Wscc behaviour change capacity building workshop

14 th December 2010 Oliver Payne, Founder, CEO, The Hunting Dynasty [email_address] , … “ Just as no building lacks an architecture , so no choice lacks a context.” …”

ABC1C2DE, Monedoa man, White Van Man

There’s one trait that we all share (irrespective of age, sex, and location)

“… despite being generally capable and smart, we are .” Jack Fuller, Australian research group Per Capita Research

“… despite being generally capable and smart, we are highly context dependent.” Jack Fuller, Australian research group Per Capita Research

Meaning? We are not purely rational beings Neither are we irrational – context dependency performs consistently (which also makes it measureable)

✔✓✓ Meaning? We are not purely rational beings Neither are we irrational – context dependency performs consistently (which also makes it measureable) Ubiquitous Predictable ✓ ✓

✔✓✓ Meaning? We are not purely rational beings Neither are we irrational – context dependency performs consistently (which also makes it measureable) Ubiquitous Predictable Persistent ✓ ✓ ✓

✔✓✓ Meaning? We are not purely rational beings Neither are we irrational – context dependency performs consistently (which also makes it measureable) Ubiquitous Predictable Persistent Near costless to enact ✓ ✓ ✓ ✓

12. Irrational escalation: the tendency to make irrational decisions based upon rational decisions in the past, or to justify actions already taken. The dollar auction is a thought exercise demonstrating the concept. 13. Loss aversion: the tendency to fear losses more than to value gains of equal size. 14. Endowment effect: the tendency to demand much more to give up an object than you would be willing to pay to acquire it. The Duke University basketball ticket experiment (a combination of loss aversion and the endowment effect = Status quo bias ) 15. Neglect of probability: the tendency to disregard probabilities for absolutes when making a decision under uncertainty. 16. ‘Not Invented Here’: the tendency to ignore an idea or solution because its source is seen as unfamiliar. 17. Planning fallacy: the tendency to underestimate the time it takes to complete tasks. 18. Post-purchase rationalisation: the tendency to rationalise your purchases as ‘good buys’ merely based on the fact that you purchased them – and the reason why a 110% money back guarantee works. 19. Pseudo-certainty effect/Gambler’s fallacy: the tendency, when seeking positive outcomes, to make only risk-averse choices; but to make risk-seeking choices to avoid negative outcomes. 20. Selective perception: the tendency for expectations to shape perceptions. 21. Wishful thinking: the formation of beliefs according to what is pleasant to imagine rather than based on evidence or rationality. 22. Zero-risk bias: the preference for reducing a small risk to zero over a greater reduction in a larger risk. 23. Self-serving bias ( Illusory superiority/better-than-average effect ) occurs when people attribute their successes to internal or personal factors but attribute their failures to situational factors beyond their control. 1. Aversion to extremes: the tendency to avoid extremes, to prefer a choice simply because it is the middle-ground option. Consumers Avoid Extremes In Soda Sizes 2. Bandwagoning or herd instinct: the tendency to do (or believe) things simply because other people do. 3. Choice-supportive bias: the tendency to remember your own choices as better than they actually were. 4. Conservatism bias : the tendency to ignore the consequences and implications of new evidence. 5. Contrast effect: the tendency to perceive measurements of an object differently when comparing them with a recently observed contrasting object. 6. Distinction bias: the tendency to view two options as more dissimilar when viewing them together than when viewing them separately. 7. Excessive temporal discounting/ hyperbolic discounting : the tendency for people to have excessively stronger preferences for immediate gains relative to future gains. 8. Exposure effect: the tendency for people to like things simply because they are familiar with them. 9. Framing effects: the tendency to draw different conclusions based on how data are presented. Anchoring Mental accounting (current income, current wealth, future income – different marginal propensity to consume, eg: extra 1, spend 0.65) 10. Scarcity value: When we perceive something to be scarce it has a greater value in our eyes. Conversely, when we perceive it to be plentiful its perceived value falls. When valuing things, circumstantial factors tend to crowd out factors that point towards absolute value. 11. Social norms: the rules that a group uses for appropriate and inappropriate values, beliefs, attitudes and behaviors. These rules may be explicit or implicit. Failure to follow the rules can result in severe punishments, including exclusion from the group.

