The presentation introduces behavioral economics and its applications for business. It discusses key concepts like mental accounting, anchoring, scarcity, and bundle framing. Experimental results are shared that tested different messaging related to these concepts. For example, adding phrases like "for your family" increased coupon savings and redemption rates. The presentation also discusses how RevTrax uses first-party purchase data and multivariate testing to better understand consumer behavior and optimize marketing efforts based on behavioral economics principles.
Behavioral economics overview presentation at TGASKurt Nelson, PhD
The following was the presentation that I gave at the TGAS conference in Texas this spring. Highlighting some of the behavioral science principles that can be used to help improve your incentives and sales operations.
Behavioural Economics content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Alternative Views of Consumer Behaviour
Behavioural Biases
Nudges
Nudges are ways of influencing people's choices without forbidding options. The book discusses how human psychology affects decision making in predictable ways. When making decisions, people have both a rational "Spock" and emotional "Homer" influencing them. Nudges aim to help the rational mind overcome biases by designing choices that provide better feedback, structure complex options, and use defaults and incentives to encourage better outcomes. The document provides examples of how rearranging cafeteria food or using images on urinals can nudge behavior in predictable ways.
15 Behavioural Economics Principles to increase ConversionsSiteVisibility
This presentation demonstrates the value of understanding and using a variety of behavioural economics principles to achieve results in your digital marketing campaign.
Behavioral Economics and Decision Makingneerupaharia
The document summarizes key concepts from behavioral economics relating to how human decision making is influenced by cognitive and emotional factors. It discusses how the brain has an "elephant" part driven by emotion and an "rider" part driven by rational thought, but the elephant often dominates decision making. It provides examples of how framing effects, biases, heuristics, loss aversion, reference points and more can impact judgments and choices in systematic and sometimes irrational ways compared to standard economic assumptions of rational actors.
The document provides an introduction to key concepts in behavioural economics. It discusses how behavioural economics studies human psychology and decisions that sometimes diverge from rational self-interest. It outlines several cognitive biases and phenomena like loss aversion, status quo bias, herd behavior, framing effects, and anchoring. The document also contrasts the traditional economic assumptions of homo economicus with a more psychologically accurate perspective of real human behavior.
Behavioral economics overview presentation at TGASKurt Nelson, PhD
The following was the presentation that I gave at the TGAS conference in Texas this spring. Highlighting some of the behavioral science principles that can be used to help improve your incentives and sales operations.
Behavioural Economics content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Alternative Views of Consumer Behaviour
Behavioural Biases
Nudges
Nudges are ways of influencing people's choices without forbidding options. The book discusses how human psychology affects decision making in predictable ways. When making decisions, people have both a rational "Spock" and emotional "Homer" influencing them. Nudges aim to help the rational mind overcome biases by designing choices that provide better feedback, structure complex options, and use defaults and incentives to encourage better outcomes. The document provides examples of how rearranging cafeteria food or using images on urinals can nudge behavior in predictable ways.
15 Behavioural Economics Principles to increase ConversionsSiteVisibility
This presentation demonstrates the value of understanding and using a variety of behavioural economics principles to achieve results in your digital marketing campaign.
Behavioral Economics and Decision Makingneerupaharia
The document summarizes key concepts from behavioral economics relating to how human decision making is influenced by cognitive and emotional factors. It discusses how the brain has an "elephant" part driven by emotion and an "rider" part driven by rational thought, but the elephant often dominates decision making. It provides examples of how framing effects, biases, heuristics, loss aversion, reference points and more can impact judgments and choices in systematic and sometimes irrational ways compared to standard economic assumptions of rational actors.
The document provides an introduction to key concepts in behavioural economics. It discusses how behavioural economics studies human psychology and decisions that sometimes diverge from rational self-interest. It outlines several cognitive biases and phenomena like loss aversion, status quo bias, herd behavior, framing effects, and anchoring. The document also contrasts the traditional economic assumptions of homo economicus with a more psychologically accurate perspective of real human behavior.
How to convince your boss to use insights and strategies from Behavioral Econ...beworks
Behavioral Economics has revolutionized our understanding of decision making.
We now know that humans are far from perfectly rational. Instead, there are psychological biases that strongly influence people’s choices.
The result is a more accurate prediction of human behavior, which can facilitate desirable business outcomes.
Once you understand the drivers of behavior, you can change behavior.
This document summarizes the key ideas from the book "Nudge" by Richard Thaler and Cass Sunstein. It discusses how subtle changes to choice architecture, referred to as "nudges", can influence behaviors in predictable ways. Nudges aim to make choices easier and help people make decisions that improve their lives without restricting freedom of choice. The document provides many examples of nudges related to health, savings, investments, and the environment that aim to help people overcome cognitive biases and biases inherent in complex systems.
This document provides an introduction to key concepts in behavioural economics. It discusses how behavioural economics differs from traditional economics by acknowledging that people are not always rational decision-makers and can be influenced by biases. Some of the biases and concepts mentioned include loss aversion, anchoring effects, default biases, framing effects, availability heuristic, herd behaviour, and bounded rationality. The document also notes how behavioural economics draws on evidence from psychology and neuroscience to better understand human decision-making.
This document outlines 13 principles of behavioral economics: anchoring, availability, chunking, commitment, framing, goal dilution, loss aversion, overweighting small probabilities, hyperbolic discounting, reciprocation, status quo bias, and social proofing. For each principle, a brief theory is provided along with a short example to illustrate how it applies to decision making. The document serves to explain key concepts in behavioral economics through concise definitions and relatable scenarios.
