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The Psychology of Money (Msc. Leila Taouti)- Made in Qatar, Boston Global Institut 2017
- 1. Kick-off class Money & Decision Making Copyright: Leila Taouti. Innovation & Behavioral Architect
- 3. Nobel Price in Economics 2017- Economist Nobel Price in Economics 2002- Psychologist
- 4. Automatic, heuristics, Biases & Errors Effort + several Steps, Reliable SYSTEM1 SYSTEM2
- 5. Automatic Effort + several Steps
- 6. Build a society to counter these biases: Nudges Automatic Effort + several Steps Learn about Biases • Loss aversion • Herding • Mental accounting • Many others to follow
- 7. Money
- 8. Money: What is it?
- 9. Opportunity Cost • What are you giving up by choosing one thing over another? Standard Economics: across categories and time
- 10. The environment triggers Visual illusion:
- 11. 3 Main Decision making Biases
- 12. I- Relativity
- 15. From Spain cucumbers 11 Qat Ryal /kg From Portugal cucumbers 15 Qat Ryal /kg
- 17. Buying expensive objects involves many quick decisions with large amounts of money
- 20. Safari trip = 1000 ryal Trip + Karak =1050 Ryal
- 22. A B CC
- 23. A B CC SLOWFAST
- 24. A fundamental Observation - Most People don’t know what they want unless they see it in context - If a business offers us a easier way of choosing, we will choose the easiest option
- 25. When you buy: Pay Great attention to all transactions that involves many quick decisions with large amounts of money. Big Add-ons seems small. Always try to think Opportunity Cost: what else can I buy for this money? When you Sell: - Find the decision points involving large amounts of money and propose service/products that enhance the experience - Partner with non-competitive Business selling expensive products/ services and propose your product/service to enhance the value proposed to the byer. Example: kitchens + agriculture products Learned lessons
- 30. Mental Accounting (First Example)
- 32. Mental Accounting (Second Example) What are you giving up by choosing a LG TV?
- 33. 4900 QR 3900 QR
- 34. 4900 QR 4900 QR
- 36. Research facts: We don't know how to think about opportunity cost, Insights: Make money specific and concrete it will have a higher perceived value, even though its less valuable from economic perspective Create a default category of money that is beneficial for you, saving for your employees Learned lessons (applied)
- 44. 5% 5% You Your company
- 45. 5% 10% You Your company
- 46. 10% 10% You Your company
- 47. Standard methods (gain) Loss aversion (2,5 times stronger than gain) -Hint, No sales: make it personal like a bank account Learned lessons
- 48. Summary
- 50. Thank you Copyright: Leila Taouti. Innovation & Behavioral Architect Leila@nudgegcc.com
Editor's Notes
- Hello ladies and gentelmen. This kick off class is extracted from a big body of research called Behavioral economics. And many 500 hundreds companies are hooked on these insights: Amazon, Google,
- Self awareness and mindfulness gives us the possibility to know where we are, take a bird view about the 2 systems …
- Renovation involves many quick decisions with large amounts of money
- One day while browsing a BE university professor stumbeled on an add on the economist magazine: Who would buy the print subscription alone when one can buy both for the same price??? The economist marketing’s wizzards knew somethings important about humans behavior.Humans rarely choose things in absolute terms. We don’t have an internal meter that tells us how much things are worth. Rather we focus on the relative advantage of one thing over another. In this case we don’t know wether the web subscription at 59$ is a better deal than the print only option at 125$, But I certainly know that the print & web option at 125 $ is a better deal than the print only option at the same price. You can even conclude that in this package the internet subscription is free?? it’s a FANTASTIC DEAAALL, GO FOR IT
- One day while browsing a BE university professor stumbeled on an add on the economist magazine: Who would buy the print subscription alone when one can buy both for the same price??? The economist marketing’s wizzards knew somethings important about humans behavior.Humans rarely choose things in absolute terms. We don’t have an internal meter that tells us how much things are worth. Rather we focus on the relative advantage of one thing over another. In this case we don’t know wether the web subscription at 59$ is a better deal than the print only option at 125$, Its needs thinking, thinking slow= System 2 thinking. But I certainly know that the print & web option at 125 $ is a better deal than the print only option at the same price. You can even conclude that in this package the internet subscription is free?? it’s a no brainer, easy and fast to thnink, system 1 thinking… FANTASTIC DEAAALL, GO FOR IT
- You can create powefull impact using mental accounting in combination of Loss aversion, The next Bias… Ill explain more ..
- in the experiment people oversell the TV that prepaid them even when it's irrational even when they lose money. we suggest that once you give people money they value that money to a higher degree they don't want to give it up
- Hello ladies and gentelmen. This kick off class is extracted from a big body of research called Behavioral economics. And many 500 hundreds companies are hooked on these insights: Amazon, Google,