Showing posts with label Behavioural economics. Show all posts
Showing posts with label Behavioural economics. Show all posts

Tuesday, July 15, 2014

shot with your own gun (or the META-return of the texas sharpshooter fallacy)

The sciences of human behaviour show that we all are susceptible to foibles known as cognitive biases.

These are processes of thinking that can sometimes lead us to making less than optimal decisions - particularly in conditions of uncertainty - or more often just relatively benign and harmless routine confabulations.

In the following case, the firm favourite - confirmation bias.

This is our tendency of people to favour information that confirms pre-existing beliefs or hypotheses.

And it's often compounded with a touch of the old texas sharpshooter fallacy.

Refreshingly, from time to time behavioural economists themselves are just as likely as any of us to be caught in these cognitive traps.

In theory, this analysis in Smart Company of how the celebrated Sarah Wilson’s 'I Quit Sugar' books and 'community' have helped a large number of people adopt more healthy behaviours seems to add up.

A slightly edited excerpt follows that links BE staples status quo bias, intrinsic motivation, loss aversion and social proof with positive and negative tension.

Here we go.

'[Wilson uses] positive tension to create anxiety about status quo [and] create an appetite for change.

By pointing to the gap between what’s undesirable now and what is a desirable future you can stimulate sufficient motivation in your customer to be open to changing their behaviour.

Loss Aversion tells us that people are more motivated to avoid loss than seek gain, so you need to work hard to reduce the perceived downside of progressing with you...overcoming negative tension to build people’s willingness to change.

By providing step-by-step meal plans as well as cooking and shopping tips, Sarah reduces people’s fear that a life without sugar is too difficult.

Further, through a thriving blog (engaging over 260,000 every day) and social media presence (over 385,000 followers) Sarah has harnessed a community of advocates and tapped into the behavioural principle of Social Proof.

People new to the materials or program who may feel anxious about whether it will work for them can have their fears allayed by seeing how many others have succeeded. There’s no surer anxiety-buster than knowing that someone else has done it before you.


This analysis is not wrong. We just smiled at it's possible over-theoreticalness.

[And before you start, sure, the irony of that statement is not lost on us...]

Another, perhaps simpler, explanation for the success of the 'I Quit Sugar' phenomenon can be found by applying the Fogg Behaviour Model.



Central to Fogg's theory is that increasing motivation is very hard and almost never works.

Making the desired behaviour easier, even where there is low motivation is generally a much better plan.

For Wilson's wannabe-sugar-free readers there is already likely to be a high motivation to change their behaviour, however because of a perceived lack of ability, it seems hard to do.

In cases like this Fogg recommends the use of a 'faciltator' trigger.

Make the desired behaviour easy by showing people who are motivated how to do it, easily.

Wilson's books, forums, recipes are facilitators, and this is how her empire has been built.

Buy making something that used to be hard, easy.

And branding it well.

Of course, there's more than one way to skin a cat, and the planner joke applies, sometimes what works in practice doesn't always work in theory.

Having said that, we are signed up for the Marketing Science Idea Exchange later this month, at which the author of the piece is conducting a couple of workshops.

In the spirit of idea exchange, hopefully we shall not be sent to the back of the class.



Thursday, June 27, 2013

last train to nudgecentral



This one is a nice little behavioural win-win-win triple nudge whammy, rewarding both recycling and a responsible behaviour around drinking at the same time, while also promoting Antarctica beer.

Festival goers in Rio de Janeiro were able to exchange their empty beer cans - rather than leave them in the street - for a free train ticket home via a modified turnstile - The Beer Turnstile - that doubled as a recycling point.

So, for the punters the desired new behaviour is all upside, theres no risk or sense of loss, it doesn't require any thinking and everyone is doing it so it feels like a good idea.

And for Antarctica beer, they become literally the beer of the festival.

HT Springwise via Marketing Futures

Saturday, June 22, 2013

football's not a matter of life or death. It's much more important than that.



Whatever the view from outside the ad industry is on the Cannes festival - an overblown self-congratulatory extravagance is a popular take - for those of us within the industry it's a chance to get a broad look at what has been happening in other parts of the world in one big chunk, and evaluate what we do in our respective markets against the best of others.

This year's Promo Grand Prix was awarded to Ogilvy Brazil, Sao Paolo, for their organ donation campaign using football team Sport Club Recife.

As a behavioural economics geek this one obviously appealed as it capitalises on a simple human psychology insight.

