Dana Center/Sci. Museum 'Hot Heads' evening speaking and workshop
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The document discusses how human behavior and decision-making can be influenced by biases and heuristics. It notes that while people are not purely rational, neither are they completely irrational, as human decision-making is highly dependent on context. It argues that by understanding cognitive biases like loss aversion, temporal discounting, default choices, social norms, and framing effects, one can create choice architectures that gently nudge people towards more sustainable behaviors.
Dana Center/Sci. Museum 'Hot Heads' evening speaking and workshop
- 1. Can ‘green’ products and lifestyles become the new objects of desire? choice lacks a context.” | How do you create sustainable behaviour?
- 2. change in purchase change in lifestyle behaviour behaviour Familiar to comms industry Familiar legislative community • Mostly switching purchase habits • Not necessarily aspirational (injunctions • Not great for side/down-shifting ‘Don’t/Please/After/Stop’) • AIDA • Costly to implement (set-up & ongoing) | How do you create sustainable behaviour?
- 3. …everyone? ABC1C2DE, Mondeo man, White Van Man -Objects that surround you -Murder, steal, park here between 4-6pm -Overt/Flops back | How do you create sustainable behaviour?
- 4. There’s one trait that we all share (irrespective of age, sex, and location) | How do you create sustainable behaviour?
- 5. “…despite being generally capable and smart, we are highly context dependent.” Jack Fuller, Australian research group Per Capita Research | How do you create sustainable behaviour?
- 6. 1. Aversion to extremes: the tendency to avoid extremes, to prefer a 12. Irrational escalation: the tendency to make irrational decisions choice simply because it is the middle-ground option. Consumers Avoid based upon rational decisions in the past, or to justify actions already Extremes In Soda Sizes taken. The dollar auction is a thought exercise demonstrating the concept. 2. Bandwagoning or herd instinct: the tendency to do (or believe) 13. Loss aversion: the tendency to fear losses more than to value gains things simply because other people do. of equal size. 3. Choice-supportive bias: the tendency to remember your own 14. Endowment effect: the tendency to demand much more to give up choices as better than they actually were. an object than you would be willing to pay to acquire it. The Duke University basketball ticket experiment (a combination of loss aversion 4. Conservatism bias: the tendency to ignore the consequences and and the endowment effect = Status quo bias) implications of new evidence. 15. Neglect of probability: the tendency to disregard probabilities for 5. Contrast effect: the tendency to perceive measurements of an object absolutes when making a decision under uncertainty. differently when comparing them with a recently observed contrasting object. 16. ‘Not Invented Here’: the tendency to ignore an idea or solution because its source is seen as unfamiliar. 6. Distinction bias: the tendency to view two options as more dissimilar In all these ways (and more) when viewing them together than when viewing them separately. 17. Planning fallacy: the tendency to underestimate the time it takes to complete tasks. 7. Excessive temporal discounting/hyperbolic discounting: the tendency for people to have excessively stronger preferences for 18. Post-purchase rationalisation: the tendency to rationalise your immediate gains relative to future gains. purchases as ‘good buys’ merely based on the fact that you purchased them – and the reason why a 110% money back guarantee works. 8. Exposure effect: the tendency for people to like things simply because they are familiar with them. 19. Pseudo-certainty effect/Gambler’s fallacy: the tendency, when seeking positive outcomes, to make only risk-averse choices; but to make 9. Framing effects: the tendency to draw different conclusions based on risk-seeking choices to avoid negative outcomes. how data are presented. •Anchoring 20. Selective perception: the tendency for expectations to shape •Mental accounting (current income, current wealth, future income – perceptions. different marginal propensity to consume, eg: extra 1, spend 0.65) 21. Wishful thinking: the formation of beliefs according to what is 10. Scarcity value: When we perceive something to be scarce it has a pleasant to imagine rather than based on evidence or rationality. greater value in our eyes. Conversely, when we perceive it to be plentiful its perceived value falls. When valuing things, circumstantial factors tend 22. Zero-risk bias: the preference for reducing a small risk to zero over a to crowd out factors that point towards absolute value. greater reduction in a larger risk. 11. Social norms: the rules that a group uses for appropriate and 23. Self-serving bias (Illusory superiority/better-than-average effect) inappropriate values, beliefs, attitudes and behaviors. These rules may occurs when people attribute their successes to internal or personal be explicit or implicit. Failure to follow the rules can result in severe factors but attribute their failures to situational factors beyond their punishments, including exclusion from the group. control. | How do you create sustainable behaviour?
