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Behavioural Economics
Natalie Horne
Strategy Director, Prime Decision
prime-decision.com
Prime Decision?
Clients include:
Collaborators include:
Strategy and insight with a behavioural edge
“All of them. We’re an agency.”
*primacy effect
B2B B2C
CustomerSalesMarketing
Products Services
behaviour
principles processes
content
perspectives
social media
websites
physical contextsdigital
experiences
adsemail
What is Behavioural Economics?
homo economicus
Optimal,Normative
Realistic,Descriptive
Get ready!
Which is the best option?
a. 40% chance of winning £22.50
b. 5% chance of winning £180.00
c. 65% chance of winning £15.40
d. 25% chance of winning £36.00
e. 80% chance of winning £11.25
a. 40% chance of winning £22.50 £9
b. 5% chance of winning £180.00 £9
c. 65% chance of winning £15.40£10
d. 25% chance of winning £36.00 £9
e. 80% chance of winning £11.25 £9
Correct =
Get ready!
WINLOSS
LOSS
LOSS
LOSS
LOSS
LOSS
WINWINWIN
More wins or losses?
More wins or losses?
X 4
X 6
What did behavioural economists discover?
We are bad at judging probabilities We are good at judging frequencies
+ many other patterns
Codifying human biases
Availability heuristic Framing Anchoring Confirmation bias Endowment effect Social norms
Primacy Defaults Priming Commitment devices Hyperbolic discounting Status quo bias
Availability heuristic
Web subscription $59
Print plus web $125
Web subscription$59
Print only$125
Print plus web$125
52%increase
68%
32%
16%
0%
84%
Framing
Conformity effects
1951, Solomon Asch
A B C
Usual error rate: 1%Group context: 75%
Anchoring
90% survival rate
vs. 10% mortality rate
No
minimum
repayment
Minimum
2%
repayment $99 paid off
$175 paid off
On a monthly bill of $435…
Applied BE
Common sense? Counterintuitive?
Availability heuristic Framing Anchoring Confirmation bias Endowment effect Social norms
Primacy Defaults Priming Commitment devices Hyperbolic discounting Status quo bias
A creative, experimental approach to identifying and
solving problems
Behavioural science:
Strategy
Tactics
The Seven Lenses
Script
SocialStory
Sync
Sense Scenario
Structure
One of Prime Decision’s proprietary methodologies
Story
What do people say? What do they not say?
How can narrative drive or disrupt decision-making?
Script
SocialStory
Sync
Sense Scenario
Structure
Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Board (Park et al, 2010)
Confirmation bias in online decision-making
Challenging or confirming narratives
“No one gets sacked for
buying IBM”
“No one gets promoted for buying IBM”
+9%# donations
+5%Total £ raised
Buy antibiotics for an African child to stop them dying of TB, with just £1
Buy antibiotics for an African child to stop them dying of TB
Script
What are the habits? How can they be disrupted?
Can other habits be used or mimicked?
Script
SocialStory
Sync
Sense Scenario
Structure
Prosecute criminals
Raise premiums
Design experiences which promote
honesty
“Just submit a reasonable estimate”
Commitment devices
I recognise that I have moral obligation to complete this task honestly.
Contro
l
Oppor
tunit
y
Hones
ty P
ledge
0%
2%
4%
6%
8%
75%decrease in high claims
95%Decrease in maximum
claims
Are you willing to tell the truth even if doing so will result in the denial of your claim?
Tactical example: In-person
Target behaviour:
Reduce wasteful energy behaviours in laboratories, especially during peak hours
Script
SocialStory
Sync
Sense Scenario
Structure
The typical communications approach:
putup
posters
Story
“We can’t afford nice-to-haves”
Script
Tactical example: In-person
Solution: 5 at 5
The Seven Lenses
Script
SocialStory
Sync
Sense Scenario
Structure
One of Prime Decision’s proprietary methodologies
Aim
Behaviour
Context
Starting point: behaviour mapping
pinterest.com/primedecision
meetup.com/behavioural
Next session: Thursday 20th 6.30pm
Questions? Get in touch
Natalie Horne
prime-decision.com | 0117 910 5200
@natalie_horne @primedecision
Sense
Script
SocialStory
Sync
Sense Scenario
Structure
TAKE ZINC 10 DAYS10
GS
DOSAGE from the start of diarrhoea and for 10 days: Children under 6 months half a tablet (10mg elemental Zinc) a day; Children over 6 months one tablet a day (20mg elemental Zinc). STORAGE Store in a dry place below 30 C. Protect from light.
Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg. Keep out of reach of childrenManufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313
NovaZ
inc
®N
ovaZ
inc®
Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg.
Keep out of reach of childrenManufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313
Zinc Sulphate Tablets USP. Each tablet contains Zinc Sulphate Monohydrate USP 54.9 mg equivalent to elemental Zinc 20 mg.
Keep out of reach of childrenManufactured by Pharmanova (Zambia ) Ltd. P O Box 31458, Plot No. 7329 Moobola Road, Lusaka, Zambia. Tel +260 211 287926/ 286926/287313
CO-TRIMOXAZOLE TABLETS BP
NovaZinc®
Social
Script
SocialStory
Sync
Sense Scenario
Structure
Social norms
Please re-use your
towels to help save
the environment
Most previous
occupants of this
room re-used their
towels during their
stay
35% re-used
50% re-used
Please re-use your
towels to help save
the environment
Structure
Script
SocialStory
Sync
Sense Scenario
Structure
Web subscription $59
Print plus web $125
Web subscription$59
Print only$125
Print plus web$125
52%increase
68%
32%
16%
0%
84%
Scenario
Script
SocialStory
Sync
Sense Scenario
Structure
Sync
Script
SocialStory
Sync
Sense Scenario
Structure
Story: What do people
say? What do they not
say? How do they justify
their choices?Script: What are the habits? How could these be
strengthened/ disrupted?
Which other scripts could be mimicked/leveraged?
Social: What are others
doing? Are they aware of
this? What form
does/could this awareness take?Sense:
What are the stimuli? How/are they
perceived? How does this affect
their experience/choices?
Structure: Which choices are
presented? How are they
framed? What is the
rationale for the order/defaults?
Scenario: Which external or
emotional/personal factors could feature?
Is there scope to modify/personalise?
Sync: What are our own
biases? Have we tested our
assumptions? Have we missed alternative contexts?
Questions to ask:
Script
SocialStory
Sync
Sense Scenario
Structure