They asked 40 owners of iPods how influenced they were by the trendiness of the product relative to their peers. The scale went from one (much less than average) to nine (much more than average), with five as average. So the neutral answer was clearly five. However, the average response from participants was 3.3.
Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier
Consider Nespresso. They sell in distinctive pods, which provide the right amount of coffee for a cup. Because they’re sold in that unit we compare their price to other places selling by the cup, such as Costa or Caffe Nero. When compared to the £2.50 Costa charge, Nespresso pods, costing 30p-37p, feel like a bargain.
But stop for a second and remember back to when they launched. If Nespresso had sold their coffee in standard packaging the natural comparison set would have other brands of roast and ground coffee, like Taylor’s or illy. Their price would have been judged against the norm for other coffees — roughly £4.00 for 227g. Even with tens of millions of pounds of advertising they could never have persuaded consumers to pay £34 for a 454g bag. But that £34 figure equates to 7p per gram, exactly what they’re charging now.
Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton
“Monstromart: where shopping is a baffling ordeal” reads the slogan of a fictional supermarket in The Simpsons.
Inside the supermarket, there were whole aisles for one type of product. There were different brands of tomato ketchup as far as the eye could see, bags sugar could be bought in hundreds of varieties, the express checkout had a sign reading: “1,000 items or less”.
In the end, the Simpsons returned to Apu’s Kwik-E-Mart. In doing so, the Simpsons were making a choice to reduce their choice. It wasn’t quite a rational choice, but it made sense. Their unconstrained freedom left them paralysed to make decisions.
There is no denying choice improves the quality of our lives. When people have no choice, life is almost unbearable. Choice is essentially freedom, which is fundamental to our well-being. However, like The Simpsons, the choice paradox suggests that offering consumers too much choice can leave them paralysed to make a decision.
Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood
I recently watched a competitive swimming heat on television. The race sticks in my mind because 50% of the athletes, four in total, were from the United States. Knowing very little about each participant, nor who the favourite was for the race, at first glance, it looked like the United States had to place in the top three. The result: none of them finished in the top three.
In this case, the size of each category, the country each athlete represented, incorrectly led me to believe they had a better chance of making it into the top three. I incorrectly believed “they had the numbers on their side”.
The category size bias demonstrates how our probability judgments are often inaccurate. Category size can impact the perceived likelihood of a specific outcome, such that an outcome classified into a large (vs small) category is perceived as more likely to occur.
Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood
I was walking down the street when I was approached by an eleven- or twelve-year-old boy. He introduced himself and said that he was selling tickets to the annual Boy Scouts circus to be held on the upcoming Saturday night. He asked if I wished to buy any at five dollars apiece. Since one of the last places I wanted to send Saturday evening was with the Boy Scouts, I declined. “Well,” he said, “if you don’t want to buy any tickets, how about buying some of our big chocolate bars? They’re only a dollar each.” I bought a couple and, right away, realised that something noteworthy had happened. I know that to be the case because: (a) I do not like chocolate bars; (b) I do like dollars; (c) I was standing there with two of his chocolate bars; and (d) he was walking away with two of my dollars.
Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini
During a famine in 1774, Frederik ordered a national cultivation programme. In a response typical of many towns, the people of Kolberg declared: “The things have neither small nor taste, not even the dogs will eat them, so what use are they to us?”
Frederick’s initial response was more a violent “shove” than a nudge – he threatened to cut the noses and ears off any peasant who did not plant potatoes. However, he soon changed tack. In modern parlance we’d say that he used a bit of “psychology”.
Legend has it that instead of issuing further threats, Frederik ordered his soldiers to establish a heavy and visible guard around the local royal potato fields, yet also instructed them to be deliberately lax in protecting them. At the same time, the local peasants noticed their king’s conspicuous admiration of potato flowers as well as the tubers themselves, and sneaked in to steal and plant the “royal crop”. Within a short time, many potatoes were stolen and soon being widely grown and eaten.
