O Behave! Issue 3 (June Edition)

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O BEHAVE is a monthly newsletter brought to you by #ogilvychange that encompasses the latest research in behavioural science. Enjoy!

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O Behave! Issue 3 (June Edition)

  1. 1. O BEHAVE! Issue 3 • June 2014
  2. 2. At How To: An Evening with Dan Ariely, the author of Predictably Irrational and The Upside of Irrationality spoke about his latest research and was interviewed by Matthew Taylor. He discussed the psychology of money at length, and touched on dishonesty, following his recent book The Honest Truth About Dishonesty. AN EVENING WITH DAN ARIELY In one of his experiments, participants were asked to roll a dice and were paid according to the side it landed on. However, before the dice was rolled, they were asked to choose whether they would take the number from the top or the bottom, and keep this decision to themselves. Once the dice had been rolled and they could see which side it had landed on, they stated whether they had chosen top or bottom – therefore giving them the opportunity to lie and take the higher amount. Participants consistently showed the same pattern of dishonesty: They would lie sporadically at first, before what Ariely terms the ‘what the hell’ effect, where they would start to lie constantly. You may recognise this effect in your own life – after indulging in something unhealthy, for example, and subsequently bingeing on unhealthy food after thinking, “What the hell!” More intriguingly still, Ariely discussed the role of confession in resetting this effect. Participants were asked to admit what they had done and apologise, and immediately afterwards showed a reversal in their behaviour, returning to the original levels of occasional dishonesty. This resetting is also known as the “fresh start” effect and is easily recognisable in our New Year’s resolutions, which we continue to make each year despite the tragic 10% success rate. Of course the best example of this is Catholic confession, where people confess their sins to a priest, perform their punishment and are able to start afresh. The Dutch Banking Association has also cottoned on to this, requiring by law that staff of financial institutions swear an oath to behave according to the code of ethics. Ariely, D. (2013). The Honest Truth About Dishonesty: How We Lie to Everyone – Especially Ourselves. HarperCollins: New York.
  3. 3. The Goal-Gradient Effect The goal-gradient effect, originally described by Hull (1932), is a bias in humans whereby the closer we get to a goal the more motivated we become to reach it. This bias can be used by businesses to incentivise and motivate their consumers to engage in a desired behaviour. For example, Kivetz, Urminsky & Zhang (2006) gave out two types of loyalty cards (Card A, Card B) at a café where customers received a stamp for every coffee they bought. Both loyalty cards rewarded customers with a free coffee when they obtained ten stamps, but customers who received card A completed it on average five days earlier than those who received card B. This is because the first loyalty card utilised the goal-gradient effect: Twelve stamps were required before the reward of a free coffee, but the first two spaces had already been stamped for free. This brought consumers perceptually closer to the goal of completing the card and thereby motivated them to do so, more than those with Card B who simply needed ten stamps. BIAS OF THE MONTH Hull, C. L. (1932). The goal-gradient hypothesis and maze learning. Psychological Review, 39 (1), 25. Kivetz, R., Urminsky, O., & Zheng, Y. (2006). The goal-gradient hypothesis resurrected: Purchase acceleration, illusionary goal progress, and customer retention. Journal of Marketing Research, 43 (1), 39-58.
  4. 4. Dr Dan Lockton took to the stage at Nudgestock 2 to make the case for behavioural design. He maintained that design is about helping people solve their problems better, rather than seeing people as ‘the problem’ in the first place. We’ve identified an innovative new product that embraces this concept: PullClean from the “Agency of Design”. Research has shown that 1 in 25 patients in U.S. hospitals obtain an infection during their stay in hospital (Centre for Disease Control and Prevention) and the existing range of hand sanitizer bottles and wall mounted dispensers have proved ineffective. Staff simply forget to use them; so what’s the solution? DESIGNING WITH PEOPLE IN MIND PullClean is a simple column that can be fitted on any pull door; it has a blue paddle on the bottom that dispenses a dab of hand sanitizer when pushed. The main insight of PullClean is that it combines the behaviour of sanitizing with a behaviour hospital workers do every day, opening doors. It is designed so people use it automatically; they default to pulling the door and dispenser in one simple motion. The paddle itself was behaviourally designed to include subconscious cues to get passers-by to push it; tapered slightly outwards so it stands out and bent slightly forwards to invite passers-by to flatten it. The most recent clinical trial of a similar product to PullClean increased sanitation compliance from 24% to 77% amongst hospital staff. It goes to show that by building on a previous behaviour, making the product salient and using clever design to entice people to push the paddle dramatic results are achievable. It wouldn’t have been possible if it wasn’t designed with people in mind. Babiarz, L. S., Savoie, B., McGuire, M., McConnell, L., & Nagy, P. (2014). Hand sanitizer-dispensing door handles increase hand hygiene compliance: A pilot study. American Journal of Infection Control, 42 (4), 443-445.