Making arrangements to donate one's organs is not at the top of most people's to-do list so by attaching the desired behaviour - carrying a donor card - to something that is at the top of the list; ie supporting your football team (Brazilian football fans are among the most passionate and partizan in the world) then the new behaviour can be achieved more easily, as a nudge, and without all that effortful thinking that we like to avoid.

And, at the same time, it removes one of the biggest barriers to organ donation - getting after the fact next of kin authorisation for the deceased's organs to be used.

Or like Bill Shankly famously observed - 'Football is not a matter of life or death. It's much more important than that.

Friday, April 12, 2013

knife fighting for the ego-friendly

Dan Ariely has famously commented on why people don't care about climate change, and how harnessing the power of the ego could be one way to move our behaviours to be more environmentally responsible.

Ego-friendly as opposed to eco-friendly.

Dan argues that if we were to invent something no-one would care about it would be climate change.

Because its real impact will be at some point far in the future, it's effects will be felt mostly by other people other than us and even if I did do something it would be a drop in the ocean such is the scale of the issue.

All of these are recipes for not caring.

Plus we only start acting when we feel something emotionally about the problem, logic isn't in it.

So Dan points to observing Prius drivers as a possible answer.

Driving a Prius promotes one's self image as a good person who is doing their bit, and is a signal to others that they are someone who cares about the environment.

The joke goes that you can spot a Prius driver by their permanent smug expression.

Anyway, the clip is from ABC's The Elegant Gentleman's Guide to Knife Fightingand is a splendid bit of insight, a smart as anything from any ad planning department and an extremis riff on Ariely's hypothesis.

Tuesday, February 12, 2013

school's out

Various Australian news outlets reported this week, that parents in Victoria who let their children miss school without a 'valid' reason may face a $70 fine per absence under a 'planned crackdown next year' by the State government.

How this will be enforced is unclear, but I was reminded of the story in Freakonomics, in which the authors reported on a study examining the day-care centre who charged parents a fine for turning up late to pick up their children.

The study looked at the habits of parents over a ten week period before the introduction of the fine and then for an identical period again after the punishment was introduced.

Surprisingly the results showed that the number of late pickups actually increased after the fine was introduced. So not only did the fines not improve the behaviour, the fine actually made the behaviour worse.

The replacement of a social norm (be on time to pick up the kids) with an economic norm (the fine becomes - in effect - a baby-sitting fee) turned the situation into a market.

Therefore, by market rules a $70 surcharge on, say, a long-weekend - a simple transaction that buys a Friday off school for a kid might be viewed as reasonably good value when weighed up against avoiding weekend traffic to the country/beach or whatever, or offset that against the hikes in hotel prices and flights that coincide with official school holidays and $70 a day is still something of a bargain.

Tuesday, February 05, 2013

why economists get things wrong



This video from Irish economist, broadcaster and author David McWilliams opens with this observation - is it not ridiculous that we should be listening to the economic 'forecasts' from those very same experts who, of course, completely failed to forecast the current crisis coming in the first place?

The core issue being neglected by the 'experts' that as soon as humans are involved (ie always) then standard economic theory goes out the window, and all kinds of foibles and biases come into play.

McWilliams' own flavour of behavioural economics influenced analysis is labelled Punk Economics and this clip is part of a series of films under the same banner. All of which are ably illustrated by Mark Flood and can be viewed via their YouTube channel.

David says 'Economics and economic analysis has become similarly overblown and self-indulgent. Worse still, many (not all) economists have failed to make it simple, easy and comprehensible for the vast majority of people, something economics must be, if it’s to be of any use to us.'

Thursday, November 08, 2012

i'm a mess


For some reason neuromarketing seems to be flavor du jour in some quarters at the moment, I appear to be hearing about it all the time.

Or perhaps it’s another example of the ‘frequency illusion’, or 'the Baader-Meinhof phenomenon' that we've mentioned here before.

I was asked to describe our point of view and approach to this subject via one of our clients and responded that, yes, this one area of enquiry that we can turn to in informing how we look at describing buyer behavior but certainly not any one-method-fits-all.

In truth, our process means we probably ‘magpie’ some relevant parts of neuroscience research, mix it up with other bits of behavioural economics and human psychology.

It’s not important or even necessary to have a complete understanding of the above sciences however it’s important have a broad understanding to pick out the pieces that are most useful.

In fact one of the most important parts to address before developing strategies is knowing 'how' a product or service is bought and what the influences are.

We often hear about communications that affect a behavior change, or otherwise.

But what is often not properly explained is what-the-existing-behavior-is-that requires-changing.

Selecting product X versus product Y is not a behavior change it’s just an instance or two of substitution of product.