“ I’m playing all the right notes, but not necessarily in the right order.” http://www.youtube.com/watch?v=mTAcbsKZlcE#t=6m8s

1. Loss aversion 2. Temporal discounting 3. Scarcity value 4. Authority effect 5. Goal dilution 6. Price perception 7. Framing 8. Commitment & Consistency 9. Heuristics: anchoring, decoy 10. Exposure effect 11. Status quo bias 12. Social norms 13. Default 14. Reciprocation

1. Loss aversion The pain of loss is twice as bad as the pleasure of gain of equal size

1. Duke University basketball final tickets are always oversubscribed so are offered in a lottery: Those without ticket would pay approx. $170 each Loss aversion

1. Duke University basketball final tickets are always oversubscribed so are offered in a lottery: Those without ticket would pay approx. $170 each Those with ticket would sell for approx. $2,400 each Loss aversion

1. Duke University basketball final tickets are always oversubscribed so are offered in a lottery: Those without ticket would pay approx. $170 each Those with ticket would sell for approx. $2,400 each The pain of loss for the same tickets was roughly 14 times higher. (standard multiple is approx. 2x) Loss aversion

“… by the time we took office around £100 million had been committed [to the Millenium Dome], so cancellation costs would have been significant.” Tony Blair Loss aversion The Dome 1.

2. Temporal discounting the tendency for people to have excessively stronger preferences for immediate gains relative to future gains.

2. Temporal discounting 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

Between 2000 –’ 06, US hybrid sales increased from 3,000 to 250,000 Which incentive is the most popular? 2. Gas prices aren’t the only reason for more hybrid sales | Nudge blog Income tax credit: $2k Sales tax incentive: $1k Temporal discounting

Between 2000 –’ 06, US hybrid sales increased from 3,000 to 250,000 Which incentive is the most popular? 2. Gas prices aren’t the only reason for more hybrid sales | Nudge blog Income tax credit: $2k Sales tax incentive: $1k Immediate Delayed Temporal discounting

Between 2000 –’ 06, US hybrid sales increased from 3,000 to 250,000 7x more popular 2. Gas prices aren’t the only reason for more hybrid sales | Nudge blog Sales tax incentive Income tax credit: $2k Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive: $1k Immediate Delayed Temporal discounting

Between 2000 –’ 06, US hybrid sales increased from 3,000 to 250,000 “ Sales tax incentives, which are immediate and easy to obtain, have a much greater effect on the demand for hybrid vehicles than income tax incentives…” Kelly Sims Gallagher and Erich Muehlegger, of Harvard’s Kennedy School, 2. Gas prices aren’t the only reason for more hybrid sales | Nudge blog Sales tax incentive Income tax credit: $2k Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive Sales tax incentive: $1k Immediate Delayed Temporal discounting

3. Scarcity value When making valuations circumstantial factors tend to crowd out absolute value: Scarce items appear more valuable than those that are plentiful.

3. During the 1700’s potatoes were considered animal food Scarcity value

3. Louis XVI convinced of its benefits wanted the French peasants to grow and eat them – but no amount of pleading worked Scarcity value

3. He declared them fit for a king and had them grown on royal grounds under guard (with instructions to be poor guards) Scarcity value

3. As a result, the people pilfered the king’s potato fields, and the plant quickly ended up in gardens all over France Scarcity value

4. Authority effect The tendency to ascribe value according to the opinion of someone/something seen as an authority.

Insulating expectation 4. Sutton council worked with B&Q to made 6,000 rolls of loft insulation available at massively reduced prices “ [A] very simple step to make their homes more carbon efficient and to save on their bills” Daniel Ratchford -Strategic Director, Environment & Leisure, Sutton Council Authority effect

5. Goal dilution When multiple goals are pursued they are less effectively achieved than goals pursued individually. @OctoberJones “Colleague gave me a letter to mail. I was so preoccupied texting I almost slotted it into the bin next to the postbox.” Twitter for iPhone . 24/09/2010

