From the people who brought you the Intelligent Investor’s 15 day free trial series, today the Startuponomics trip report series has begun. Be excited, be ready.
I recently attended Startuponomics in San Francisco, a conference run by Dan Ariely on behavioural economics, decision making, irrational thought, motivation, influencing behaviour, and how people think. I learned a huge amount of interesting information at this conference and I hope this little series will help share some of it for those interested. Some posts will be longer than others as they are summarising 1-3 hour discussions. Subscribe to my rss on the right to ensure you don’t miss out! Click here to unsubscribe.
Now, let’s get on with it.
Dan Ariely – Day 1
Think of behaviour as a flow or process. Where can we intervene?
He discussed external vs subjective reality. Your intuition about how the world operates is biased.
Study – Table length illusion example. E.G. told visual illusions are X, but our brain keeps seeing Y.
Example about box checking. Check the box if you don’t want to participate. Opt in vs opt out. The default is to not check the box no matter what the question is. Consider the fact that we are less active than we think in making our decisions.
The environment of the interface has a massive impact on the customers decision. If questioned, we come up with stories about what we chose even though our reasons may not be real.
Study – Long term medication company. Drug rep example. generic vs branded medication. Trying to make people do something different to what they’re doing. 80/20 branded / generic went to 10/90 after telling people that they had to choose one or the other compared with asking them to choose generic which caused little change.
When discussing it, people lie or get it wrong. People behave as if it is expensive to return the postcard when it would save them money. Understand how defaults work. Question about assuming change and if people still didn’t respond.
Study – Physicians example where physicans were told that they had made a mistake a day prior with a patient – would they call them to inform them to take a pain killer? 60/40 in group 1. All did nothing in second group when decision was nothing, ibuprofen or some other drug. Defaults are important. But when you add more complexity to the decision to do nothing or not, more people do nothing. [Ask Question about competing principle economist example.]
Study – He gave an example about reducing the urinal bed pans in hospital (maybe do it by changing the default). Default matters alot in things that we pay alot of attention to. As things become more difficult we want to do less and as a result interface designers decide for us.
Study -The jam study. 6 or 24 Jams. 40/60 approach the table in each case respectively. 1.4/1.5 try jams. 30% /3% actually buy. ” I’ll do it next time” is more common amongst the high choice option. Excitement can be overturned by too much choice. Technically more options fits more tastes but also results in confusion. Options increase utility up to a point then it goes negative. Then it reverts to the default of nothing if too much choice.
Study – 401 k example. A ways to make less contributions is to make it opt in rather than opt out. Give lots of options. Make the decision seem important. [Ask question about what effect importance has]. Think about how much time we actually spend on important decisions. Not enough (marriage kids university).
Switch with opt out option works.
Lots of software is resistant to changes. Think about how we build software as a result of irrationality.
Default is no mail delivery. If we want more people on mail, we should change the interface.
Default is click here to not receive offers from us. Similarly, this can be manipulated.
Default is not having a free trial or access to an article. One idea is to sign them up automatically and tell them to enter their details to complete the process.
Can you think of any more?
Zero has a special place in people’s hearts. Don’t train people to think the service costs nothing. Give it a value. Make people work for it, fill out a survey to get it free might help people value their trials at ii (though it also may reduce sign ups). We can do this after we have their email address.
Study – Cheap airline example where a long one step interface with matrix style options was made into a two step process with other changes. The idea to break it into two screens and changed the previous premium option to basic and the others to basic (minus x,y, z). Very successful (so much so that results not revealed). Used loss aversion in the process. How to trial this on our site?.
We have lots of individual differences but are tuned to the differences. We are all more similar than we think.
There is a trade off between how many people finish versus the quality of the data.
Study – The pre holed card for caraway example. Pre-punched cards (10 car washes to get one free, 20 to get one free with 10 pre-punched) – people think they’re half-way through and complete the second lot more.
Study – The WordPress.com example… Should they create a new step in the sign up process to let people choose their theme. Work hard before you do anything else. Ikea effect.
If you believe in people being irrational, how do you feel about forcing people to do things?
Influencing decisions once versus habits. The 3 vs 10 reasons you love someone example. Participants asked to list either 3 or 10 reasons that they love someone. The way we are made to think about something for time can change our opinion since this changed how much they said they love the person when surveyed afterwards. The extent to which we don’t know our preferences is quite large. Interface makes the difference. In this case 3 was more powerful as people couldn’t think of 10 reasons often.
E.g. Think about 15 ways this class could be improved. What if you do it in week 4 vs 12, they forget. time lapsed is crucial.
Study - How often do you floss example. Giving a scale can influence their future depending on where on the scale they fall (so you can manipulate where people will fall on a scale and how they will act by varying the scale). Then more people went to dentist when low on the scale. Scales can Shape behaviour.
Study – Financial advisor risk attitudes example. Asking people to remember bad things before asking preferences can have an impact. “stock market example”. Can manipulate emotion in this way. But once answered they take it very seriously. They will then rely on it.
When market research about what they think they think through surveying they will make it up on the spot. The way you ask the question really influences the answer. Observing preferences is very different to directly asking for them.
Computer processor example. Audi configuring example. People don’t actually know they preferences for buying cars and the average car bought was always close to the default options (several different default car options were tested (e.g. base including leather seats / base not including leather seats). People don’t know their preferences. Need to get people to committ while they are primed.
I’m not certain I’ll continue the series on this blog (i was only planning on doing via email), so if you are interested in hearing more about the talks, please like this post or post a comment below.
Edit – The next article in the series is available here – Self Control, Motivation and why Bronze is better than Silver