- 7. 1. Aversion to extremes: the tendency to avoid extremes, to prefer a 12. Irrational escalation: the tendency to make irrational decisions choice simply because it is the middle-ground option. Consumers Avoid based upon rational decisions in the past, or to justify actions already Extremes In Soda Sizes taken. The dollar auction is a thought exercise demonstrating the concept. 2. Bandwagoning or herd instinct: the tendency to do (or believe) 13. Loss aversion: the tendency to fear losses more than to value gains things simply because other people do. of equal size. 3. Choice-supportive bias: the tendency to remember your own 14. Endowment effect: the tendency to demand much more to give up choices as better than they actually were. an object than you would be willing to pay to acquire it. The Duke University basketball ticket experiment (a combination of loss aversion 4. Conservatism bias: the tendency to ignore the consequences and and the endowment effect = Status quo bias) implications of new evidence. 15. Neglect of probability: the tendency to disregard probabilities for 5. Contrast effect: the tendency to perceive measurements of an object absolutes when making a decision under uncertainty. differently when comparing them with a recently observed contrasting object. A. We are not purely rational beings to ignore an idea or solution 16. ‘Not Invented Here’: the tendency because its source is seen as unfamiliar. 6. Distinction bias: the tendency to view two options as more dissimilar when viewing them together than when viewing them separately. 17. Planning fallacy: the tendency to underestimate the time it takes to complete tasks. B. Neither are we irrational – context the tendency to rationalise your 7. Excessive temporal discounting/hyperbolic discounting: the tendency for people to have excessively stronger preferences for 18. Post-purchase rationalisation: immediate gains relative to future gains. purchases as ‘good buys’ merely based on the fact that you purchased dependency is consistent & measureable works. 8. Exposure effect: the tendency for people to like things simply them – and the reason why a 110% money back guarantee because they are familiar with them. 19. Pseudo-certainty effect/Gambler’s fallacy: the tendency, when seeking positive outcomes, to make only risk-averse choices; but to make 9. Framing effects: the tendency to draw different conclusions based on risk-seeking choices to avoid negative outcomes. how data are presented. •Anchoring 20. Selective perception: the tendency for expectations to shape •Mental accounting (current income, current wealth, future income – perceptions. different marginal propensity to consume, eg: extra 1, spend 0.65) 21. Wishful thinking: the formation of beliefs according to what is 10. Scarcity value: When we perceive something to be scarce it has a pleasant to imagine rather than based on evidence or rationality. greater value in our eyes. Conversely, when we perceive it to be plentiful its perceived value falls. When valuing things, circumstantial factors tend 22. Zero-risk bias: the preference for reducing a small risk to zero over a to crowd out factors that point towards absolute value. greater reduction in a larger risk. 11. Social norms: the rules that a group uses for appropriate and 23. Self-serving bias (Illusory superiority/better-than-average effect) inappropriate values, beliefs, attitudes and behaviors. These rules may occurs when people attribute their successes to internal or personal be explicit or implicit. Failure to follow the rules can result in severe factors but attribute their failures to situational factors beyond their punishments, including exclusion from the group. control. | How do you create sustainable behaviour?
- 8. | How do you create sustainable behaviour?
- 9. There are so many decisions to make in life, those that are made for us a often welcomed (indifferent, confused, conflicted) | How do you create sustainable behaviour?
- 10. Defaults A conference experimented with their default menu options: one year they offered meat as default, the next year vegetarian 83% 17% Vegetarian = option Meat = default When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner? | Marc Gunther | climatebiz.com | How do you create sustainable behaviour?
- 11. Defaults A conference experimented with their default menu options: one year they offered meat as default, the next year vegetarian 20% 80% Meat = option Vegetarian = default When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner? | Marc Gunther | climatebiz.com | How do you create sustainable behaviour?
- 12. | How do you create sustainable behaviour?
- 13. Decision-making is relative to what you can have, not absolutely about what you want. | How do you create sustainable behaviour?
- 14. Few people use stairs when there’s an escalator on offer. How do you create the desire to use stairs? Funtheory.com | Piano Staircase | How do you create sustainable behaviour?
