We develop creative solutions to challenging business problems using scientific insights about how people actually think and behave, rather than what they say.
Fear of the unknown
People have a preference for risks that are associated with known probabilities than uncertainties where probabilities are unknown
Example
People prefer partaking in activities where the probabilities are known - such as gambling - over activities where the decisions rely on uncertainties, such as choosing an appropriate life insurance policy
Easily hooked
People become attached to the first piece of information they are presented with, and they use it to judge all subsequent information
Example
When asked to bid on items in an auction, participants were first asked to write down the last 2 digits of their social security number. Being anchored by this number influenced their value judgement when asked to bid on a bottle of wine - those with higher social security numbers said they would pay up to 346% more than those with lower numbers.
Follow the leader
We tend to trust people in authoritative positions such as doctors or celebrities, therefore we place more importance on their opinions and contributions
Example
A famous experiment showed that 65% of people administered painful electric shocks to participants when instructed to do so by a doctor, which shows the influence authority has on behaviour, even when inconsistent with our values
Less is more
Having too many options can make us decline to make any decision due to the fear of not making the optimal choice
Example
Sales of jam in a supermarket increased 10x when the choice of flavours was reduced from 24 to 6. Customers decided not to buy any jam when presented with 24 options as the decision was too difficult
Making a pledge
Once people have made a commitment to do something, they are much more likely to achieve the end goal. This is sometimes referred to as the sunk cost bias
Example
When asked to specify their exercise goals & sign a contract to acknowledge their commitment, people were 50% more successful in achieving their fitness goals than those who did not sign a contract
Benefits over features
We care more about benefits than features, as benefits display their value and worth more clearly. We also don’t process the benefits unless they are salient and tangible to us. We need to see the direct benefits, rather than benefits which are quite remote.
Example
Positioning iPhones as having a camera that allows you to capture perfect memories and room to keep them safe is more motivating than a 48-megapixel camera and 512GB storage.
Creatures of habit
People don’t like change & prefer things to remain the same. The more we behave a certain way, the more automatic this behaviour becomes
Example
When the default option for organ donation was switched from opt-in to opt-out, consent rates significantly increased to almost 100%. Opting-in became the default behaviour
I'm better than you
We tend to overestimate our positive qualities and underestimate our negative qualities relative to others. This makes us more susceptible and attracted to statements that appeal to our ego.
Example
In a survey among University lecturers, 68% of them rated themselves in the top 25% of teaching ability.
The power of emotion
We underestimate the influence of emotions & urges on our future decisions. How we think we will act and how we actually act can vary dramatically
Example
Investors know that the best strategy is to buy stocks at low value and sell at high value. However when the market drops their emotions prevent them from acting rationally. They panic sell when they should wait until the stocks regain value
The importance of context
Our choices are affected by context and the relation to available comparisons. In other words, how options are framed affects our choices
Example
When presented with 2 cameras costing $170 and $240 respectively, no difference in purchase decisions was found. However, when another camera costing $470 was introduced, the majority of people chose the middle option at $240
One step closer
As we approach a goal, our efforts and commitment toward that goal increase. We are more likely to finish a task if it looks like we are closer to completion.
Example
People are more likely to fill in a loyalty card if 2 stamps are already filled in on a card with 10 spaces, compared to a blank card with 8 spaces because they feel as though they are part of the way to completion.
The power of ownership
People feel the impact of losses twice as strongly as they enjoy acquiring equal gains.
Example
Employees awarded with a bonus at the start of the year, with the threat of revoking the bonus based on performance, made more effort to maintain a good performance than employees who received a bonus at the end of the year
It doesn't always add up
We use different mental bank accounts and rules of thumb when making decisions about whether to purchase a product
Example
People often have a special “money jar” set aside for a holiday, while still carrying substantial credit card debt. The special fund is treated differently from the money used to pay off debt, even though it’s exactly the same
The future is bright
We are much more optimistic than we are realistic. We tend to overestimate our knowledge, underestimate the risks & exaggerate our ability to control events
Example
When a group of people were asked how they would rate their driving skills relative to the wider population, 80% believed that they were better-than-average drivers, despite this being statistically impossible
Leave a lasting impression
People judge an experience based on how they felt at its peak and end, rather than the sum or average of the experience as a whole.
Example
Participants preferred to keep their hand in colder water for a shorter time than wait a little longer and have the temperature increased.
Tomorrow's problem
We are impatient & tend to be biased towards making decisions that provide instant gratification & often put off decisions that are associated with future outcomes
Example
When presented with a choice of receiving £150 today or £160 in 4 weeks and then asked to choose between receiving £160 in a year or £150 in 48 weeks, people will invariably choose the £150 now but will be willing to wait for the full year to receive the £160
Subconscious suggestions
We are always picking up on subconscious cues about our immediate environment, consequently affecting our behaviour and decisions
Example
A wine shop conducted an experiment to see how store ambience would affect the sale of specific wines. On days where French music was played, French wines outsold German wines by a ratio of 5:1 and on the days they played German music, German wine outsold French wine by 3:1
You scratch my back
When given small gifts or tokens, we feel motivated to reply with a benefit in kind. Even simple acts, such as saying "thank you" can enhance our level of commitment and desire to reciprocate.
Example
When restaurant diners received a single after-dinner mint, tips increased by 3%. When the waiter offered one mint, paused and turned back and said "for you nice people, I'll give you another" tips skyrocketed to a 23%.
Stand out from the crowd
People are more likely to look at and remember the details of salient objects relative to their neighbours
Example
Neuroscientists tracked the eye-movements of consumers as they chose between snack items. They found that when consumers chose between a product they prefer & a visually enhanced but less preferred product, people tend to choose the latter
Jumping on the bandwagon
We are herd animals, therefore we measure our behaviour in relation to each other and decide what is acceptable & appropriate in social settings
Example
When a pretzel cart passed through a train, 1 in 12 passengers bought pretzels. However, when people were cued by other passengers eating pretzels sales increased to 1 in 7 people.