I like this four quadrant model for identifying buying behavior which I’ve paraphrased from ‘I’ll Have What She’s Having’.

Independent choices

1. Guesswork – where the choice is mostly independent, in categories with with low differentiation and a high number of choices - then things like sales promotions, 'twofers', and suchlike are key . Things like insurance often purchased in this manner.

2. Considered choice – again the choice is broadly independent, but there are fewer choices – in the book Mark cites things like deodorant falling into this bucket.

Social choices

1. Copying experts – where there are fewer number of choices but a higher price point then expert opinions matter – high end tech products are one example, some automotive is probably another.

2. Copying peers –where there are a high number of choices then social influence is a major factor. Fashion, music, movies etc. This is a pretty large quadrant and in fact most buying behaviour is influenced by peer copying.

Once this is established then the fun starts...

The key thing is to understand that the combination of social influence and then a layer of human biases is a heady mixture and testament to the idea that we really don't act in the rational cost-benefit-analysis way that economists and marketers imagine we do. In fact we are manipulated by our own biases all the time.

Here's my top five favourite biases.

ANCHORING BIAS
A common human trait to rely too heavily, or ‘anchor’ on one trait or piece of information when making decisions.
Here’s a real cancelled flights example that I fell for recently.

Airline: 'Sorry Mr Pritchard the 5.45 has been cancelled, but I can put you on the 9.45'
Me: 'WTF!'
Airline: 'Hang on, there's one seat on the 7.45 I can get you'
Me: 'cool!'

FRAMING EFFECT
The restaurant wine list – we instinctively go towards the mid price wines because the restaurant are craftily framing them with super-expensive and cheapskate options.
Or buying a car – 'do I get the basic no frills model or the high end super deluxe souped-up version? Actually let’s go for the one in the middle that looks like better value'

We've recently applied this to how we frame donation levels for a charity's online campaign. I expect to see an uplift in overall donations vs where they have been.

AVAILABILITY HEURISTIC
A mental rule of thumb in which we use the ease which similar examples come to mind to form an idea about the probability of certain events.
For example, more people are killed every year by refrigerators falling on top of them than by terrorists, but because of the 'availability' of information about terrorism we see that as more of a threat.

CONFIRMATION BIAS
Someone who has to write a blog post about neuromarketing, for example, will primarily search for information that would confirm his or her pre-existing beliefs ;)

COMMITMENT BIAS
The situation where people justify increased investment in a process, based on the cumulative prior investment, despite new evidence suggesting that the cost, starting today, of continuing the decision now outweighs any expected benefit.
See also 'sunk cost fallacy'. Think about CommBank who continued to pump money into the 'CAN' campaign despite early evidence that it was sure to flop. heh.

And the best of all…

HINDSIGHT BIAS
Also known as the 'knew-it-all-along effect' is the inclination to see events that have already occurred as being more predictable than they were before they took place.

'I wish I'd put that $100 on Green Moon, I knew it was going to win…'

That’s not an exhaustive list by any stretch. There’s literally hundreds of foibles we all succumb to on a moment by moment basis.
I’m working up a post on the Texas Sharpshooter Bias as we speak, so stand by for that…

Also the other fundamental to remember is that behaviour shapes attitudes not the other way round. We will almost always modify our attitudes to be consistent with our behaviours.

We post-rationalise our decisions afterwards.

Any given product does not have to be clearly better in terms of rational features or benefits. Its social value, for instance may be more useful.

After all, there’s plenty of 'better' phones out there other than Apple’s but, for now, it's arguably still the popular choice because it says something about the taste of it's owner.

So the if objective is to change the buyer behaviour first, this may involve moving the behaviour around a product or service from one ‘type’ of behaviour to another.

For instance, outside of two or three big ones, the majority of breakfast serial purchase behaviour could be lumped into in the guesswork category. Driven by promotions and such-like, so any behavior change strategy would first involve moving buyer behaviour from a guesswork, commodity, space into a peer-copying space .

There is a precedent, I've seen some research to suggest that around 60-70% of groceries are bought because they are the brands that 'mum' bought, so there’s a territory to start with.

Unfortunately there is no 'buy-button' in the brain despite what some neuromarketers say. If only it were as straightforward.

There’s a great TED talk I saw recently, and I forgot to bookmark it so if any readers recognize this bit then please point me to the talk.

The speaker recounts the ways in which through his research he identified the ways in which people describe the 'story' of their lives.

A Journey?
A Film?
A Novel?
A Battle?

These were all popular descriptions.

No-one described their life story as a mess.

