The document explores various psychological effects related to consumer behavior, including the impact of rounded pricing on purchasing decisions, the optimism bias in future predictions, and strategies to foster intimacy in relationships. It also discusses supermarket tactics designed to increase spending, such as store layout and sensory appeal, and highlights behavioral insights from studies on towel reuse in hotels. Furthermore, it mentions upcoming events and promotions related to behavioral economics.

1. O BEHAVE!
Issue 11 • February 2015

2. The Psychological Effect of Round Pounds 3
Bias of the Month 4
How to Make Anyone Fall in Love with You 5
Get It Right, or Else 6
The Wonderful World of the Supermarket 7
Real Life Nudge of the Month 8
Upcoming Events 8
The Maddest Men of All 9
CONTENTS

3. Wadhwa, M., & Zhang, K. (2015). This Number Just Feels Right: The Impact of Roundedness of Price Numbers on Product Evaluations. Journal of Consumer
Research, 41(5), 1172-1185
A restaurant has decided to expand their lunch offering and add pizza to their menu. They know which toppings and sizes
they’ll offer, but what about the price? One manager thinks £9.99 for a medium pizza is appropriate, another thinks it
should be £10. Surely the 1p difference between the prices is so minimal it won’t influence the consumers decision
making, right? Wrong: according to recent research, shoppers deal with pricing information differently when prices feature
round numbers (£10) as opposed to non-rounded ones (£9.99). Wadhwa and Zhang (2015) found that rounded prices are
processed more fluently which encourages reliance on feelings, and therefore people make purchasing decisions based
on it “feeling right”. In contrast, non-rounded numbers are dis-fluently processed and encourage reliance on cognition to
decide whether or not it’s a good price.
THE PSYCHOLOGICAL EFFECT OF ROUND POUNDS
This phenomenon was shown across five different experiments.
One experiment found that products that are recreational or
luxurious benefit from rounded prices, as these purchases tend to
be more emotional; consumers were more inclined to buy a bottle
of champagne when it was priced at $40.00, rather than $39.72 or
the highest price of $40.28. On the other hand, the research found
that purchases of utilitarian items such as a calculator benefited
from non-rounded pricing. The difference between practical and
luxury purchases was further demonstrated in a second
experiment, where participants were told to purchase a camera
for either a family holiday or a class project. Results showed that
those who bought the camera for a holiday preferred to pay a
rounded number price, whereas those who thought it was for a
school project preferred to pay a non-rounded price.
For the managers of the restaurant, it seems that they would benefit from charging the rounded £10.00 as food is
generally emotional purchase, based on our hunger signals.

4. BIAS OF THE MONTH
Optimism Bias
When looking at the future, we tend to inflate the good and positive things we think will happen to us and ignore the
bad and negative things that could happen. Our tendency to be too hopeful leads us to consistently overstate how
successful we will be, the chances we will win the lottery, or even our perceived ability to avoid a car crash whilst
driving drunk, when compared to our friends. We tend to image positive outcomes much more clearly and vividly than
we imagine negative outcomes, and spend more time imagining these positive outcomes. Although it is good to be
optimistic (negativity about life can lead to depression), it can also be dangerous as an overly-optimistic belief that
nothing bad will happen to us can lead us to not take necessary precautions.
Sharot, T. (2011). The optimism bias. Current Biology, 21 (23), R941-R945.
Sharot (2011) conducted a study where she asked participants to
estimate how likely they were to experience something negative such as
Alzheimer's disease. She then showed them what their average chance
was of actually suffering from the disease. After being given this
information, she asked the participants again to estimate how likely they
were to be diagnosed, and found that people who received information
more positive than their initial thoughts (i.e. a smaller chance of being
diagnosed than they expected) were more likely to reduce their second
estimate to closely match the information given. On the other hand, those
who received information that their actual chance of being diagnosed with
Alzheimer's was higher than they originally thought stuck to their original
estimate. Essentially, the participants only changed their estimation in
light of positive information and ignored negative information, therefore
showing we are biased towards believing only positive information.
As mentioned, being optimistic is a good thing but we need to ensure that this bias doesn’t lead us to ignore relevant
negative information or stop us from taking necessary precautions, particularly in the health space such as cancer
screening.