With recycling bins, people generally discard waste while in the process of doing something else, like talking on a phone How do you stop this goal dilution? 5. ? Recycling bins work better when they have holes in them | nudgeblog Goal dilution

With recycling bins, people generally discard waste while in the process of doing something else, like talking on a phone Use a small hole 5. Recycling bins work better when they have holes in them | nudgeblog Goal dilution

With recycling bins, people generally discard waste while in the process of doing something else, like talking on a phone 5. Recycling bins work better when they have holes in them | nudgeblog Goal dilution 34% more appropriate material than a bin with a large hole

With recycling bins, people generally discard waste while in the process of doing something else, like talking on a phone 5. Recycling bins work better when they have holes in them | nudgeblog Goal dilution “… recycling bins… that lacked those [small] holes were basically used as trash cans.” Sean Duffy, Associate professor of psychology at Rutgers–Camden

6. Price perception We should be willing to pay what we think something is worth. In reality, the price that is demanded for something, makes us value it.

6. Price perception $0.10 $2.50 Team at MIT administered electric shock Without fake pain relief tablet With fake pain relief tablet The participants were told the cost of the pill, and assumed they were real. http://www.medicalnewstoday.com/articles/99532.php

6. Price perception $0.10 $2.50 61% experienced a reduction in pain http://www.medicalnewstoday.com/articles/99532.php

6. Price perception $0.10 $2.50 61% experienced a reduction in pain 85% experienced a reduction in pain http://www.medicalnewstoday.com/articles/99532.php

6. The infamous Joshua Bell example - a violinist who could sell out concert halls above ground played the Washington DC Subway for 45 mins during morning rush hour Price perception Joshua Bell on youtube

6. “… one of the finest classical musicians in the world…” Washington Post Price perception Joshua Bell on youtube

6. Price perception “… one of the finest classical musicians in the world…” Washington Post

6. Price perception “… one of the finest classical musicians in the world…” Washington Post For a total of…

6. Price perception “… one of the finest classical musicians in the world…” Washington Post For a total of ( )

7. Framing Choosing is relative to what you can have, not absolutely about what you want.

Rolls Royce were having problems selling cars in their regular showrooms. 7. Framing

Rolls Royce were having problems selling cars in their regular showrooms. So they sold them at Yacht fairs, where the items on sale go for a few million rather than a few hundred thousand. 7. Framing

Rolls Royce were having problems selling cars in their regular showrooms. So they sold them at Yacht fairs, where the items on sale go for a few million rather than a few hundred thousand. (I've just saved £8m not buying that yacht… what's £350k for a lovely car?!) 7. Framing

Few people use stairs when there’s an escalator on offer. How do you create the desire to use the stairs? 7. Funtheory.com | Piano Staircase ? Framing

Few people use stairs when there’s an escalator on offer. Piano stairs increased stair use by 66% 7. Funtheory.com | Piano Staircase Framing

8. Commitment & Consistency The tendency to persue a course of action if we have publicly committed it (even when we feel an action is not right).

STICKK.com enables users to form commitment contracts to help them achieve their personal goals. These goals may be to lose weight, run a marathon, etc 8. STICKK.com Commitment & Consistency

The Commitment Contract concept is based on two well known principles of behavioural economics: People don't always do what they claim they want to do, and Incentives get people to do things 8. STICKK.com Commitment & Consistency

Selling My Addiction Selling my “ right to regain weight .” 8. x Commitment & Consistency The winner of the auction wins the rights to receive any forfeitures on my stickK weight maintenance contracts over the course of the next year.

9. Anchoring & Decoys The common human tendency to rely too heavily, or ‘anchor’, on one trait or piece of information when making decisions.