The document discusses behavioural economics and how it differs from traditional economics. Traditional economics assumes people act rationally to maximize wealth and income. Behavioural economics recognizes people do not always make rational decisions due to things like biases, limited willpower, and outside influences. It provides examples of how heuristics and irrational behaviors can influence decisions. The document advocates applying insights from behavioural economics, such as understanding decision-making processes and identifying bottlenecks, to help address irrational behaviors and encourage positive outcomes through "nudges" like simplifying choices and using social influences. It categorizes approaches as mindful or mindless, and externally imposed or self-imposed. The goal is to harness behavioral economics to help achieve strategic objectives.
Behavioural economics and digital marketingVyshnavi Doss
The document discusses how behavioural economics can be applied in digital marketing. It begins by contrasting classical economics assumptions about rational decision making with the realities of human psychology. Behavioural economics recognizes that humans are predictably irrational and influenced by subtle contextual factors. The document then provides several examples of how behavioural economics concepts like social proof, scarcity, commitment, and feedback loops can shape online user behaviour and decisions in a way that nudges them towards a desired conversion or action. It argues that digital choices can be designed by employing hidden psychological forces that have more influence on decisions than long-term consequences.
This document provides an overview of behavioural economics. It begins by explaining that behavioural economics has emerged from psychological studies exploring biases in decision-making. It then contrasts the assumptions of classic economics, which considers consumers to be entirely rational, with the findings of behavioural economics and psychology, which recognize that consumers are emotional and can be persuaded in irrational ways. The document goes on to provide examples of behavioral economic concepts in action from various companies. It also describes the two thinking systems - system 1 being fast, emotional thinking and system 2 being slow, logical thinking. Finally, it outlines and explains a number of key behavioral economic principles that influence human decision-making.
Nudges are subtle ways of influencing consumer decisions without limiting choices. Choice architects can design contexts that steer behaviors through defaults, social proof, and salience. While nudges can increase organ donation and retirement savings rates, they may also undermine autonomy and evade important issues. Effective nudges require understanding behavior in context rather than one-size-fits-all solutions.
Advances in the behavioral sciences can better enable the human-centric design of programs, technologies, and organizations. Explore six lessons from behavioral economics that you can apply to your workplace. To learn more, view our special section on behavioral economics and management from Deloitte Review, Issue 18: http://deloi.tt/1TrSA6y
The document discusses how behavioral economics can be applied to improve social service programs and client outcomes. It explains concepts from behavioral economics like bounded rationality, heuristics, framing, and loss aversion. It provides examples of how these concepts influence financial decision making and recommendations for using insights from behavioral economics to better design programs, messages, and services. The document advocates applying these insights to enhance client understanding, program enrollment and success, through approaches like reframing financial education, addressing time preferences, and employing nudges and defaults.
15 Lessons from Behavioural Economics - by @tjalve @boardofinno - Board of In...Board of Innovation
Within our team @boardofinno, we give short presentations to each other, to learn more, to get inspired, to be amazed,…
The following deck was used by @tjalve in our internal #teachme session.
It covers 15 lessons from Behavioural Economics you can apply to your ongoing projects.
The concepts covered are:
1. The Endowment Effect
2. Hyperbolic Discounting
3. The IKEA effect
4. Anchoring Bias
5. The Von Restorff Effect
6. Loss Aversion
7. Hedonic Adaption
8. The Bandwagon Effect
9. The Inaction inertia effect
10. The Zeigarnik Effect
11. The Framing Effect
12. The Goal Gradient Effect
13. The Choice Paradox
14. Round Pricing Preference
15. Reciprocity
This is a presentation that covers the basic concepts of the book Nudge, by Richard Thaler and Cass Sunstein. We read this book at our UX Book Club meeting, and I presented an introduction to it at the LA IxDA meeting.
Slides Jeff Otto recently used in his discussion w/ mentees of The Product Mentor.
The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.
Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.
http://TheProductMentor.com
This presentation looks at behavioural nudges used by different businesses. Nudges are interventions that preserve freedom of choice but that nonetheless influence people’s decisions. Our decisions are often heavily affected by behavioural biases, instinctively we favour the default option
Choices are contextual and we are also deeply affected by social norms.
The document discusses the concept of nudge theory. It begins by defining what a nudge is, both literally and in the context of the theory. It then explains that nudge theory is a modern concept for understanding how people think and make decisions, helping people improve their thinking, managing change, and identifying influences. The document notes that nudge theory was popularized by the 2008 book Nudge and accepts that people have certain tendencies rather than ignoring realities. It provides examples of how nudge techniques differ from traditional enforced changes. Overall, the document provides an overview of nudge theory, how it can be applied in various areas, and how to design effective nudges.
This document summarizes research on loss aversion and the endowment effect from behavioral economics. It discusses several key findings:
1. People strongly prefer to avoid losses rather than acquire equivalent gains. This loss aversion is greater than what would be expected based on pure economic utility.
2. The endowment effect shows that people value things more once they own them. Ownership increases satisfaction and willingness to pay.
3. Framing choices as losses or gains significantly impacts decisions through loss aversion even if the economic substance is unchanged. People will accept greater risks to avoid losses than acquire gains.
Critical Analytical ThinkingPart II Heuristics and Bias.docxannettsparrow
Critical Analytical Thinking
Part II: Heuristics and Biases
Dr. Abdelghani Es-Sajjade
[email protected]
Overview
The law of small numbers
Cause and chance
Anchors
Availability heuristic
The public and the experts
Representativeness
Causal stereotypes
Regression to the mean
A two-systems view of regression
The law of small numbers
Observations
The counties in which the incidence of kidney cancer is lowest are mostly rural, sparsely populated in the Midwest, the South, and the West
Why? The clean living of the rural lifestyle. No air pollution, no water pollution, fresh food without additives.