- 15. Few people use stairs when there’s an escalator on offer. Piano stairs increased stair use by 66% Funtheory.com | Piano Staircase | How do you create sustainable behaviour?
- 16. | How do you create sustainable behaviour?
- 17. The pain of loss is twice as much as the pleasure of gain of equal size | How do you create sustainable behaviour?
- 18. Loss aversion Attempts by Southern California Edison to notify people of their energy use with e-mails and text messages did no good. Chicago Tribune | A gentle prod to go green | How do you create sustainable behaviour?
- 19. Loss They tried an Ambient Orb – a aversion personal energy meter that glows green when your use is modest, red at other times: Within weeks users of the orb reduced their energy consumption during peak times by 40% Chicago Tribune | A gentle prod to go green | How do you create sustainable behaviour?
- 20. | How do you create sustainable behaviour?
- 21. No one wants to be the weirdo in the group | How do you create sustainable behaviour?
- 22. Social norms In Australia, tax-payers were informed that normal practice was honesty in tax returns HEADS, YOU DIE: Bad decisions, choice architecture, and how to mitigate predictable irrationality | Jack Fuller | Per Capita research | How do you create sustainable behaviour?
- 23. Social norms In Australia, tax-payers were informed that normal practice was honesty in tax returns Deductions plunged by 47% (over $800 million Aus$ extra revenue) HEADS, YOU DIE: Bad decisions, choice architecture, and how to mitigate predictable irrationality | Jack Fuller | Per Capita research | How do you create sustainable behaviour?
- 24. | How do you create sustainable behaviour?
- 25. the tendency for people to have excessively stronger preferences for immediate gains relative to future gains. Make hay while the sun shines; Eat, drink, and be merry; A bird in the hand is worth two in the bush | How do you create sustainable behaviour?
- 26. US hybrid sales 2000 –’ 06 Temporal discounting (3,000 to 250,000) Sales tax incentive: $1k $1,000 Now $2,000 Later (Sales tax discount) (Income tax rebate) | How do you create sustainable behaviour?
- 27. US hybrid sales 2000 –’ 06 Temporal discounting (3,000 to 250,000) $1,000 Now $2,000 Later (Sales tax discount) (Income tax rebate) “Sales tax incentives, which are immediate and easy to obtain, have a much greater effect on the demand for hybrid vehicles…” Kelly Sims Gallagher and Erich Muehlegger, of Harvard’s Kennedy School, | How do you create sustainable behaviour?
- 28. | How do you create sustainable behaviour?
- 29. Disposable card Reusable coffee coffee cup Thermos | How do you create sustainable behaviour?
- 30. “Just as no building lacks an architecture, so no choice lacks a context.” Dr. Robert Cialdini, ex-Regents' Professor of Psychology and Marketing Arizona State University | How do you create sustainable behaviour?
Editor's Notes
- #3: Describe who you are by the objects that surround you
- #4: Expensive to enact and run: once you stop behaviour flops back Has to be overt Doesn’t ‘work’ consistently for everyone
- #5: “…there is no neutral way to present a choice.” Behavioural Economics: red hot or red herring? IPA 2009
- #6: “…there is no neutral way to present a choice.” Behavioural Economics: red hot or red herring? IPA 2009
- #7: Behavioural Economics is a treasure trove of insight into the building blocks of [desicions] These experiments have documented and codified variables in human choices into a series of known and established biases (consistent patterns of behaviour that deviate from expectations) and heuristics (‘rules of thumb’ used to aid decision making). These demonstrate how people often make ‘predictably irrational’ decisions that don’t fit with the ‘best’ decision that rational, self-interested behaviour would predict.
- #8: Behavioural Economics is a treasure trove of insight into the building blocks of [desicions] These experiments have documented and codified variables in human choices into a series of known and established biases (consistent patterns of behaviour that deviate from expectations) and heuristics (‘rules of thumb’ used to aid decision making). These demonstrate how people often make ‘predictably irrational’ decisions that don’t fit with the ‘best’ decision that rational, self-interested behaviour would predict.
- #9: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.
- #10: There are so many decisions to make in life, those that are made for us a often welcomed. “ Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options. That principle is particularly relevant in a world that’s increasingly awash with choices https://www.mckinseyquarterly.com/A_marketers_guide_to_behavioral_economics_2536
- #13: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.
