This document introduces several concepts from behavioural economics and social psychology that can be applied to websites, including: 1) Social proof - showing that many others have made a particular choice to encourage others to do the same. Deeper social proof involves showing that peers or aspirational figures made a choice. 2) Loss aversion - framing choices in terms of losses rather than gains to make users feel they are losing something by not taking action. 3) Scarcity - communicating that an opportunity or item is limited to increase its perceived value. 4) Anchoring - using initial reference points to influence later decisions, such as anchoring a price. 5) Framing - how

1. Behavioural
Economics (and social psychology)
for the web
Mindmelting practitioners and enthusiasts
facilitated by Kam Star
kam@playgen.com

2. Introducing ourselves…
My name, I’m a … ‘job role’ @ company / client
I’ve used / would like to use behavioural economics to …
This week I listened / watched ….

3. Business about behaviour change

5. Social Proof
Tendency of people to assume actions of
others or want what others are having.

6. Social Proof :: ASK
“How can I convince my visitors they’re not
the only person making this choice? “

10. Deeper Social Proof :: Behaviour Heuristics
▶If lots of people are doing it, do it
Show directly how many (or what proportion of) people are choosing an option
▶If people like me are doing it, do it
Show the user that his or her peers, or people in a similar situation, make a particular choice
▶If people that I aspire to be like are doing it, do it
Show the user that aspirational figures are making a particular choice
▶If something worked before, do it again
Remind the user what worked last time
▶If an expert recommends it, do it
Show the user that expert figures are making a particular choice

11. Loss Aversion
The pain felt for a loss is twice as strong as the
reward felt from an equal gain.

12. Loss Aversion :: ASK
“How can I make my visitors think
they’d be losing something valuable if
they don’t take action?“

14. Scarcity
Tapping into the condition in which our wants
appear to be greater than the resources.
We place a higher value on an
object that is scarce, and a lower
value on those that are abundant.
We love to feel like we got
something special that no-one
else (limited number) can get.

15. Scarcity :: ASK
“How can I communicate scarcity?“
- Time limited
- Quantity limited
- ….

19. Anchoring
Tendency to rely too heavily on the first piece of
information offered (the “anchor”) when making
decisions. (whether it's relevant or not!!)

22. Anchoring :: ASK
“How can I use anchoring in my
favour?“
Can I anchor a particular
price/selection choices?

23. Framing
“its not what you say, its how you say it”
People react differently to a choice depending on
whether its presented as a loss or as a gain.
10% FAT 90% FAT FREE!

24. Framing
Imagine that there is an unusual disease outbreak, which is expected to kill
600 people, but you can administer one of the following drugs ;
Framing I :
A : 200 people will be saved
B : ⅓ probability 600 will be saved. ⅔ probability that everyone will die.

25. Framing
Imagine that there is an unusual disease outbreak, which is expected to kill
600 people, but you can administer one of the following drugs ;
Framing I :
A : 200 people will be saved
B : ⅓ probability 600 will be saved. ⅔ probability that everyone will die.
Framing II :
A: 400 people will die
B: ⅓ probability that nobody will die. ⅔ probably that 600 people will die.
Tversky and Kahneman (1981)

26. Framing
Imagine that there is an unusual disease outbreak, which is expected to kill
600 people, but you can do administer one of the following drugs ;
Framing I :
A : 200 people will be saved : 72%
B : ⅓ probability 600 will be saved. ⅔ probability that everyone will die. : 28%
Framing II :
A: 400 people will die : 22%
B: ⅓ probability that nobody will die. ⅔ probably that 600 people will die. 78%
Tversky and Kahneman (1981)

27. Framing the Price
1 : £5 for product + Free Shipping
2 : £2.50 for product + £2.50 shipping
3 : FREE product! (+ £5 shipping)

28. Framing the Price
1 : £5 for product + Free Shipping
2 : £2.50 for product + £2.50 shipping
3 : FREE product! (+ £5 shipping) >80% selected this!

29. Framing :: ASK
“How can I frame the proposition in
terms of a gain or a loss?“

30. Decoy Effect
We tend to have a specific change in preference
between two options when also presented with a
third option that is ‘asymmetrically dominated’.
Rome
Rome with Coffee
Paris with Coffee

31. Decoy Effect

32. Decoy Effect

33. Decoy Effect

34. Decoy Effect

35. Decoy Effect
87%
74%
makes almost
twice as much
income!

36. Choice Paralysis
Faced with more options, we
tend to make less decisions!
Shoppers
who
stopped
6
kinds of jam
24
kinds of jam
40% 60%

37. Choice Paralysis
Faced with more options, we
tend to make less decisions!
Shoppers
who
stopped
6
kinds of jam
24
kinds of jam
40% 60%
Shoppers
who bought
jam
30% 3%

38. the other 42*
* its not an academic 42, but listed as a mnemonic