Observations
The counties in which the incidence of kidney cancer is highest are mostly rural, sparsely populated in the Midwest, the South, and the West
Why? Poverty of rural lifestyle—no access to good medical care, too much alcohol, too much tobacco.
Our mind & statistics
Explanation has nothing to do with rural life
System 1 excels in one form of thinking: it automatically and effortlessly establishes causal connections between events…
even when supporting data is minimal or totally absent
We are insensitive to sample size or reliability of data.
Sample of 150 or 3000, who cares?
Why? WYSIATI and system 1 is gullible.
Our mind & statistics
We know about sample size!
But often can’t help ourselves.
Did you initially notice “sparsely populated”?
What is the difference?
Large samples are more precise than small samples.
Small samples yield extreme results more often than large samples do.
Hence, small counties, less people so …?
Certainty & doubt
Our mind has a preference for sliding into certainty over maintaining doubt
System 1: rich image with poor evidence
Even in science:
Small sample experiment, complex phenomenon.
Exercise 1
Cause & Chance
We have an inclination to causal thinking
Statistics is different because it focuses on what could have happened instead
The null-hypothesis
Randomness sometimes appears as a pattern
Hot hand: 3 or 4 scores in a row
basketball hot hand, team of players who scores 3 or 4 times in a row is now given more passes and extra defended. Research: this sequence of successes and missed shot fits all the conditions of random. The hot hand is in the eye of the beholder. Massive and widespread cognitive illusion.
11
Speaking of the Law of Small Numbers
“Yes, the studio has had three successful films since the new CEO took over. But it is too early to declare he has a hot hand.”
“The sample of observations is too small to make any inferences. Let’s not follow the law of small numbers.”
“I plan to keep the results of the experiment secret until we have a sufficiently large sample. Otherwise we will face pressure to reach a conclusion prematurely.”
Anchors
Anchoring effect: considering a particular value from an unknown quantity before estimating that quantity
Question: was Ibn Taymiyyah younger or older than 114 years old when he passed away?
What is the anchor? 114 years old.
You.
This document outlines ten principles of economics according to N. Gregory Mankiw. It discusses how people make decisions by facing tradeoffs and considering opportunity costs. Rational people make decisions at the margin by weighing marginal costs against marginal benefits. Markets are generally an efficient way to organize economic activity as decentralized decisions lead to beneficial outcomes through the invisible hand of supply and demand.
How to convince your boss to use insights and strategies from Behavioral Econ...beworks
Behavioral Economics has revolutionized our understanding of decision making.
We now know that humans are far from perfectly rational. Instead, there are psychological biases that strongly influence people’s choices.
The result is a more accurate prediction of human behavior, which can facilitate desirable business outcomes.
Once you understand the drivers of behavior, you can change behavior.
This document summarizes the key ideas from the book "Nudge" by Richard Thaler and Cass Sunstein. It discusses how subtle changes to choice architecture, referred to as "nudges", can influence behaviors in predictable ways. Nudges aim to make choices easier and help people make decisions that improve their lives without restricting freedom of choice. The document provides many examples of nudges related to health, savings, investments, and the environment that aim to help people overcome cognitive biases and biases inherent in complex systems.
This document provides an introduction to key concepts in behavioural economics. It discusses how behavioural economics differs from traditional economics by acknowledging that people are not always rational decision-makers and can be influenced by biases. Some of the biases and concepts mentioned include loss aversion, anchoring effects, default biases, framing effects, availability heuristic, herd behaviour, and bounded rationality. The document also notes how behavioural economics draws on evidence from psychology and neuroscience to better understand human decision-making.
This document outlines 13 principles of behavioral economics: anchoring, availability, chunking, commitment, framing, goal dilution, loss aversion, overweighting small probabilities, hyperbolic discounting, reciprocation, status quo bias, and social proofing. For each principle, a brief theory is provided along with a short example to illustrate how it applies to decision making. The document serves to explain key concepts in behavioral economics through concise definitions and relatable scenarios.
The document discusses behavioural economics and how it differs from traditional economics. Traditional economics assumes people act rationally to maximize wealth and income. Behavioural economics recognizes people do not always make rational decisions due to things like biases, limited willpower, and outside influences. It provides examples of how heuristics and irrational behaviors can influence decisions. The document advocates applying insights from behavioural economics, such as understanding decision-making processes and identifying bottlenecks, to help address irrational behaviors and encourage positive outcomes through "nudges" like simplifying choices and using social influences. It categorizes approaches as mindful or mindless, and externally imposed or self-imposed. The goal is to harness behavioral economics to help achieve strategic objectives.
Behavioural economics and digital marketingVyshnavi Doss
The document discusses how behavioural economics can be applied in digital marketing. It begins by contrasting classical economics assumptions about rational decision making with the realities of human psychology. Behavioural economics recognizes that humans are predictably irrational and influenced by subtle contextual factors. The document then provides several examples of how behavioural economics concepts like social proof, scarcity, commitment, and feedback loops can shape online user behaviour and decisions in a way that nudges them towards a desired conversion or action. It argues that digital choices can be designed by employing hidden psychological forces that have more influence on decisions than long-term consequences.
This document provides an overview of behavioural economics. It begins by explaining that behavioural economics has emerged from psychological studies exploring biases in decision-making. It then contrasts the assumptions of classic economics, which considers consumers to be entirely rational, with the findings of behavioural economics and psychology, which recognize that consumers are emotional and can be persuaded in irrational ways. The document goes on to provide examples of behavioral economic concepts in action from various companies. It also describes the two thinking systems - system 1 being fast, emotional thinking and system 2 being slow, logical thinking. Finally, it outlines and explains a number of key behavioral economic principles that influence human decision-making.
