Wellness, Wealth Management, & Will Power Interaction Design through the Lens of Behavioral Economics

717 views

Published on

Interaction designers craft experiences by curating the flow of information within contexts that aim to focus attention & interest. Subtle psychological details can dramatically transform an experience. The current excitement about "gamification" has begun to draw on the powerful ways that packaging can convert a mundane task into an engaging challenge. Experimental results from behavioral economics spotlight opportunities for improving the dynamics of an interaction: The presentation frame can harness intrinsically motivating cues, enabling people to develop behavioral patterns that harmonize with their deepest aspirations.

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
717
On SlideShare
0
From Embeds
0
Number of Embeds
58
Actions
Shares
0
Downloads
0
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • Wellness, Wealth Management, & Will Power Interaction Design through the Lens of Behavioral Economics

    1. 1. Wellness, Wealth Management, & Will PowerInteraction Design through the Lens of Behavioral EconomicsPaul Whitmore Saswit@psych.stanford.eduJuly 28, 2011 for ESI lunch talk
    2. 2. “Framing” Links Psychology to Behavioral Economics Contextual cues, situational aspects, environmental associations shape/structure perception 4
    3. 3. Behavioral economists view Designers/ProductManagers as CHOICE ARCHITECTS Opt ion A Opt ion B “Many features, noticed and unnoticed, can influence decisions. The person who creates that environment is, in our terminology, a choice architect.” (Thaler & Sunstein)6
    4. 4. Case Study: BofA’s Keep the ChangeSubjective Valuation: 1. Psychophysics of Value 2. Mental Accounting David Fetherstonhaugh, IDEO Behavioral Economist in Residence
    5. 5. 1. Psychophysics of Value Diminishing Returns (Weber-Fechner Law) Response starts big, and with each additional increment, gives less and less bang8
    6. 6. 1. Psychophysics of ValuePain of Spending Purchase of $5.10 1st 2nd 3rd 4th 5th 6th
    7. 7. 1. Psychophysics of Value 6th 5th 4thPain of Spending 3rd 2nd 1st 90 ¢ $1 $2 $3 $4 $5 $6 Actual Dollars Spent
    8. 8. MPC = ~1.0 MPC < 1.0 MPC = ~0 Violate economic notion of fungibility (money has no labels: money is one unitary metric). People behave as if money in one account is not a substitute for money in any other account. Marginal Propensity to Consume (MPC) very dependent on “account” in which it’s held11 adapted from Prof Russell James III, Texas Tech U
    9. 9. 2. Mental AccountingRounds up to90¢ Mental Spending Account Mental Savings Account Pain of Spending Joy of Saving o! Waho 90¢ saved Actual Dollars Spent Actual Dollars Saved
    10. 10. Automating ChoiceSubscription to reduce friction of decision-making  Theater tickets / Gym membership  Amazon: 2 ways – PRIME & 15% off if a purchase is transformed from a one-off purchase to a subscription  Medical insurance –Seems irrational to choose high premium, low deductible, yet many don’t want to make repeated calculations about trade offs 2
    11. 11. Endowment Effect explains one waysubscriptions change framingMug Experiment at Cornell in 1985Every other MBA class was given a $6 mug Buyer reserve price $2.50 ; Seller reserve $5.25 Expected trades 11; actual number below 2.Random distribution should not have guessed which people preferred $ to a Cornell mug. 7
    12. 12. How do subscriptions change the framing? How does endowment effect show up in subscription momentum? Once something is part of ME, letting go of it feels like a loss, even if offered a compensatory gain I lose part of me, and gain mere $ back. 8
    13. 13. Subscriptions can support behavioral changeSet up a policy where I am guaranteed not to have to make a sequence of choices Don’t Make Me Think Create a climate of “us” where trust is supported 9
    14. 14. Understanding PreferencesBuilding a better Eliza (1966 computer program) ELIZA mimicked a therapist by returning whatever user typed with a question > How does that make you feel? > Tell me more about … 12
    15. 15. People are not adept at knowing what they wantChoosing for tonight Choosing for next Choosing for second Thursday ThursdayNext week I will want things that are good for me… adapted from Prof Russell James III, Texas Tech U
    16. 16. Asking people about their goals is tricky When asked to describe personal priorities, people provide morearticulate & explicit goals for lower prioritiesDelmore Effect - http://www-psych.stanford.edu/~wit/PhDraft.pdf