Excerpt from: Inside the Nudge Unit: How small changes can make a big difference by David Halpern
But when Meghan Busse, Duncan Simester and Florian Zettelmayer, academics from MIT and the Kellogg School of Management, investigated they discovered a curious anomaly. In the previous weeks the car companies had been cutting prices so much that the employee discount was generally no better and occasionally more expensive, than existing deals.
The academics hypothesised that it was the price cue, not the price, which mattered. Consumers reacted to the plausibility of the deal rather than the actual discount. When consumers don’t trust brands they treat deals sceptically, but when they’re accompanied by a back story they have more heft.
When you are contemplating promotions don’t rely on an eye-watering discount. Numbers leave customers cold. We’re not natural statisticians – stories move us to action far better.
Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton
We found that over the next several weeks, those who had been consuming more energy than their neighbours reduced their energy consumption, by 5.7 per cent. Not much of a surprise there. More interesting, however, was the finding that those who had been consuming less energy than their neighbours actually increased their energy consumption by 88.6 per cent. These results show that what most others are doing acts as something of a “magnetic middle”, meaning that people who deviate from the average tend to be drawn towards it – they change their actions to be more in line with the norm regardless of whether they were previously behaving in a socially desirable or undesirable way.
Excerpt from: Yes! 50 Secrets from the Science of Persuasion by Noah Goldstein, Steve Martin and Robert Cialdini
The experiments prove that it’s hard to overturn negative opinions. Rejecters of your brand are difficult to convince because they interpret your message through a lens of negativity.
As the legendary stock market investor, Charlie Munger, said:
“The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can’t get in. The human mind has a big tendency of the same sort.”
Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton
In the policy world, a good example comes from a programme known as the Nurse Family Partnership (NFP), originally developed and tested by David Olds in the USA. The programme involves a nursing practitioner befriending and supporting a young at-risk mother from the pre-natal stage through the child’s second birthday. It is a well-validated programme that has been shown to reduce violence and abuse of the child, improve educational attainment and even reduce the child’s rate of offending at the age of 15 compared with children from a similar background who did not participate in the programme (at least in the USA).
A less well known but fascinating detail of the NFP is that Olds noted when we introduced it into the UK was that the programme worked much better with mothers having their first child. This isn’t a marginal detail. It is an expensive programme, and so it is incredibly important to make sure that is focuses on the right people, and at the right time, to whom it will make a difference – young, first time mothers.
In general, we might take as an opening mantra something like “learn it first, learn it right”
Excerpt from: Inside the Nudge Unit: How small changes can make a big difference by David Halpern
Here’s another example: in World War 2, US paratroopers had a problem with the fact that, allegedly, one in twenty chutes failed in some way. The soliton was to require the packers and inspectors to regularly jump out of airplanes using parachutes chosen at random from the store. The quality of packing then rose to 100 per cent and stayed there. “The packers are all jumpers,” explained on NCO to Stars and Stripes magazine: ” We try to have each man jump once a month. That’s a pretty food way to keep them honest on the tables.”
Excerpt from: One Step Ahead: Notes from the Problem Solving Unit
Years ago, when The Tonight Show rules late-night TV and when the all the guests weren’t celebrities promoting their latest book, movie, or TV show, host Johnny Carson interviewed the Girl Scout who sold the most cookies that year. This young lady, Markita Andrews, set a cookie sales record that was never broken. What was her technique? In addition to hard work, she used a framing strategy to make her customers view the purchase as a trivial expense.
Markita’s strategy was simple When she knocked on a door, she would firs ask for a $30,000 donation to the Girl Scouts. Naturally, she had no takers on that request. But then she’d ask if they would at least buy a box of Girl Scout cookies. and just about everyone would.
Excerpt from: Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing by Roger Dooley
In the mid-1990s, there was a shortage of organic cotton—cotton that Patagonia relied on to make its products. While other companies might source non-organic alternatives in the interim, Chouinard’s’ response was “if we have to be in business using an evil product like traditionally grown cotton, we don’t deserve to be in business”.
The big ‘a-ha’ for Chouinard was that you could do something good for the environment that was also good for your business. Patagonia became California’s first B Corporation in January 2012. At the time, the company was turning over $600m in annual revenues and employed around 2000 people.