Nudges are subtle ways of influencing consumer decisions without limiting choices. Choice architects can design contexts that steer behaviors through defaults, social proof, and salience. While nudges can increase organ donation and retirement savings rates, they may also undermine autonomy and evade important issues. Effective nudges require understanding behavior in context rather than one-size-fits-all solutions.
Advances in the behavioral sciences can better enable the human-centric design of programs, technologies, and organizations. Explore six lessons from behavioral economics that you can apply to your workplace. To learn more, view our special section on behavioral economics and management from Deloitte Review, Issue 18: http://deloi.tt/1TrSA6y
The document discusses how behavioral economics can be applied to improve social service programs and client outcomes. It explains concepts from behavioral economics like bounded rationality, heuristics, framing, and loss aversion. It provides examples of how these concepts influence financial decision making and recommendations for using insights from behavioral economics to better design programs, messages, and services. The document advocates applying these insights to enhance client understanding, program enrollment and success, through approaches like reframing financial education, addressing time preferences, and employing nudges and defaults.
15 Lessons from Behavioural Economics - by @tjalve @boardofinno - Board of In...Board of Innovation
Within our team @boardofinno, we give short presentations to each other, to learn more, to get inspired, to be amazed,…
The following deck was used by @tjalve in our internal #teachme session.
It covers 15 lessons from Behavioural Economics you can apply to your ongoing projects.
The concepts covered are:
1. The Endowment Effect
2. Hyperbolic Discounting
3. The IKEA effect
4. Anchoring Bias
5. The Von Restorff Effect
6. Loss Aversion
7. Hedonic Adaption
8. The Bandwagon Effect
9. The Inaction inertia effect
10. The Zeigarnik Effect
11. The Framing Effect
12. The Goal Gradient Effect
13. The Choice Paradox
14. Round Pricing Preference
15. Reciprocity
This is a presentation that covers the basic concepts of the book Nudge, by Richard Thaler and Cass Sunstein. We read this book at our UX Book Club meeting, and I presented an introduction to it at the LA IxDA meeting.
Slides Jeff Otto recently used in his discussion w/ mentees of The Product Mentor.
The Product Mentor is a program designed to pair Product Mentors and Mentees from around the World, across all industries, from start-up to enterprise, guided by the fundamental goals…Better Decisions. Better Products. Better Product People.
Throughout the program, each mentor leads a conversation in an area of their expertise that is live streamed and available to both mentee and the broader product community.
http://TheProductMentor.com
This presentation looks at behavioural nudges used by different businesses. Nudges are interventions that preserve freedom of choice but that nonetheless influence people’s decisions. Our decisions are often heavily affected by behavioural biases, instinctively we favour the default option
Choices are contextual and we are also deeply affected by social norms.
The document discusses the concept of nudge theory. It begins by defining what a nudge is, both literally and in the context of the theory. It then explains that nudge theory is a modern concept for understanding how people think and make decisions, helping people improve their thinking, managing change, and identifying influences. The document notes that nudge theory was popularized by the 2008 book Nudge and accepts that people have certain tendencies rather than ignoring realities. It provides examples of how nudge techniques differ from traditional enforced changes. Overall, the document provides an overview of nudge theory, how it can be applied in various areas, and how to design effective nudges.
This document summarizes research on loss aversion and the endowment effect from behavioral economics. It discusses several key findings:
1. People strongly prefer to avoid losses rather than acquire equivalent gains. This loss aversion is greater than what would be expected based on pure economic utility.
2. The endowment effect shows that people value things more once they own them. Ownership increases satisfaction and willingness to pay.
3. Framing choices as losses or gains significantly impacts decisions through loss aversion even if the economic substance is unchanged. People will accept greater risks to avoid losses than acquire gains.
Critical Analytical ThinkingPart II Heuristics and Bias.docxannettsparrow
Critical Analytical Thinking
Part II: Heuristics and Biases
Dr. Abdelghani Es-Sajjade
[email protected]
Overview
The law of small numbers
Cause and chance
Anchors
Availability heuristic
The public and the experts
Representativeness
Causal stereotypes
Regression to the mean
A two-systems view of regression
The law of small numbers
Observations
The counties in which the incidence of kidney cancer is lowest are mostly rural, sparsely populated in the Midwest, the South, and the West
Why? The clean living of the rural lifestyle. No air pollution, no water pollution, fresh food without additives.
Observations
The counties in which the incidence of kidney cancer is highest are mostly rural, sparsely populated in the Midwest, the South, and the West
Why? Poverty of rural lifestyle—no access to good medical care, too much alcohol, too much tobacco.
Our mind & statistics
Explanation has nothing to do with rural life
System 1 excels in one form of thinking: it automatically and effortlessly establishes causal connections between events…
even when supporting data is minimal or totally absent
We are insensitive to sample size or reliability of data.
Sample of 150 or 3000, who cares?
Why? WYSIATI and system 1 is gullible.
Our mind & statistics
We know about sample size!
But often can’t help ourselves.
Did you initially notice “sparsely populated”?
What is the difference?
Large samples are more precise than small samples.
Small samples yield extreme results more often than large samples do.
Hence, small counties, less people so …?
Certainty & doubt
Our mind has a preference for sliding into certainty over maintaining doubt
System 1: rich image with poor evidence
Even in science:
Small sample experiment, complex phenomenon.
Exercise 1
Cause & Chance
We have an inclination to causal thinking
Statistics is different because it focuses on what could have happened instead
The null-hypothesis
Randomness sometimes appears as a pattern
Hot hand: 3 or 4 scores in a row
basketball hot hand, team of players who scores 3 or 4 times in a row is now given more passes and extra defended. Research: this sequence of successes and missed shot fits all the conditions of random. The hot hand is in the eye of the beholder. Massive and widespread cognitive illusion.