  5. 5. Following the recent death of Nobel Prize winning economist Gary Becker, we are re-examining his paper on the economics of marriage, a brilliant piece of work not least for its use of inverted commas when discussing people marrying for “love”. Written in 1974, this precedes the revolution of incorporating human irrationality into economics, and instead suggests that choice of marriage partner is a logical decision based on weighing up the costs and benefits. THE ECONOMICS OF MARRIAGE The economic model of marriage rests on two assumptions: Firstly, as marriage is (almost) always voluntary, it can be expected that people marrying are doing so to increase their utility relative to its expected levels if they were to remain single. Secondly, a market in marriages can be said to exist, given that males and females compete to find the best mate. This market is assumed to be at equilibrium; in other words, no one could change their mate and become better off. One’s economic gain from marriage is based on combined income, relative difference in wages and the level of ‘nonmarket productivity augmenting variables’, also known as factors like intelligence, education and beauty. Becker also elegantly explains the prevalence of monogamous marriages as they are the most efficient, due to the diminishing marginal returns of each person added to the household after the first two. Luckily for those of you not yet experiencing the gains of marriage, mathematicians have also devised the optimal strategy for selecting the perfect mate when choosing from a fixed number of options, the solution to the so-called Marriage Problem. Make a list of all of your potential suitors, and date – but do not marry one of – the first 36.8% of them. Then continue through your list until you find the first person who is better than the very best of the first group. This is apparently the most efficient way to find your perfect match, unless you meet the very best person in the first third – but you can still marry second best from the remaining 63.2%. You are welcome. Becker, G.S. (1974). A Theory of Marriage. In T.W. Schultz (Ed.) Economics of the Family: Marriage, Children and Human Capital (pp. 299-351). University of Chicago Press: Chicago, Illinois.
  6. 6. Throughout our life we develop a self-concept, an understanding and belief of the type of person we perceive ourselves to be. Due to our consistency bias, once this self-concept has been developed, we work hard to maintain it. One character trait that exists as part of most people’s self-concept is honesty. Although we work hard to maintain a consistent sense of self, such as being an honest person, there are instances in which we behave in a contradictory manner. Three experiments showed that making one’s ‘honest’ self-concept more salient before filling out these forms increases people’s level of honesty. Across three different forms (a tax form, a travel expense form and a mileage report for car insurance) people were asked to sign at the top or bottom of the form. Results consistently showed that those who signed the form at the beginning gave the most honest answers, while the group who signed the form at the end were significantly less honest in all three experiments, even when compared to the control group who did not sign the form at all. This is a worrying finding as nearly every self-reported form from insurance companies, governments and businesses require a signature at the end, suggesting that millions of pounds are not being claimed by these companies. In court cases, witnesses declare their pledge to honesty before giving their testimonies - perhaps for a reason. Companies, take note! ARE YOU BEING HONEST? EDITORS’ PICK OF NUDGESTOCK 2 One instance of this contradiction is when it is financially beneficial to be dishonest. The annual tax gap between ‘actual’ and ‘claimed’ taxes in the U.S. is a great example of this, with the gap itself reported to be as much as $345 billion annually, and an estimated half of this amount being due to people misrepresenting their income and deductions. One explanation for people engaging in this type of dishonest behaviour is that when people fill out self-report forms inquiring about their finances, they are not asked to sign to confirm that all the information provided is honest until the end. Therefore, it is not until after they commit their ‘sins’ that their self-concept of honesty is made salient. And, once exposed, it is hypothesised that people post-rationalise and engage in various mental justifications and reinterpretations about their moral standards, which enables them to maintain a positive self-image despite having lied. Shu, L. L., Mazar, N., Gino, F., Ariely, D., & Bazerman, M. H. (2012). Signing at the beginning makes ethics salient and decreases dishonest self-reports in comparison to signing at the end. Proceedings of the National Academy of Sciences, 109 (38), 15197-15200.
  7. 7. Spotted: Social Norms in Bristol We are herd animals and like doing what others are doing, particularly people who are similar to us. Our visiting colleague Sam from the Ogilvy office in Sydney came across a subtle social norm on his recent trip to Bristol. With the goal of trying to boycott Tesco, locals painted a sign that said “93% of local people say no to Tesco”. The reason that this sign should work is not only does it state that most people say no to Tesco, but that most “local people” say no, and therefore most people like you! REAL LIFE NUDGE OF THE MONTH UPCOMING EVENTS London Behavioural Economics Network Monthly Drinks Tuesday 8th July, 7.30-10.00pm http://www.meetup.com/London-behavioural-comms-monthly-informal-drinks/ Behavioural Decision Research in Management: London Business School Wednesday 16th – Saturday 19th July http://www.decisionsciencenews.com/2013/08/03/bdrm-2014-july-17-19-at-london-business-school/ Measuring Behavior Conference 2014 Wednesday 27th – Friday 29th August http://www.measuringbehavior.org/mb2014/home
  8. 8. WERE YOU THERE? Our annual behavioural science festival in Deal featured twelve of the most influential academics and practitioners in the field, including our keynote Professor Armand Leroi, to discuss how the theories of psychology and behavioural economics can be translated into action to produce real behaviour change. See the summary here. Watch the videos here.
  9. 9. Cíosa Garrahan @CiosaGarrahan ciosa.garrahan@ogilvy.com BROUGHT TO YOU BY Juliet Hodges @hulietjodges juliet.hodges@ogilvy.com

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