cabinet Office Behavioural Insights Team, 2011
  21. 21. THE POWER OF THE CROWDConsumersworking togetherfor a better deal Protecting consumer feedback and improving public sector choice toolsBetter access toperformance andcomplaints data
  22. 22. THE POWER OF INFORMATION Making informed choices easier Richer information for important choices
  23. 23. 3Wherenext?
  24. 24. As tools, technologies increase people’s ability to perform a target behaviour by making it easier, or restructuring itBJ Fogg, PersuasiveTechnologies, 2002
  25. 25. The psychology of UX 1) People will do the least amount of work possible to get a task done 2) People have limitations 3) People make mistakes 4) Dont 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
  26. 26. Making behaviour visible makes participation more likely