11
Speaking of the Law of Small Numbers
“Yes, the studio has had three successful films since the new CEO took over. But it is too early to declare he has a hot hand.”
“The sample of observations is too small to make any inferences. Let’s not follow the law of small numbers.”
“I plan to keep the results of the experiment secret until we have a sufficiently large sample. Otherwise we will face pressure to reach a conclusion prematurely.”
Anchors
Anchoring effect: considering a particular value from an unknown quantity before estimating that quantity
Question: was Ibn Taymiyyah younger or older than 114 years old when he passed away?
What is the anchor? 114 years old.
You.
This document outlines ten principles of economics according to N. Gregory Mankiw. It discusses how people make decisions by facing tradeoffs and considering opportunity costs. Rational people make decisions at the margin by weighing marginal costs against marginal benefits. Markets are generally an efficient way to organize economic activity as decentralized decisions lead to beneficial outcomes through the invisible hand of supply and demand.
This document is a continuous assessment cover sheet from 2011 requiring the submission of an essay. It requests information like the student's surname, initials, student ID, programme of study, module, lecturer, and date of submission. It includes a declaration that the submitted work contains no plagiarized content.
The document describes rational choice theory and how it can be used to explain individual decision-making and social outcomes. It outlines the central assumptions of rational choice theory, which are that decision-makers have logically consistent goals and choose the best available option given those goals. Experimental methods and laboratory experiments are also discussed as ways to test rational choice theory by studying individual behavior in controlled settings with financial incentives.
This document provides an overview of consumer behavior and why it is important to study using scientific methods rather than intuition alone. It discusses how consumer behavior research can help marketers make better predictions that lead to more successful marketing strategies and product development. Specifically, it notes that intuition is limited and often results in incorrect assumptions, while scientific research using methods like experiments can identify real correlations and causal relationships between variables. Understanding consumer psychology through an evidence-based approach allows marketers to meet consumer needs and wants more effectively.
This chapter introduces the key principles of economics. It discusses that economics addresses how societies manage scarce resources through decisions made by individuals and firms. The chapter outlines the principles of how people make decisions, how people interact through markets and trade, and how the overall economy functions. The principles covered are: people face tradeoffs; opportunity cost is the relevant cost; rational people think at the margin; people respond to incentives; trade can make all parties better off; markets are generally efficient but governments can address market failures; productivity drives living standards; inflation is caused by too much money printing; and societies face a short-run tradeoff between inflation and unemployment.
This document summarizes research that showed people have very poor recall of grocery prices they just paid. A study found that on average, people could not name the correct price of an item they just put in their cart and had an average error of 15% of the real price. Even frequent shoppers performed poorly. The findings question economic assumptions that people respond rationally to prices. Store managers could exploit poor price recall through various discount strategies to maximize revenue.
The science of influence 2013 - Selling InteractionsAnderson Hirst
A summary of insights to help you to apply science to influence for effective sales meeting. This white paper will provide you with 12 big ideas to stimulate your thoughts about managing customer interactions differently and we provide practical tips on how to apply this in sales in everyday situations.
This chapter introduces some of the key principles of economics. It discusses that economics addresses questions about how societies manage scarce resources. It explores four main principles: how people make decisions, how people interact, how markets usually provide a good way to organize economic activity, and how governments can sometimes improve market outcomes. The chapter provides examples and discussion of opportunity costs, incentives, trade, and the role of prices in allocating resources. It also addresses how a country's standard of living depends on its ability to produce goods and services.
Everything you ever needed to know about incentives including: psychology, best practices, and cautionary tales.
In this eBook, marketers in companies who acquire subscription and other long-term customers will learn
- how you can use human psychology to improve your Conversion Rate and Customer Lifetime Value
- what are the dos and don’ts of successful incentive schemes
- which companies do a great job with incentives ... and which ones don’t!
When making decisions, individuals, businesses, and governments must consider scarcity due to limited resources and unlimited wants. Rational decision-making requires weighing costs and benefits to determine the best use of resources. For individuals, this may involve career choices, education levels, and budgets that maximize benefits. For governments, rational decisions allocate scarce public funds to priorities like infrastructure, education, or defense based on anticipated economic growth and standards of living. Rational choices demonstrate an understanding of opportunity costs as the next best alternatives forgone.
The document provides instructions for creating an account on the HelpWriting.net site in order to request essay writing help, including completing an order form with instructions and deadline. Writers will bid on the request and the customer can choose a writer based on qualifications, with the option to request revisions until satisfied with the final paper. The site aims to provide original, high-quality content and guarantees refunds for plagiarized work.
Behavioral economics has gained much attention in
field of psychology and public policy. The field of study
known as behavioral economics initially began as a purely
academic attempt at modeling irrational consumer choices,
thereby challenging the notion of the rational consumer of
traditional economics. Management functions in 21st century
workplaces have witnessed the paradigm shift in the decision
making. According to Richard Thaler (Nobel Memorial Prize
winner), Economic Sciences is a nudge for marketers to learn
about behavioral economics. His work explains how can
marketers nudge quick-thinking, short-attention consumers?
This article seeks to examine and explain the difference which
behavioral economics can make in formulating marketing
strategies using the nudging concept given by Nobel prize
winner Richard Thaler.
Thinking:People are doing it wrong! Digital Elite Camp presentation. How cognitive biases and mental heuristics help to sell more. https://www.dreamgrow.com/thinking-cognitive-biases-in-sales-and-marketing/
How do modern consumers decide what they want to share, like, or purchase? Having a basic understanding of behavioral psychology can help you understand and better engage your consumers.