Patagonia continues to donate 10% of its profits to small-scale environmental campaigns where $10,000-$15,000 can make a real difference. Their Worn Wear initiative encourages the repair, recycling and resale of garments. The company once took a full-page advert in the New York Times with the tagline: “don’t buy this jacket, unless you really need it”.
Excerpt from: Product Gems 1: 101 Science Experiments That Demonstrate How to Build Products People Love by David Greenwood
As Harvard social psychologist Joshua Greene put it, “The best way to get people to do something is to tell them their neighbours are already doing it.”
Take, as proof, what happened when psychologist Thomas Moriarty staged thefts on a New York City beach to see if onlookers would risk personal harm to halt the crime. In the study, a research accomplice would put a beach blanket down five feet from the blanket of a randomly chosen individual – the experimental subject. After a couple of minutes on the blanked spent relaxing and listening to music from a portable radio, the accomplice would stand up and leave the blanket to stroll down the beach, A few minutes later, a second researcher, pretending to be a thief, would approach, grab the radio, and try to hurry away with it. As you might guess, under normal conditions, subjects were very reluctant to put themselves in harms way by challenging the thief – only four people did so in the twenty times that the theft was staged. But when the same procedure was tried another twenty times, with a slight twist, the results were drastically different. In these incidents before taking his stroll, the accomplice would simple ask the subject to please “watch my things,” which each of them agreed to do. Now, propelled by the rule for consistency, nineteen of the twenty subjects became virtual vigilantes, running after and stopping the thief.
Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini
Those who employ it can cash in on its influence without any appearance of having structured the situation in their favor. Retail clothiers are a good example. Suppose a man enters a fashionable men’s store and says that he wants to buy a three-piece suit and a sweater. If you were the salesperson, which would you show him first to make him likely to spend the most money?
Clothing stores instruct their sales personnel to sell the costly item first. Common sense might suggest the reverse: If a man has just spent a lot of money to purchase a suit, he may be reluctant to spend very much more on the purchase of a sweater. But clothiers know better. They behave in accordance with what the contrast principle would suggest: Sell the suit first, because when it comes time to look at sweaters, even expensive ones, their prices will not seem as high in comparison. A man might bulk at the idea of spending $95 for a sweater, but if he has just bought a $495 suit, a $95 sweater does not seem excessive. The same principle applies to a man who wishes to buy the accessories (shirts, shoes, belt) to go along with his new suit.
Contrary to the commonsense view, the evidence supports the contrast-principle prediction. As sales motivation analysts Whitney, Hubin, and Murphy state, “The interesting thing is that even when a man enters a clothing stores with the express purpose of purchasing a suit, he will almost always pay more for whatever accessories he buys if he buys them after the suit purchase than before.”
Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini
At a busy New York City subway station we hired researchers to count the number of commuters who donated to a street musician as they walked past.
After a short time a small change was made to the situation that had an immediate and impressive impact. Just before an approaching (and unsuspecting) commuter reached the musician, another person (who was in on the act) would drip a few coins into the musician’s hat in view of the approaching commuter. The result? An eight-fold increase in the number of commuters who chose to make a donations.
In a series of post-study interviews with commuters who did donate, every one of them failed to attribute their action to the fact that they had just seen someone else give money first. Instead they provided alliterative justifications: “I liked the song he was playing”; “I’m a generous person”; and “I felt sorry for the guy.”
Excerpt from: The Small BIG: Small Changes that Spark Big Influence by Robert Cialdini, Noah Goldstein, and Steve Martin
Emotions get people to change their behavior. In his show Crowd Control, Dan Pink tried to get people to stop illegally using handicapped parking spots. When Dan’s team changed the handicapped signs so they has a picture of a person in a wheelchair on them, illegal parking in the spots didn’t go down — it topped altogether. Seeing a person’s face, thinking about how someone else might feel, made all the difference.