5. HOW TO MAKE ANYONE FALL IN LOVE WITH YOU
For those of you who spent Valentine’s Day at home with a ‘dine in for two’ meal, eating the whole thing yourself to lessen
the pain of being alone, we may be able to help. In 1997, New York psychologist Arthur Aron and his colleagues created 36
questions to elicit the feeling of intimacy between two people who had never met before. These soul-baring questions –
ranging from, “How often do you get your hair cut?” to “Of all the people in your family, whose death would you find most
disturbing? Why?” – are designed to accelerate self-disclosure and vulnerability, while other questions focused on
relationship building, e.g. “Make three true ‘we’ statements each. For instance, ‘We are both in this room feeling…’” and
“Tell your partner what you like about them; be very honest, saying things you might not say to someone you’ve just met”.
After spending just 45 minutes answering these questions, the pairs rated themselves significantly closer than pairs who
had only engaged in typical small talk. Using the Inclusion of Others in the Self (IOS) scale (Aron et al, 1992), they found
that the participants reported their relationship with their partner of 45 minutes as closer than the closest actual relationship
reported by 30% of the control group. Furthermore, over half of the pairs who had interacted in this way had a subsequent
conversation, and over a third went on to do something together. This is a classic example of behaviour driving attitude:
your brain has to rationalise why you’re sharing so much with a stranger, and the increased adrenalin from this vulnerability
creates the same physiological response as attraction (e.g. Dutton & Aron, 1974).
So now you’ve got your list of questions to ask on a first date, how do you recruit
someone to test them out on? Online dating is the obvious choice, but psychologists
suggest that Tinder – renowned for being more casual – is actually better for finding
relationships than sites like Match.com. A study by Frost, Chance, Norton and Ariely
(2008) suggested that people are experiential goods, who we choose based on
attributes like sense of humour and rapport, but online dating reduces this down to
searchable attributes, like income and religion. In other words, the algorithms aren’t
much good at distinguishing between those you’ll click with and those you won’t, and
as conversation tends to lead to dates much more quickly on Tinder, this may mean
less wasted time if you’re not attracted to them in real life. Furthermore, we can infer
a great deal of information about a person and their personality just from a
photograph, which means that choosing a potential mate with little or no other
information may not be as shallow as it seems. So, armed with your smart phone and
these 36 questions, you can go out there and make anyone fall in love with you.
Aron, A., Melinat, E., Aron, E.N., Vallone, R.D., Bator, R.J. (1997). The Experimental Generation of Interpersonal Closeness: A Procedure and Some Preliminary Findings.
Personality and Social Psychology Bulletin, 23 (4), 363-377.

6. GET IT RIGHT, OR ELSE
How good is your metacognitive accuracy? This intimidating-sounding term refers to how accurate your sense of the
reliability of your own knowledge is; in other words, how confident you are that you’re right. Arnold, Chisholm & Prike
(2014) tested whether the outcome of a decision can influence how accurate we are using a type 2 signal detection
theory methodology, i.e. asking their participants to distinguish between their correct answers (signals) and incorrect
answers (noise) before submitting them. Participants were given a multiple-choice general knowledge quiz and asked to
indicate their favoured answer for each question and whether they wanted to submit it (“Go for points” or “Withhold”),
and their confidence levels in both their answer and their decision to submit or not. This occurred in either a high
punishment condition, where each incorrect answer resulted in four points being deducted while one point was awarded
for correct answers, or a high reward condition, where four points were awarded for each correct answer and only one
deducted for each incorrect answer.
They found that the threat of a high penalty improved participants’ insight into the quality of their own knowledge; the
quantity of correct answers submitted was only slightly reduced, whereas the number of incorrect answers that were
withheld significantly increased. The promise of a big reward, however, reduced the ability to discriminate between
correct and incorrect information. While previous studies have shown that people answer more conservatively with the
threat of punishment, this is the first study to show how the presence of reward or punishment regulates perception of
accuracy.
Arnold, M.M., Chisholm, L.M., & Prike, T. (2014). No pain no gain: The positive impact of punishment on the strategic regulation of accuracy. Memory, forthcoming.
While more research into this area needs to be done – particularly in situations
where rewards and punishments are very real and tangible – its implications
and potential applications are wide-ranging. For doctors and surgeons, whose
patients may face severe consequences if their diagnosis was wrong, it
suggests this pressure helps them to perform better, and that it may benefit
medical students to have tests graded with penalties for incorrect answers so
they become accustomed to making decisions in this way. However, it could
also mean that traders are making less accurate decisions; investments that
pay off are rewarded handsomely, while there are little or no consequences for
making bad investments. Perhaps this incentive structure contributed
somewhat to the recent financial crisis, and should therefore be redesigned.