The document is a summary of key concepts from the book "Misbehaving: The Making of Behavioral Economics" by Richard Thaler. It discusses several concepts that challenge traditional economic assumptions that people always make rational decisions. It explains that behavioral economists believe people are often impulsive, short-sighted and irrational in their decision-making. The summary then outlines several specific concepts from the book, including bounded rationality, loss aversion, the endowment effect, mental accounting, and prospect theory. It provides examples to illustrate how these concepts depart from the rational actor model and better explain actual human behavior.
This chapter introduces key concepts in economics. Microeconomics studies individual decision-making of households and firms, while macroeconomics examines economy-wide phenomena. Economists assume individuals rationally pursue self-interest, responding to incentives. Economics is a science that uses models and data to predict behavior, though some question full rationality. Positive economics describes what is, while normative economics involves value judgments about what should be.
This chapter introduces key concepts in economics. Microeconomics studies individual decision-making of households and firms, while macroeconomics examines economy-wide phenomena. Economists assume individuals rationally pursue self-interest, responding to incentives. Economics is a science that uses models and data to predict behavior, though some question full rationality. Positive economics describes what is, while normative economics involves value judgments about what should be.
Attitude measurement and scaling techniquesKritika Jain
The document discusses various methods for measuring attitudes, including both structured and unstructured techniques. It describes non-structured methods like in-depth interviews and focus groups that can provide exploratory insight but have limitations. Structured methods including scales are presented as better able to objectively measure attitudes. Specific scaling techniques are outlined, such as graphic rating scales, semantic differential scales, rankings, and multiple item scales including Thurstone and Likert scales. The document provides an overview of different attitude measurement methods and their applications.
Similar to Webinar: Using Behavioral Economics to Identify What Motivates Shopper Behavior (20)
How to personalize and target promotions without CRMRevTrax
Finding and delivering the appropriate message to the appropriate audience is one of the primary goals of brand marketing. Delivering that consistent message through all touchpoints should be a top priority.
But what if your organization does not have a CRM program? Is it possible to personalize your digital promotions without CRM?
OfferArchitect™ - The new paradigm for digital offer testingRevTrax
OfferArchitect™ identifies the most impactful coupon offer against a target audience segment by using the Auto Optimizer™ feature. It is a real-time, multivariate-testing platform based upon behavioral economics principles. RevTrax’s heuristic methodology considers all relevant messaging on the coupon itself and the ambient environment including copy, imagery, value, etc. Experiments are planned, tested and operationalized in conjunction with highly credentialed academics from leading marketing research institutions.
Using CRM Data to Activate Shoppers at Retail
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Webinar: Using Behavioral Economics to Identify What Motivates Shopper Behavior
1. Presenters
1
Neil Gandhi
Vice President of Data Science
RevTrax
Email: NGandhi@revtrax.com
Jura Liaukonyte, M.A., Ph.D.
Professor of Strategic Pricing and Economics of Advertising
Cornell University
Email: Jurate@cornell.edu
2. Agenda
2
What is Behavioral Economics and why is it important for
business?
4 mini cases on Behavioral Biases and their application to
consumer behavior
How can RevTrax help with behavioral testing?
3. What Is Behavioral Economics?
Behavioral economics is a branch of economics that
integrates psychological factors into traditional
models of economic decision-making.
Economics is powerful because it helps us make
predictions about concepts such as market prices,
costs, and resource allocation.
Behavioral economics is even more powerful
because it retains the formalization of
economics, while enriching it with insights from
other disciplines which allow it to make better
predictions about real-world behavior.
3
5. Why is it Important for Business
Behavioral economics can be a valuable
toolset for shaping the behaviors of
consumers.
Insights from behavioral economics can
inform the construction of choice
architectures, as well as can be used to
create powerful incentives to act in particular
ways.
5
Why is it Important for Business?
6. Behavioral economics can be applied to all aspects of the consumer experience.
We will focus on four mini-cases that have yielded interesting results:
Mental Accounting
Anchoring
Scarcity
Bundle Framing
6
How Can Behavioral Economics be Used?
9. Case 1: Mental Accounting
Mental Accounting is a term in behavioral
economics uses to describe people’s proclivity
to divide up their money into separate accounts
based on certain criteria
The term was first coined by behavioral
economist Richard Thaler, in an attempt to
explain his discovery that propensity to
consume differed between separate mental
accounts
9
10. Let’s do a quick example to illustrate this:
Imagine you have set aside $5 each day for your lunch, so that you can buy
yourself a hot dog from your favorite stand…
10
Case 1: Mental Accounting
11. Scenario 1: Say you get to the stand, and you
discover that because of a hole in your pocket,
you have lost exactly $5. However, you still
have enough money left in your wallet to buy
the hot dog. Do you still buy the hot dog?
11
Case 1: Mental Accounting
12. Scenario 2: This time you didn’t lose any
money before arriving at the hot dog stand.
You buy a hot dog, but as you are walking back
to your office, before you have taken even one
bite, you drop it on the ground! Do you go
back and buy another hot dog?
12
Case 1: Mental Accounting
13. It turns out that more people answer yes to the Scenario 1 question than the
Scenario 2, even though they are economically speaking the same question.
In the first question, most people do not see the lost $5 as coming from the
“lunch account,” so they feel comfortable still making a withdrawal from that
account.
In the second question, most people perceive the lost hot dog as a $5 loss from
their “lunch account,” so they do not feel comfortable making another
withdrawal from that account.