Excerpt from: Barking Up the Wrong Tree by Eric Barker
The second reaction to the the law was more subtle and more general than the deliberate defiance of the smugglers and hoarders. Spurred by the tendency to want what they could no longer have, the majority of Miami consumers came to see phosphate cleaners as better products than before. Compared to Tampa residents, who were not affected by the Dade County ordinance, the citizens of Miami rated phosphates detergents as gentler, more effective in cold water, better whiteners and fresheners, more powerful on stains. Affect passage of the law, they had even come to believe that phosphate detergents poured more easily than did the Tampa consumers.
Excerpt from: Consumer Reaction to Restriction of Choice Alternatives by Michael Mazis and Robert Settle
One successful example was Sainsbury’s in 2004 who realised much supermarket shopping was done in a daze. “Sleep shopping” as they termed it. Shoppers were buying the same items week in, week out — restricting themselves to the same 150 items despite there being 30,000 on offer.
AMV BBDO, Sainsbury’s creative agency, went to great lengths to dramatise the extent of sleep shopping. They hired a man dressed in a gorilla suit and sent him to a Sainsbury’s to do his week’s shopping. They questioned shoppes as they were leaving the store and a surprisingly low percentage had noticed him. When shoppers are on autopilot it’s hard to grab their attention.
Excerpt from: The Choice Factory by Richard Shotton
The following is a perfect illustration of the tendency of modern business to pretend that economics is true, even when it isn’t. London’s West End theatres often send out emails to people who have attended their productions in the past, to encourage them to book tickets, and it was the job of an acquaintance of mine who worked as a marketing executive for a theatre company to send out these emails. Over time, she learned something that defied conventional economic rules; it seemed that if you send out an email promoting a play or musical, you sold fewer tickets with the email. Conversely, offering tickets at full price seemed to increase demand.
According to economic theory, this makes no sense at all, but in the real world it is perfectly plausible. After all, any theatre selling tickets t a discount clearly has plenty to spare, and from this it might be reasonable to infer that the entertainment on offer isn’t all that good. No one wants to spend £100-£200 on tickets, a mean, car-parking and babysitting, only to find that you would have had more fun watching television at home; in avoiding discounted theatre tickets, people are not being silly – they are showing a high degree of second-order social intelligence.
Excerpt from: Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland
After we talked in my office one day about scarcity and exclusivity of information, he decided to do a study using his sales staff. The company’s customers—buyers for supermarkets or other retail food outlets—were phoned as usual by a salesperson and asked for a purchase in one of three ways. One set of customers heard a standard sales presentation before being asked for their orders. Another set of customers heard the standard sales presentation plus information that the supply of imported beef was likely to be scarce in the upcoming months. A third group received the standard sales presentation and the information about a scarce supply of beef, too; however, they also learned that the scarce-supply news was not generally available information—it had come, they were told, from certain exclusive contacts that the company had. Thus the customers who received this last sales presentation learned that not only was the availability of the product limited, so also was the news concerning it—the scarcity double whammy.
The results of the experiment quickly become apparent when the company salespeople began to urge the owner to buy more beef because there wasn’t enough in the inventory to keep up with all the orders they were receiving. Compared to the customers who got only the standard sales appeal, those who were also told about the future scarcity of beef bought more than twice as much.
Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini
But the problem is not just with journalists. The physician John Ioannidis scandalized his colleagues and anticipated the replicability crisis with his 2005 article “Why Most Published Research Findings Are False.” A big problem is that many of the phenomena that bio. medical researchers hunt for are interesting and a priori unlikely to be true, requiring highly sensitive methods to avoid false positives, while many true findings, including successful replication attempts and null results, are considered too boring to publish.
This does not, of course, mean that scientific research is a waste of time. Superstition and folk belief have an even worse track record than less-than-perfect science, and in the long run an understanding emerges from the rough-and-tumble of scientific disputation. As the physicist John Ziman noted in 1978, “The physics of undergraduate text-books is 90% true; the contents of the primary research journals of physics is 90% false.” It’s a reminder that Bayesian reasoning recommends against the common practice of using “textbook” as an insult and “scientific revolution” as a compliment.
A healthy respect for the boring would also improve the quality of political commentary.