But, for most of us that’s what it is.

For those looking for a silver bullet in marketing then the bad news is that there isn't one.

Human behavior is a big wonderful a mess that you just have to pick through and try and find the bits that are going to work for you.

Tuesday, September 11, 2012

momentum and strategy

I've always thought that the single most valuable skill of a strategist or planner, if you prefer, is the ability to be constantly on the alert, noticing things and then interpreting them.

This is called having insight.

It doesn't have to be an earth shattering revelation, just 'apprehending the true nature of things'.

Our thanks then go to our Tahlia, in the Sputnik Insight and Planning Lab, who noticed this yesterday and pointed the rest of us to it.

An excellent short sequence of heavily loaded tweets - posted below - from the Obama 2012 campaign that clearly demonstrates that - despite Cass R. Sunstein's recent departure from the Obama camp - applied behavioural economics are still very much part of the Obama strategy.

Before Charlie gets at me, a quick note that this post is merely an observation on a piece of the Obama communications strategy, I'm not close enough to the policies debate or other political issues in the US to be voicing any informed opinion.

(My own representativeness heuristic does, however, lead me towards feeling that Baz is the the choice most capable for the next term, so there you go.)



A quick look at a couple of the key tweets.

'317,954 who gave were giving for the first time'
In psychology this is called the Bandwagon effect or Herding – this influences our tendency to do (or believe) things because many other people do (or believe) the same.

Also known as social proof.

This is all about momentum-as-strategy.
Despite Obama being the current Prez and therefore extremely popular with a section of the electorate there are still more (a lot more) NEW people joining the cause.

This acts as a sort-of counter availability heuristic to the neck-and-neck nature of the race as described by the opinion polls (always the scourge of momentum and often the hardest battle).

If I'm unsure about which side to back then this statement is indicating clearly that there's a groundswell for Baz's camp, something is going on.

'$5 or $10 helped, most donations were under $250 but the average was $58'
This is a clever tweet that combines a framing effect plus anchoring and a bit of herding.

Once the anchor is set, there is a bias toward adjusting or interpreting other information to reflect the "anchored" information.

This tweet anchors us on the high figure of 250 (probably too much to contemplate as a donation) however $58 seems reasonable

And that's the average i.e. That's what most people are giving. Those who gave $5-$10 are thanked but clearly are being encouraged to rethink their donation based on the social norm - $58.

The final tweet of the sequence - endings are very important in the efficacy of communications of course - adds the sense of urgency with a clear direct instruction to act. 'RT this link, right now".

The link goes to the donation page, and, wahey!, the page title is 'Build the Momentum: Donate today'.

In his paper 'Understanding how behaviour shapes strategy' Mark Earls concluded with the following paragraph, one which I seem to have commited to memory and find myself oft to recount when talking with clients about strategy.

'...wouldn’t it be useful to think about strategy in terms of momentum?
Strategy as being primarily how to create a sense of momentum in our favour?
About creating the sense that we, staff, customers, citizens or investors are moving more andmore towards something? Or that more of us are doing so?
Or that our velocity in any given direction is getting faster?
And if this is right, shouldn’t we start to judge all strategy by the sense that it is creating or sustaining momentum?'


Anyway, let's notice how the rest of the campaign unfolds.

Friday, August 31, 2012

the loch ness monster bias

We're familiar with the idea that none of us 'thinks as much as we think we think'.

It would also appear that we don't even see as much as we think we see.

Our thanks to Faris, who posted this Transport for London info spot from 2008 that demonstrates the idea of 'change blindness'.

'Change blindness' one of those little cognitive traps that shows the inherent flaws in how we process visual information.



'Whodunnit' is clearly a close relative of this 1998 study by Daniel Simons and Daniel Levin called 'The Door Study' in which a participant fails to notice when the person he is talking to is replaced by someone else, clearly demonstrating the phenomenon.



There's a full academic paper available; 'Change Blindness Blindness: The Metacognitive Error of Overestimating Change-detection Ability' if you are inclined to read more.

I'm reminded of what we doctors call 'The Loch Ness Monster bias'. Roughly translated this means that rather than rather than using the maxim 'I'll believe it when I see it' we would be better advised to note that we will, 'see it when we believe it'.

Wednesday, July 25, 2012

blackadder and behavioural economics

I recall an anecdote from a conversation several years ago with representatives of the late, and much lamented, COI - the UK government's policy objectives and public services marketing body which sadly closed it's doors for the final time in the early part of 2012.

The agency I worked for at the time were assisting the UK Department of Health on a number of initiatives including some of the anti smoking activity.