9. A Dirty Word or a Dirty World? Attribute Framing, Political Affiliation, and Query Theory | David Hardisty, Eric Johnson and Elke Weber at Columbia University Ask cross-section to list: b. Disadvantages of carbon taxes a. Advantages of carbon taxes 100% of Democrats 100% of Republicans Ask cross-section to list: Advantages of carbon taxes Disadvantages of carbon taxes 100% of Democrats 46% of Republicans ✓ ✓ ✓ ✓ Anchoring & Decoys

The decoy effect in action: 9. Rome (all expenses paid) Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger Anchoring & Decoys

The decoy effect in action: Rome (all expenses paid) Paris (all expenses paid) Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger ? 9. Anchoring & Decoys

The decoy effect in action: Rome (all expenses paid) Paris (all expenses paid) Rome (all expenses paid except morning espresso) Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger ? 9. Anchoring & Decoys

The decoy effect in action: Rome (all expenses paid) Paris (all expenses paid) Rome (all expenses paid except morning espresso) Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger “… when people cannot decide between two front-runners, they use the third candidate as a sort of measuring stick…” Washinton Post, Shankar Vedantam 9. Anchoring & Decoys

The decoy effect in action: Hybrid car (Used) Small-engine petrol car (Used) Hybrid car (New) “… when people cannot decide between two front-runners, they use the third candidate as a sort of measuring stick…” Washinton Post, Shankar Vedantam Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger 9. Anchoring & Decoys

The decoy effect in action: Hybrid car (Used) Small-engine petrol car (Used) Small-engine petrol car (New) Voting Yea for the Decoys | Consumerology | December 11th, 2009 by Julie Adelsberger “… when people cannot decide between two front-runners, they use the third candidate as a sort of measuring stick…” Washinton Post, Shankar Vedantam Anchoring & Decoys 9.

10. (Mere) Exposure effect We tend to develop a preference for things merely because we are familiar with them. In studies of interpersonal attraction, the more often a person is seen by someone, the more pleasing and likeable that person appears to be.

Whilst queuing for food at Yale 40% of students took a serving of fruit 10. Yale University researcher Marlene Schwartz in a 2007 study (Mere) Exposure effect

Whilst queuing for food at Yale 40% of students took a serving of fruit When asked if they would ‘ like fruit or fruit juice’… 70% of students took a serving of fruit 10. Yale University researcher Marlene Schwartz in a 2007 study (Mere) Exposure effect

11. Status quo bias The tendency to like things to stay relatively the same: keeping - and liking - what we have. (Combination of loss aversion and the endowment effect)

11. Guests Bring Their Quirks to the Dinner Table Food critic Frank Bruni took guests along and assigned them a dish to order. They would eat a quarter of their meals and pass their plates, trying each dish in turn. Status quo bias

“… [they] were… ‘temporary custodians’ of their original meal. But he found that his guests were partial to their original dish, even though they had no role in choosing it.” The New York Times, Frank Bruni 11. Guests Bring Their Quirks to the Dinner Table Status quo bias (keeping - and liking - what we have)

12. Social norms No one wants to be the weirdo in the group.

Tax doesn’t have to be taxing (no, really) In Australia, tax-payers were informed that that normal practice was honesty in tax returns 12. HEADS, YOU DIE: Bad decisions, Framing, and how to mitigate predictable irrationality | Jack Fuller | Per Capita research Social norms

Tax doesn’t have to be taxing (no, really) In Australia, tax-payers were informed that that normal practice was honesty in tax returns Deductions plunged by 47% (over $800 million Aus$ extra revenue) 12. HEADS, YOU DIE: Bad decisions, Framing, and how to mitigate predictable irrationality | Jack Fuller | Per Capita research Social norms

People steal bits of wood from Arizona’s Petrified Forest National Park. 12. Many past visitors have removed petrified wood from the Park, changing the natural state of the Petrified Forest Please don’t remove the petrified wood from the Park , in order to preserve the natural state of the Petrified Forest [nothing] The signs above were tested to stop the theft: Some were more successful than others… Yes! 50 secrets from the science of persuasion | Goldstein, Martin, Cialdini | 2007 | pp20 Social norms

People steal bits of wood from Arizona’s Petrified Forest National Park. Many past visitors have removed petrified wood from the Park, changing the natural state of the Petrified Forest Please don’t remove the petrified wood from the Park , in order to preserve the natural state of the Petrified Forest 8% theft [nothing] Yes! 50 secrets from the science of persuasion | Goldstein, Martin, Cialdini | 2007 | pp20 Social norms 12.