13
Case 1: Mental Accounting
14. How can this phenomenon be applied to a business situation?
We tested online coupons that originally contained a simple phrase like “SAVE $2.00”
We added different phrases to these coupons and tested their effectiveness compared
to the control:
We saw significant gains in coupon printing and redemption for the groups with these
added phrases.
14
Case 1: Mental Accounting
SAVE $2.00
SAVE $2.00
FOR YOUR FAMILYvs.
15. Why did this happen?
In additional tests, we saw that participants felt that the money saved was
contributing “for their family,” which are different accounts than money for
their personal use.
This is a prime example of how businesses like yours can target the correct
mental account of your customers and see significant improvements.
15
Case 1: Mental Accounting
19. Use coupons to drive CRM acquisition.
Coupons can include standard
print-at-home offers as well as high value
and free coupons.
Example:
Through a social sharing campaign, a client delivered
over 60,000 high value coupons and received over
100,000 CRM opt-ins in under three months.
19
What are the sizes of the two horses?
20. Anchoring is a psychological term, commonly referred to as anchoring bias, that refers
to the cognitive bias where an individual “anchors” their response toward the first
information they are presented with, even if that information is completely irrelevant.
In one of the first studies on anchoring, researchers Amos Tversky and Daniel Kahneman
gave subjects five seconds to calculate the product of the numbers one through eight.
20
Case 2: Anchoring
21. Anchoring is a psychological term, commonly referred to as anchoring bias, that refers
to the cognitive bias where an individual “anchors” their response toward the first
information they are presented with, even if that information is completely irrelevant.
In one of the first studies on anchoring, researchers Amos Tversky and Daniel Kahneman
gave subjects five seconds to calculate the product of the numbers one through eight.
They showed half of the subjects the numbers in forwards order, and half of the subjects
the numbers in backwards order.
21
Case 2: Anchoring
1×2×3×4×5×6×7×8 8×7×6×5×4×3×2×1
22. Anchoring is a psychological term, commonly referred to as anchoring bias, that refers
to the cognitive bias where an individual “anchors” their response toward the first
information they are presented with, even if that information is completely irrelevant.
In one of the first studies on anchoring, researchers Amos Tversky and Daniel Kahneman
gave subjects five seconds to calculate the product of the numbers one through eight.
They showed half of the subjects the numbers in forwards order, and half of the subjects
the numbers in backwards order.
22
Case 2: Anchoring
1×2×3×4×5×6×7×8 8×7×6×5×4×3×2×1
Quick estimate:
512
Quick estimate:
2,250
23. Anchoring is a psychological term, commonly referred to as anchoring bias, that refers
to the cognitive bias where an individual “anchors” their response toward the first
information they are presented with, even if that information is completely irrelevant.
In one of the first studies on anchoring, researchers Amos Tversky and Daniel Kahneman
gave subjects five seconds to calculate the product of the numbers one through eight.
They showed half of the subjects the numbers in forwards order, and half of the subjects
the numbers in backwards order.
23
Case 2: Anchoring
1×2×3×4×5×6×7×8 8×7×6×5×4×3×2×1
Quick estimate:
512
Quick estimate:
2,250
Correct
answer:
40,320
24. In a modern demonstration of anchoring,
MIT professors offered to sell various
valuable consumer products (computer
accessories, wine bottles, luxury
chocolates, and books) to MBA students
First, students were asked whether they
would buy each good for a dollar figure
equal to the last two digits of their social
security number.
Then, after giving a yes/no response,
subjects were asked to state the most
they would pay for those items.
24
Wine Spectator Experiment
25. The results showed that those with high
SSN numbers were willing to pay more for
the products across the board.
Evidently, these participants did not have,
or were unable to retrieve personal values
for ordinary products,
The values they provided were
anchored to their social security
number which is essentially a random
figure.
25
Wine Spectator Experiment
26. What not to do: disregarding anchoring bias
Instead of listing an item with a severely marked-up
original price, and then almost always selling it at a
major “discount” of 30%, 40% or 50% off, JCPenney
knocked down all prices by about 40%
This policy eliminated the anchor of the full-price item
upon which to base their savings.
Even though prices were lower, the customer did not
have a reference price to compare the prices to, so their
was no “hype” around any of the products.
26
Case 2: Anchoring
27. As a result, they saw steep declines in
sales all around the country, and
shareholders began to sell their stocks in
the company.
New policy took away consumers'’ feeling
of small achievement when they got rid
of deals
27
Case 2: Anchoring
28. As a result, they saw steep declines in
sales all around the country, and
shareholders began to sell their stocks in
the company.
New policy took away consumers'’ feeling
of small achievement when they got rid
of deals
28
Case 2: Anchoring
29. Now let’s look at two positive ways of applying the
anchoring bias to your business:
In the first experiment, we randomly assigned low
or high values to the first set of “lead” offers. The
value of the rest of the “follower” offers was held
constant.
We found this framing significantly increased the
printing and redemption of the “follower” offers,
even though their value stayed the same.
When anchored with the high value coupon,
consumers spent more time exploring the rest of
the offers and felt that the perceived value of the
rest of the coupons was greater.
29
Case 2: Anchoring
- ❒ X
Lead Offer
1
Lead Offer
2
Lead Offer
3
Follower
Offer
1
Follower
Offer
2
Follower
Offer
3
Follower
Offer
4
Follower
Offer
5
Follower
Offer
6
Low or
High
Values
held
constant
30. In the second experiment, we tested
different anchoring messages to see how
they affected coupon printing and
redemption
The messages on the right were displayed at
the top of the offers screen:
We found higher printing rates for
customers who saw anchoring messages
versus the control.
30
Case 2: Anchoring
Anchor Message Tested
You can print coupons and save money!