Excerpt from: Rationality: What It Is, Why It Seems Scarce, Why It Matters by Steven Pinker
After all, isn’t brevity important? Nobody sits down and reads a great big press ad or an eight-page sales letter. do they? Do they?
Er, turns out they do. And more orders come from the long letter than the short version. More enquiries from the long ad than the short one.
Perhaps the most famous example in press advertising is an ad for Merrill Lynch written by a partner, Louis Engel. Engel was the managing editor at Business Week until he was hired by Charles Merrill, the firm’s founder.
The ad occupied a full page in the New York Times. Seven columns. Tiny type. NO PICTURES. In total, 6,540 words.
It drew 10,000 requests for a booklet mentioned towards the end of the ad (which, incidentally, had no coupon or any other recognizable “response device”).
Excerpt from: Write to Sell: The Ultimate Guide to Great Copywriting by Andy Maslen
Metrics have even shaped literature. When Alexandre Dumas first wrote The Three Musketeers in serialised form, his publisher paid him by the line. Dumas therefore added the servant character Grimaud, who spoke in short sentences, to stretch out the text (then killed him off when the publisher said that short lines didn’t count).
Relying on measurements like clicks or likes can give a misleading impression of how people are truly behaving. During 2007–8, over 1.1 million people joined the “Save Darfur’ cause on Facebook, which aimed to raise money and attention in response to the conflict in Sudan. A few of the new members donated and recruited others, but most did nothing. Of the people who joined, only 28 per cent recruited someone else, and a mere 0.2 per cent donated.
Excerpt from: The Rules of Contagion: Why Things Spread — And Why They Stop by Adam Kucharski
The second kind of response is at the other extreme. Rather than ignore results, people may have too much faith in them. Opaque and difficult is seen as a good thing. I’ve often heard people suggest that a piece of maths is brilliant because nobody can understand it. In their view, complicated means clever. According to statistician George Box, it’s not just observers who can be seduced by mathematical analysis. “Statisticians, like artists, have the bad habit of falling in love with their models,’ he supposedly once said.
Excerpt from: The Rules of Contagion: Why Things Spread — And Why They Stop by Adam Kucharski
PYOTR SMIRNOV came into this world on the eve of the birth of Russian capitalism and, in 1864, employed that capitalist spirit to make what would eventually be the world’s number one selling vodka brand, now known as Smirnoff. Pyotr was the first to use the charcoal filtering process that removes impurities from the grain-neutral spirit. He was also the first to “advertise.”
While organized publicity was still a vague concept, Smirnov shrewdly gathered a group of beggars, offered them a warm meal and plenty to drink at his home, then paid them to pop into Moscow’s major bars demanding Smirnoff. The man was a PR genius far ahead of his time. No wonder he became the official vodka supplier to the tsar in 1886.
Excerpt from: The 12 Bottle Bar: Make Hundreds of Cocktails with Just Twelve Bottles by David Solmonson and Lesley Jacobs Solmonson
Economists call this excessive risk-taking when you know you’ll be bailed out ‘moral hazard’. To reduce moral hazard on the road, the economist Gordon Tullock once argued that instead of mandating seat belts, the government should require large spikes to be installed in the centre of steering wheels – known as Tullock spikes. These spikes would make drivers more aware of the danger of driving too fast. The Bank of England doesn’t quite do that.
Excerpt from: Can’t We Just Print More Money?: Economics in Ten Simple Questions by Rupal Patel and Jack Meaning
“Writing, when properly managed (as you may be sure I think mine is) is but a different name for conversation.”
Laurence Sterne English writer, 1713 – 1768
Excerpt from: Write to Sell: The Ultimate Guide to Great Copywriting by Andy Maslen
This is connected with the art of negotiation. The game theorist John Nash demonstrated that protagonists bargain more effectively when they are less needy. The less you fear not getting what you want, the more likely you are to get what you want. The logical conclusion follows: in any negotiation, your best strategy is an internal as well as external question. Can you ‘will’ yourself into a state of relative indifference, and thereby negate anxiety-induced neediness?
Excerpt from: Making Decisions: Putting the human back in the machine by Ed Smith