The COI were early champions of much of the thinking that we now broadly associate with behavioural economics and were therefore right on the ball with recognising that the dominant paradigm in communications theory that placed disproportionate importance on the notion that independent thinking and rational decision making were the principle influence on the choices we make was not 100% correct.

While those factors are often significant in short-term decision making - I choose brand x baked beans because they are on special offer - they do not explain longer term behaviours, much of which are far more affected by how we see others behave, habits we've formed and our general inability to compute things like financial costs and benefits.

Anyway, research material that COI provided us to inform the work we were doing with DoH indicated that the frightening messaging on cigarette packets intended to make people think about stopping smoking (smoke these and you will die etc) was in fact having a somewhat opposite effect.

The COI psychologists were becoming concerned that the results indicated that these warnings were actually more of an encouragement to smoke because the emotional response was more akin to an 'excitement' that one would attribute to activities such as bungee jumping or other extreme sports.

Essentially extrinsic factors overpowering intrinsic motivations.

I did a short talk last night to the members of the Institute of Analytics professionals and used the following example from Blackadder to add a bit of flavour to my argument that the data industry can best complement the creative industry by concentrating effort on finding the right information and helping us all continue to qualify and quantify at least some of the following matters, because it's all there in the data and patterns.

- How other people's behaviour affects our own
- How and why habits are formed
- Fundamental motives (survival, reproduction)
- Why we are bad at simple sums

Captain Blackadder:
You see, Baldrick, in order to prevent war two great super-armies developed. Us, the Russians and the French on one side, Germany and Austro-Hungary on the other. The idea being that each army would act as the other's deterrent. That way, there could never be a war.

Private Baldrick:
Except, this is sort of a war, isn't it?

Captain Blackadder:
That's right. There was one tiny flaw in the plan.

Private Baldrick:
Oh,what was that?

Captain Blackadder:
It was bollocks.

I used Professor Kahneman's 'bat and ball' experiment on the crowd.

Remember this was 150 or so analytics professionals, data geeks and mathematics heads.

A bat and ball costs one dollar and ten cents to buy.
The bat costs a dollar more than the ball.
How much does the ball cost?

Just about everyone nodded when I asked if ten cents came to mind.

So the idea that independent thinking and rational decision making are the principle influence on the choices we make has one tiny teeny flaw.

It is complete bollocks.

Wednesday, October 26, 2011

i'll have what she's having



For those of us in the advertising business the prevailing convention is to think about about human behaviour in terms of the individual.

And the objective of advertising being to try and change that individuals behaviour.

So with that in mind this week's recommended reading is 'I'll Have What She's Having' by Mark Earls, Alex Bentley, Michael J. O'Brien.

'I'll Have..' sets out to counter that convention by demonstrating that 'consumer' behaviour is far more social; ergo influence is social (ie peer influence etc).

The book's title is a reference to the famous scene in When Harry Met Sally.

Meg Ryan triumphantly bursts Billy Crystal's bubble - he thinks he can tell real from fake, you know the bit in the restaurant - then a startled woman at another table say's to the waiter the immortal line.
'I'll have what she's having'.

So, in summary, 'I'll have..' would argue that to improve effectiveness of marketing - which is essentially now the spreading of ideas - to focus on trying to influence the behaviour of individuals is ultimately going to be much less rewarding than looking beyond that - to our inherent social nature - and how behaviour is learned by watching, and copying, each other.

And a pretty compelling argument it is too - though not necessarily a popular idea in adland ;) - obviously if you have followed the thread from 'Herd' and 'Welcome to the Creative Age', this is essentially part 3 of the trilogy.

The behavioural science version of Bowie's Berlin trilogy of Low, Heroes and Lodger, if you like.

Wednesday, February 10, 2010

you've been framed


The story of when TV host Johnny Carson interviewed the Girl Scout who sold the most cookies door to door one year, is recalled by Neuromaketing blog

During the interview Johnny asked: “What’s the secret to your success?”

The girl replied, “I just went to everyone’s house and said, ‘Can I have a $30,000 donation for the Girl Scouts?”

When they said ‘No,’ I said, ‘Would you at least buy a box of Girl Scout cookies?’


Reminds me of the down-and-out fella who stopped me in the street round near Liverpool St (at banker bonus time) and said

‘Can you spare £200 for a hooker and some cocaine, guv.’

I gave him £1 for a cup of coffee.

This is what neuromarketing calls a 'framing' strategy.
By floating the £200 number, a pound seems like nothing in relation.

Smart cookie.