People steal bits of wood from Arizona’s Petrified Forest National Park. Many past visitors have removed petrified wood from the Park, changing the natural state of the Petrified Forest Please don’t remove the petrified wood from the Park , in order to preserve the natural state of the Petrified Forest 8% theft [nothing] 3% theft Yes! 50 secrets from the science of persuasion | Goldstein, Martin, Cialdini | 2007 | pp20 Social norms 12.

People steal bits of wood from Arizona’s Petrified Forest National Park. Many past visitors have removed petrified wood from the Park, changing the natural state of the Petrified Forest Please don’t remove the petrified wood from the Park , in order to preserve the natural state of the Petrified Forest 8% theft 1.7% theft [nothing] 3% theft Yes! 50 secrets from the science of persuasion | Goldstein, Martin, Cialdini | 2007 | pp20 Social norms 12.

People steal bits of wood from Arizona’s Petrified Forest National Park. Many past visitors have removed petrified wood from the Park, changing the natural state of the Petrified Forest Please don’t remove the petrified wood from the Park , in order to preserve the natural state of the Petrified Forest 8% theft 1.7% theft [nothing] 3% theft “… a message that focuses recipients on the injunctive norm will be superior to messages that focus recipients on the descriptive norm .” (Cialdini et al., 2003) Yes! 50 secrets from the science of persuasion | Goldstein, Martin, Cialdini | 2007 | pp20 Social norms 12.

13. Defaults There are so many decisions to make in life, those that are made for us a often welcomed. (An apathetic version of status quo bias. )

A conference experimented with their default menu options : one year they offered meat as default, the next year vegetarian 13. When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner? | Marc Gunther | climatebiz.com Vegetarian Meat Defaults

A conference experimented with their default menu options : one year they offered meat as default, the next year vegetarian When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner? | Marc Gunther | climatebiz.com 83 % 17 % Vegetarian = option Meat = default 13. Defaults

A conference experimented with their default menu options : one year they offered meat as default, the next year vegetarian When Behavioral Economics Meets Climate Change, Guess What's Coming for Dinner? | Marc Gunther | climatebiz.com 20 % 80 % Vegetarian = default Meat = option 13. Defaults

14. Reciprocation Responding to a positive action with another positive action, and responding to a negative action with another negative one. Not altruistic action or social gift = no expectation of future positive response

Ocado - a U.K. grocery delivery service - operates a ‘green’ van that allows shoppers to take delivery at times when a van will already be in their area. 14. Nudge blog | An grocery delivery service that lets you see when its vans have plans to be in your neighborhood August 18, 2008 Reciprocation

1. Loss aversion 2. Temporal discounting 3. Scarcity value 4. Authority effect 5. Goal dilution 6. Price perception 7. Framing 8. Commitment & Consistency 9. Heuristics: anchoring, decoy 10. Exposure effect 11. Status quo bias 12. Social norms 13. Default 14. Reciprocation Done

Example: Reducing energy use in the home

Reducing energy use in the home 1. Ask people to indicate the extent to which they think energy efficiency is a good thing (Temporal discounting: people tend to discount effort required in the future) 2. Make their thoughts public (Commitment & consistency) 3. Focus on what stands to be lost instead of what stands to be gained (Loss aversion: pain of loss twice as strong as pleasure of gain) 4. Tell them what their neighbors are doing (Social norms) 5. Tell them what experts are saying (Authority effect) Never mind what people believe—how can we change what they do? A chat with Robert Cialdini

If you remember one thing… Never mind what people believe—how can we change what they do? A chat with Robert Cialdini

“… marginalise undesirable behaviour.” Dr. Robert Cialdini, ex-Regents' Professor of Psychology and Marketing Arizona State University Never mind what people believe—how can we change what they do? A chat with Robert Cialdini If you remember one thing…

Influential Cameron, highlights OPOWER at TED2010 President Obama speaks at OPOWER, Arlington “ I want companies like OPOWER… all across America. It’s good for consumers. It’s good for our economy. It’s good for our environment.” “… Behavioural Economics can transform people's behaviour in a way that all the bullying and badgering from a Government cannot possibly achieve.”

“ Just as no building lacks an architecture , so no choice lacks a context.” …”

“ 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

“ 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 Thank you

Wscc behaviour change capacity building workshop

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