Behavioural economics (and beyond: a presentation to Which? magazine

James Caig

Deputy Head of Strategy, MEC

@jamescaig

seewhathappensblog.com

Classical

economics

Behavioural

economics

People are rational

beings always striving

for the best possible

outcome for the least

possible effort

Decision-making is

irrational, emotional, and

influenced by a range of

conscious and

unconscious factors

use misleading rules of thumb

care disproportionately about what others do

respond to the way choices are presented

ALL

OF

US

Framing

People make decisions based on relative not absolute information

online ONLY

online AND magazine

magazine ONLY

$59

$125

68%

32%

16%

84%

0% $125

Loss

aversion

People work

harder to avoid

losing things than

they do to gain

them

Scarcity value

People perceive

things to have

more value the

more scarce and

harder to obtain

they are

Chunking

People are more

likely to complete

tasks when

they’re broken

down into little

steps

David Ogilvy

People don’t think how they feel,

they don’t say what they think,

and they don’t do what they say

Marketing can help consumers

make the ‘right’ comparison, and

build a choice architecture which

makes the right choice easy

Nick Chater, IPA, Professor of Behavioural

Science, Warwick Business School

There is no pleasure gauge.

All we have is comparison

between similar things.

How

brands

have

responded

Decision-

making and

the public

agenda

1

2

3 Where

next?

How

brands

have

responded

1

Challenging value

conventions

Re-framing in Retail

Dine in for two for £10

£10 off your next pizza

Waitrose Essentials

New purchase

levers

Context over content

Brand stories and

simple actions

Decision-

making and

the public

agenda

2

This new approach represents an important part of the

Coalition Government’s commitment to reducing

regulatory burdens on business and society, and achieving

Applying behavioural insight to health,

Cabinet Office Behavioural Insights Team, 2011

We can give citizens more or better information.

We can prompt people to make choices that are in

line with their underlying motivation. And we can

help to encourage social norms around healthier

behaviours.

its policy goals as cheaply and effectively as

possible. It is also part of the Government’s

answer to how we can spend public money

more effectively.

THE POWER OF THE CROWD

Consumers

working together

for a better deal

Better access to

performance and

complaints data

Protecting consumer feedback

and improving public sector

choice tools

THE POWER OF INFORMATION

Making informed

choices easier

Richer information

for important

choices

3 Where

next?

As tools, technologies

increase people’s ability

to perform a target

behaviour by making it

easier, or restructuring it

BJ Fogg, Persuasive

Technologies, 2002

The psychology of UX

http://uxmag.com/articles/the-psychologists-view-of-ux-design

1) People will do the least amount of work possible to get a task done

2) People have limitations

3) People make mistakes

4) Don't make people remember things from one task to another

5) People look to others for guidance on what they should do, especially if they are uncertain

6) People are easily distracted

7) People need feedback

8) Committing to a small action makes people much more likely to later commit to a larger action

Making behaviour visible makes

participation more likely