    17. 17. Eliciting Goals that Matter Recalling past successes just makes it worseDistracting people by asking them to think about irrelevant topics doesn’t help either 15
    18. 18. To recall a success, not connected to mostimportant goal, can help 1- Make it possible to accumulate info without deliberate action 2- Enable answers to “quiz” like questions to create small successes to build greater engagement w/o triggering anxiety16
    19. 19. How to get people to talk about themselves? Hunch isexemplary at playing “the question game”17
    20. 20. Illusion of Control (Langer 1975)Chance can be overcome by ChoiceLottery staged one week before Superbowl Tickets were 4 x 2 inch football cards Odds were 1:227Asked to sell card back to someone else: No choice: $1.96 Choice: $8.67 18
    21. 21. Elicited versus Explicit Preferences Knowing more about a person means that the interaction can be more nuanced. Transition from a statistical best guess to a dialog that enables nuance and tuning Not just the black hats should be using this to attune messaging over time on the web19
    22. 22. Beware that Q&A can just be pesky Eliza tricked people into thinking that we are talking about meMicrosoft “Clippy” had much more computational intelligence, but it only directed attention to Clippy 20
    23. 23. Making it fun / addictiveZynga games appear deliberately designed to incarnate the absinthe/crack cocaine elements of motivation and engagement inside FaceBook. 84.2 Million Cityville players this January outstripped Farmville’s maximum by over 500K 21
    24. 24. Beyond Boredom and Anxiety Csikszentmihalyi’s concept of Flow (adapted by Jenova Chen, MFA)24
    25. 25. Paradoxes of Hedonics (the study of experience) Experienced vs. Remembered Utility Certain dimensions are easy to evaluate: Most intense moment Last moment Other dimensions are nearly impossible to guess: Average height on a roller coaster ride Average rate of winnings at a casino 26
    26. 26. Peak and End Rule (Kahneman) Experienced vs. Remembered Utility Our mind does not make movies; it takes snapshots Rather than guess the total amount of suffering, people recall the worst instant, and the last instant. If you increase the amount of suffering, but arrange for the last minutes to be less intense, people report a longer period as less painful
    27. 27. Peak and End Rule -- Pictograph 28
    28. 28. Achievement Orientation as MotivatorPsychophysical Curve of Response to Increase Stimulus Diminishing Returns (Weber-Fechner Law)  Response starts big  Each additional increment gives less & less bang22
    29. 29. Behavioral Economics can explain one way that games hook into motivationMove from framing where response is flat into framing where the payoff is still increasing.Games do this by slicing infinite horizon into smaller intervalsThe reverse occurs with Subscription, and explains how friction reduces: Move many short, sharp shocks toward one smooth flat perspective.
    30. 30. Social embeddings make habit change fun Quantified Self collecting a range of techniques/tools/ topics  Sensors (Fitbit/Zeos/GreyGoose)  Apps (Livifi/Procrastinator)  Domains: Chronic Conditions to Optimization Transformation requires habit “the enormous flywheel of society” (Wm James) Maker community building an economy of whimsy  Hacker Dojo/NoiseBridge/Ace Monster Toys  Bootcamps morph into “Summer of Riesling” with tasting workouts 30
    31. 31. Peak and End Rule for Designers The last moment of contact makes an inordinate difference to the recalled value of experience Jared Spools "Truth About Download Time"  Nielsen concluded that users will be annoyed … by pages that take any longer than about 10 seconds to load. (Since most popular sites take 8 secs, and less popular take an avg of 19 secs to download)  No correlation between download times and perceived speeds. Amazon.com, rated one of fastest, really one of the slowest  Strong correlation between perceived download time and whether successfully completed task on a site
    32. 32. Sources for followup Best Review book on the subject Priceless: The Myth of Fair Value (and How to Take Advantage of It) Poundstone (2010)  Delmore Effect (Paul Whitmore Sas) http://www-psych.stanford.edu/~wit/PhDraft.pdf  Daniel Kahneman http://www.nobel.se/economics/laureates/2002/kahneman-lecture.html  Dan Ariely http://danariely.com/the-books/  Sheena Iyengar http://www.columbia.edu/~ss957/articles.html 24

    ×