7. THE WONDERFUL WORLD OF THE SUPERMARKET
Have you ever gone to the supermarket with your shopping list and, despite your best efforts, ended up purchasing
more than you intended? If so, don’t beat yourself up about it; supermarket chains have put hundreds of thousands of
pounds into research to get you to spend more and have added psychological tactics in nearly every inch of their stores.
The following are just a few examples.
Growing trolleys and shrinking tiles
No you are not shrinking, trolleys are just getting bigger. The larger the trolley, the more likely you are to put more items
in it; research has shown when the size of the trolley doubled, consumers bought 40% more. Conversely, tiles in the
supermarket are getting smaller, as the noise of a trolley going over small tiles makes the shopper think they are going
very fast so they slow down and consequently spend more time looking at shelves.
Layout
Supermarkets have conducted endless tracking studies to investigate how consumers navigate around a store and
found that we generally turn right and navigate a route around its parameter, dipping in and out of centre aisles. For this
reason, supermarkets generally place luxury items around the edges and necessities such as dairy products in the back
or centre of the store, so people must venture through most of the supermarket in order to obtain such items.
Play on our senses
As you walk into a supermarket, you are hit with amazing smells of freshly baked bread or
cookies, which is to trigger your salivary glands and trick your brain into thinking it is
hungry, making you more likely to impulse buy.
Samples
Samples play a dual role in getting you to buy more. Firstly, it plays on our sense of guilt;
as you have just eaten two samples, you feel obliged to now purchase the items.
Secondly, eating triggers our taste buds, which makes you more likely to feel hungry,
even if you were satisfied before.
There are hundreds of examples of ways in which supermarkets use psychological tactics to get you to spend more, but if
you want to stick to your list use a hand basket, go when you have a cold (and therefore can’t smell anything) and don’t eat
any of the samples no matter how tempting they are!
Loughnan, D. (2012). Food Shock: The truth about what we put on our plate…and what we can do to change it. Exisle Publishing: New South Wales, Australia.

8. Spotted: Social norming (the wrong way) in a hotel, Accra
Most of you will be familiar with the classic Goldstein, Cialdini and
Griskevicius (2008) hotel towels study, where they found people were
most likely to reuse their towels with the message that the majority of
other guests also reused their towels. The management of this hotel
(which will remain nameless!) apparently haven’t come across this study,
and instead emphasised the tons of towels unnecessarily washed every
day – making it seem okay to get new towels each day, as this appears to
be what everyone else is doing. There is also an appeal for the sake of
the environment, which we know people think influences their behaviour,
but actually has a small effect relative to the social norm. Oops!
REAL LIFE NUDGE OF THE MONTH
UPCOMING EVENTS
Gender and the Brain, LSE
Monday 2nd March, 6.30-8.00pm
http://www.lse.ac.uk/publicEvents/events/2015/03/20150302t1830vSZT.aspx
Behavioural Boozeonomics with the London Behavioural Economics Network
Monday 9th March, 6.30-11.00pm
http://www.meetup.com/London-behavioural-comms-monthly-informal-drinks/events/219015893/
How to: Great Thinkers – Daniel Dennett
Wednesday 18th March, 12.45-1.45pm
http://www.howtoacademy.com/philosophy/great-thinkers-daniel-dennett-lunchtime-talk-4138

9. THE MADDEST MEN OF ALL
Our very own Rory Sutherland and Juliet Hodges are
featured on the latest Freakonomics Radio podcast,
“The Maddest Men of All”, talking about behavioural
economics, #ogilvychange and our project on
persuasion in the News UK call centre.
In their books Freakonomics, SuperFreakonomics and
Think Like a Freak, Steven D. Levitt and Stephen J.
Dubner explore "the hidden side of everything," telling
stories about cheating schoolteachers and eating
champions while teaching us all to think a bit more
creatively, rationally, and productively. The
Freakonomics Radio podcast, hosted by Dubner,
carries on that tradition with weekly episodes, which
receive more than 5 million downloads a month.
Listen to it here!

10. Cíosa Garrahan
@CiosaGarrahan
ciosa.garrahan@ogilvy.com
BROUGHT TO YOU BY
Juliet Hodges
@hulietjodges
juliet.hodges@ogilvy.com