(Control)
The average person prints $24 in coupon savings!
Most people print at least $15 in coupon savings!
You can print up to $75.50 in coupon savings!
32. Scarcity is a heuristic, or a decision making tool, in
which people are more likely to perceive an item as
having greater value if it is scarce
There are two types of scarcity appeals: those
driven by low supply and those driven by high
demand.
To the right, we have an example of a low supply
scarcity appeal.
These appeal to people who value uniqueness.
High demand appeals typically involve phrases like
“almost sold out” and “while supplies last.”
These appeal to people who value group
conformity.
32
Case 3: Scarcity
33. In 2012, researchers performed a well-known experiment
that illustrated the importance of scarcity in the
marketing world.
The item in question was wristwatches. They exposed
subjects to two different advertisements for a new
watch:
“Exclusive limited edition. Hurry, limited stocks”
“New edition. Many items in stock”
The findings of their study were very significant: there
was a 50% increase in the amount customers were
willing to pay for the “exclusive” watch compared to the
“new edition.”
33
Case 3: Scarcity
34. We conducted a series of experiments to test the effects of different
scarcity-suggesting messages on coupon printing and redemption:
“Act Now!”
“Limited Time Only”
“While Supplies Last”
“Grab It Now”
“Maximum 2 Prints per Coupon”
“Don’t Miss Out!”
Among these, we found that all scarcity messages were effective and
“Limited Time Only” and “Don’t Miss Out” had the most significant
effects in increasing printing and redemption rates.
34
Case 3: Scarcity
36. Bundling is a familiar tool to many businesses, and is used encourage sales
of products in a way that is profitable to the business and beneficial to the
customer.
Bundle framing deals with the way that bundled offers are presented and
the particular combinations of stimuli that most encourage the customer
to purchase the bundled products.
Framing is an important tool in behavioral economics for understanding
consumer behavior, and this tool can be used effectively with offer
bundling to produce significant results.
36
Case 4: Bundle Framing
37. What kind of results in behavioral economic research led to the interest in bundle framing?
A 1995 study at Columbia Business School revealed several interesting results dealing with
framing of bundled products:
When bundles are composed of complements, people are more likely to buy them.
Presenting the price of the bundle differently causes significant changes in likelihood of
purchasing.
People who are more familiar with products inside the bundle respond differently to
framing than people who are less familiar with said products.
With all of these results, it is no surprise that research into bundle framing is very useful
for marketing today.
37
Case 4: Bundle Framing
38. First we tested coupons of the form “Buy Product 1, Get $X.XX of Product 2” and
switched around the order to see if it altered customer behavior
We found that when the more popular product was placed first, the customer
engagement was the highest.
38
Case 4: Bundle Framing
Buy Product 1, Get
$X OFF Product 2
Buy Product 2, Get
$X OFF Product 1
Get $X OFF Purchase
of Product 1 and
Product 2
39. Next, we tested whether placing bundle coupons
and standalone coupons on the same coupon
page would increase printing compared to just
one or the other.
We found that adding bundled promotion to
standalone offers drastically increased total
engagement with both products.
Finally, we tested whether this combination
worked on a variety of products and coupons.
And found this effect to be true for multiple
different combinations.
39
Case 4: Bundle Framing
40. Agenda About RevTrax
RevTrax is a leading provider of
personalization & promotional
marketing technology to CPG brands
and retailers.
Leader in personalized offers
and online to offline analytics
since 2008
Client base of 350+ national brands
& banners with our technology
deployed on hundreds of brand sites
and owned properties
40
42. 42
RevTrax captures 1st party path-to-
purchase data to understand consumer
behavior
Receive data from the brand’s clearing house
Understand which digital channels, marketing tactics, and executions drive the highest engagement for each consumer at each individual retailer
Create the opportunity to optimize media spend, CRM efforts, shopper marketing initiatives, etc.
Unique Identifier Channel Campaign Keyword Purchase Date Barcode ID Retailer
12344321 Search Branding Laundry Detergent 1/2/15 169294683 TARGET
23455432 Email CRM N/A 1/2/15 169301942 SAFEWAY
34566543 Search Acquisition Hair Care 1/3/15 169351160 WALGREENS
45677654 Social Facebook N/A 1/9/15 169401668 PUBLIX
56788765 Display Branding N/A 1/11/15 169416484 KROGER
Engagement Data Barcode ID Transaction Data
43. 1st party purchase data that ties marketing messages/tactics to actual purchase
Silent observation vs focus groups, surveys, and panels which can distort true behavior
Multivariate design vs simple A/B tests
43
Why is RevTrax able to uniquely support
BE testing effectively?
44. Thank You!
44
Neil Gandhi
Vice President of Data Science
RevTrax
Email: NGandhi@revtrax.com
Jura Liaukonyte, M.A., Ph.D.
Professor of Strategic Pricing and Economics of Advertising
Cornell University
Email: Jurate@cornell.edu
Editor's Notes
From the sellers perspective these are all 3 identical offers, because they offer $X OFF of the sale of 2 items. But the way you frame the bundled offer matters a lot!
Talking points:
This is accomplished through rigorous experiment design via multi-variate testing that gets to the root of why consumers make their purchase decisions—both online and offline.
As a recap, while other methods do provide some visibility into consumer psychology, the methods themselves create issues with the accuracy of the data:
the data doesn’t connect marketing messages to actual purchase
(2) the data relies on self-reported data by consumers who know they are being observed
(3) the data is collected in group settings or other unnatural environments that could affect the validity and accuracy of the data.
Understanding the psychology of the consumer is much better served by silently observing purchase behavior by capturing first-party purchase data like the data captured through the RevTrax platform