Natalie Horne - Behavioural Economics

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Natalie Horne - Behavioural Economics

  1. 1. Behavioural Economics Natalie Horne Strategy Director, Prime Decision prime-decision.com
  2. 2. Prime Decision? Clients include: Collaborators include: Strategy and insight with a behavioural edge
  3. 3. “All of them. We’re an agency.” *primacy effect
  4. 4. B2B B2C CustomerSalesMarketing Products Services behaviour
  5. 5. principles processes content perspectives social media websites physical contexts digital experiences adsemail
  6. 6. What is Behavioural Economics?
  7. 7. homo economicus Optimal, Normative Realistic, Descriptive
  8. 8. Get ready!
  9. 9. Which is the best option? a. 40% chance of winning £22.50 b. 5% chance of winning £180.00 c. 65% chance of winning £15.40 d. 25% chance of winning £36.00 e. 80% chance of winning £11.25
  10. 10. a. 40% chance of winning £22.50 £9 b. 5% chance of winning £180.00 £9 c. 65% chance of winning £15.40 £10 d. 25% chance of winning £36.00 £9 e. 80% chance of winning £11.25 £9 Correct =
  11. 11. Get ready!
  12. 12. More wins or losses?
  13. 13. More wins or losses? X 4 X 6
  14. 14. What did behavioural economists discover?  We are bad at judging probabilities  We are good at judging frequencies + many other patterns
  15. 15. Codifying human biases  Availability heuristic  Framing  Anchoring  Confirmation bias  Endowment effect  Social norms  Primacy  Defaults  Priming  Commitment devices  Hyperbolic discounting  Status quo bias
  16. 16. Availability heuristic
  17. 17.  Web subscription $59  Print plus web $125  Web subscription $59  Print only $125  Print plus web $125 52% increase 68% 32% 16% 0% 84% Framing
  18. 18. Conformity effects 1951, Solomon Asch A B C Usual error rate: 1% Group context: 75%
  19. 19. Anchoring  90% survival rate vs.  10% mortality rate $99 paid off $175 paid off On a monthly bill of $435…
  20. 20. Applied BE
  21. 21. Common sense? Counterintuitive?  Availability heuristic  Framing  Anchoring  Confirmation bias  Endowment effect  Social norms  Primacy  Defaults  Priming  Commitment devices  Hyperbolic discounting  Status quo bias
  22. 22. A creative, experimental approach to identifying and solving problems Behavioural science: Strategy Tactics
  23. 23. The Seven Lenses Script SocialStory Sync Sense Scenario Structure One of Prime Decision’s proprietary methodologies
  24. 24. Story What do people say? What do they not say? How can narrative drive or disrupt decision-making? Script SocialStory Sync Sense Scenario Structure
  25. 25. Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Board (Park et al, 2010) Confirmation bias in online decision-making
  26. 26. Challenging or confirming narratives “No one gets sacked for buying IBM” “No one gets promoted for buying IBM”
  27. 27. +9% # donations +5% Total £ raised Buy antibiotics for an African child to stop them dying of TB, with just £1  Buy antibiotics for an African child to stop them dying of TB
  28. 28. Script What are the habits? How can they be disrupted? Can other habits be used or mimicked? Script SocialStory Sync Sense Scenario Structure
  29. 29. Prosecute criminals Raise premiums Design experiences which promote honesty
  30. 30. “Just submit a reasonable estimate”
  31. 31. Commitment devices I recognise that I have moral obligation to complete this task honestly. 0% 1% 2% 3% 4% 5% 6% 7% 8% Control Opportunity Honesty Pledge 75% decrease in high claims 95% Decrease in maximum claims
  32. 32. Are you willing to tell the truth even if doing so will result in the denial of your claim?
  33. 33. Tactical example: In-person Target behaviour: Reduce wasteful energy behaviours in laboratories, especially during peak hours Script SocialStory Sync Sense Scenario Structure
  34. 34. The typical communications approach: put up posters
  35. 35. Story “We can’t afford nice- to-haves”
  36. 36. Script
  37. 37. Tactical example: In-person Solution: 5 at 5
  38. 38. The Seven Lenses Script SocialStory Sync Sense Scenario Structure One of Prime Decision’s proprietary methodologies
  39. 39. Aim Behaviour Context Starting point: behaviour mapping
  40. 40. pinterest.com/primedecision
  41. 41. meetup.com/behavioural Next session:  Thursday 20th 6.30pm
  42. 42. Questions? Get in touch Natalie Horne prime-decision.com | 0117 910 5200 natalie.horne@prime-decision.com @natalie_horne @primedecision
  43. 43. Sense Script SocialStory Sync Sense Scenario Structure
  44. 44. TAKE ZINC 10 DAYS 10 GS DOSAGE from the start of diarrhoea and for 10 days: Children under 6 months half a tablet (10mg elemental Zinc) a day; Children over 6 months one tablet a day (20mg elemental Zinc). STORAGE Store in a dry place below 30 C. Protect from light. Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg. Keep out of reach of children Manufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313 NovaZinc® NovaZinc® Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg. Keep out of reach of children Manufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313 Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg. Keep out of reach of children Manufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313 CO-TRIMOXAZOLE TABLETS BP NovaZinc®
  45. 45. Social Script SocialStory Sync Sense Scenario Structure
  46. 46. Social norms 35% re-used 50% re-used
  47. 47. Structure Script SocialStory Sync Sense Scenario Structure
  48. 48.  Web subscription $59  Print plus web $125  Web subscription $59  Print only $125  Print plus web $125 52% increase 68% 32% 16% 0% 84%
  49. 49. Scenario Script SocialStory Sync Sense Scenario Structure
  50. 50. Sync Script SocialStory Sync Sense Scenario Structure
  51. 51. Story:  What do people say?  What do they not say?  How do they justify their choices? Script:  What are the habits?  How could these be strengthened/ disrupted?  Which other scripts could be mimicked/leveraged? Social:  What are others doing?  Are they aware of this?  What form does/could this awareness take? Sense:  What are the stimuli?  How/are they perceived?  How does this affect their experience/choices? Structure:  Which choices are presented?  How are they framed?  What is the rationale for the order/defaults? Scenario:  Which external or emotional/personal factors could feature?  Is there scope to modify/personalise? Sync:  What are our own biases?  Have we tested our assumptions? Have we missed alternative contexts? Questions to ask: Script SocialStory Sync Sense Scenario Structure

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