- #14: In broad terms ‘choice architecture’ concerns itself with how people gather information, when they choose, and how absolute values are crowded out by other influences. The broad groups of effects are framing biases (e.g. the ‘availability’ heuristic, and ‘ anchoring effects’), where the grouping of choices influences final choice, and ordering effects (e.g. the ‘primacy’ effect and the ‘recency effect’), where relative order in the group creates bias. The whole area of Behavioural Economics dedicated to choice architecture is perhaps one of the richest seams for our industry, and the one which we believe we should make into a special subject for priority investigation of its potential applications. ■ We are all choice architects because there is no neutral way to present a choice. Presenting something first on a list can bias its choice (the ‘primacy’ effect), as can presenting it last (the ‘recency’ effect). This phenomenon is well known to the market research industry, who try to eliminate its affect by rotating stimulus. People tend to choose relative to what is available rather than to any absolute standard (this is known as the ‘availability’ heuristic). The way we frame choice is therefore fundamental to the decisions that we make. ■ We are all familiar with the experience of choosing the second-cheapest wine on the wine list. We are also familiar with never choosing the most expensive item on the menu. However, having one very expensive item on the menu can increase the average value of dishes ordered, even if the most expensive choice is rarely chosen.
- #17: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.
- #18: Even though people see the rational benefit of having a pension, today’s loss is more persuasive than the future gain. The ingenious ‘Save More Tomorrow Pension’ side-steps this by only starting to collect contributions when the person next gets a pay rise. This way the person’s income only ever goes up in terms of their pay-packet experience. The loss is disguised by the method of collection. The result is that more young people start and maintain pension funds at an earlier age.
- #21: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.
- #22: Social norms: Studies dating back at least three decades clearly show the power of social norms. We tend to ascribe our actions to more high-minded motives, or to practical concerns about money. But at its core, our behavior often boils down to that old mantra: Monkey see, monkey do. OCTOBER 18, 2010 The Secret to Turning Consumers Green By STEPHANIE SIMON
- #25: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.
- #26: Shiv and Fedorikhin 199 Cake & Fruit Salad choice: remember 7 digits, chose Cake, remember 2 digits go for Fruit Salad Ralph Keeney, of Duke University, recently noted that America’s top killer isn’t cancer, or heart disease, or smoking, or obesity. It’s our inability to overcome our own short-term behaviour: Ralph estimates that about half of us will make a life-style decision that will ultimately lead us to an early grave.
- #27: We know that decisions about brands – the decisions we aim to influence – are complex. They involve not only direct utility (a car that will take you from A to B) and opportunity cost (what else could the same money buy?), but also status (what does this car say about me?), concern with the needs of others (who else will use the car, and for what purposes? And what would this car say about them?), social concerns (should I drive less or get a hybrid?), fashion (who does buy yellow cars?), and many other issues and concerns. NOTES: Gas prices aren’t the only reason for more hybrid sales http://nudges.wordpress.com/gas-prices-arent-the-only-reason-for-more-hybrid-sales/ http://www.thehuntingdynasty.com/2010/01/death-and-taxes-why-your-decisions-kill-you-and-cost-you-money/ Gas prices aren’t the only reason for more hybrid sales | Nudge blog
- #28: We know that decisions about brands – the decisions we aim to influence – are complex. They involve not only direct utility (a car that will take you from A to B) and opportunity cost (what else could the same money buy?), but also status (what does this car say about me?), concern with the needs of others (who else will use the car, and for what purposes? And what would this car say about them?), social concerns (should I drive less or get a hybrid?), fashion (who does buy yellow cars?), and many other issues and concerns. NOTES: Gas prices aren’t the only reason for more hybrid sales http://nudges.wordpress.com/gas-prices-arent-the-only-reason-for-more-hybrid-sales/ http://www.thehuntingdynasty.com/2010/01/death-and-taxes-why-your-decisions-kill-you-and-cost-you-money/
- #29: Below are seven examples of broad areas of enquiry from Behavioural Economics. We have deliberately chosen those which will feel familiar. They are intended to serve as a taster of what Behavioural Economics can offer agencies, with the aim of demonstrating its relevance, and encouraging us to go to the next level of exploration together. In each case we describe a general principle, in the simplest of terms, and attempt to illustrate it with practical case examples of how it is being used, or might conceivably be used, in a brand’s communications strategy and execution, in order to better engage with consumers.