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Natalie Horne - Behavioural Economics

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Behavioural Economics Natalie Horne Strategy Director, Prime Decision prime-decision.com
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Page 1: Natalie Horne - Behavioural Economics

Behavioural Economics

Natalie Horne

Strategy Director, Prime Decision

prime-decision.com

Page 2: Natalie Horne - Behavioural Economics

Prime Decision?

Clients include:

Collaborators include:

Strategy and insight with a behavioural edge

Page 3: Natalie Horne - Behavioural Economics

“All of them. We’re an agency.”

*primacy effect

Page 4: Natalie Horne - Behavioural Economics

B2B B2C

CustomerSalesMarketing

Products Services

behaviour

Page 5: Natalie Horne - Behavioural Economics

principles processes

content

perspectives

social media

websites

physical contextsdigital

experiences

adsemail

Page 6: Natalie Horne - Behavioural Economics

What is Behavioural Economics?

Page 7: Natalie Horne - Behavioural Economics

homo economicus

Optimal,Normative

Realistic,Descriptive

Page 8: Natalie Horne - Behavioural Economics

Get ready!

Page 9: Natalie Horne - Behavioural Economics

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

Page 10: Natalie Horne - Behavioural Economics

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 =

Page 11: Natalie Horne - Behavioural Economics

Get ready!

Page 12: Natalie Horne - Behavioural Economics

WINLOSS

LOSS

LOSS

LOSS

LOSS

LOSS

WINWINWIN

Page 13: Natalie Horne - Behavioural Economics

More wins or losses?

Page 14: Natalie Horne - Behavioural Economics

More wins or losses?

X 4

X 6

Page 15: Natalie Horne - Behavioural Economics

What did behavioural economists discover?

We are bad at judging probabilities We are good at judging frequencies

+ many other patterns

Page 16: Natalie Horne - Behavioural Economics

Codifying human biases

Availability heuristic Framing Anchoring Confirmation bias Endowment effect Social norms

Primacy Defaults Priming Commitment devices Hyperbolic discounting Status quo bias

Page 17: Natalie Horne - Behavioural Economics

Availability heuristic

Page 18: Natalie Horne - Behavioural Economics

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

Page 19: Natalie Horne - Behavioural Economics

Conformity effects

1951, Solomon Asch

A B C

Usual error rate: 1%Group context: 75%

Page 20: Natalie Horne - Behavioural Economics

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…

Page 21: Natalie Horne - Behavioural Economics

Applied BE

Page 22: Natalie Horne - Behavioural Economics

Common sense? Counterintuitive?

Availability heuristic Framing Anchoring Confirmation bias Endowment effect Social norms

Primacy Defaults Priming Commitment devices Hyperbolic discounting Status quo bias

Page 23: Natalie Horne - Behavioural Economics

A creative, experimental approach to identifying and

solving problems

Behavioural science:

Strategy

Tactics

Page 24: Natalie Horne - Behavioural Economics
Page 25: Natalie Horne - Behavioural Economics

The Seven Lenses

Script

SocialStory

Sync

Sense Scenario

Structure

One of Prime Decision’s proprietary methodologies

Page 26: Natalie Horne - Behavioural Economics

Story

What do people say? What do they not say?

How can narrative drive or disrupt decision-making?

Script

SocialStory

Sync

Sense Scenario

Structure

Page 27: Natalie Horne - Behavioural Economics

Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Board (Park et al, 2010)

Confirmation bias in online decision-making

Page 28: Natalie Horne - Behavioural Economics

Challenging or confirming narratives

“No one gets sacked for

buying IBM”

“No one gets promoted for buying IBM”

Page 29: Natalie Horne - Behavioural Economics
Page 30: Natalie Horne - Behavioural Economics

+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

Page 31: Natalie Horne - Behavioural Economics

Script

What are the habits? How can they be disrupted?

Can other habits be used or mimicked?

Script

SocialStory

Sync

Sense Scenario

Structure

Page 32: Natalie Horne - Behavioural Economics

Prosecute criminals

Raise premiums

Design experiences which promote

honesty

Page 33: Natalie Horne - Behavioural Economics

“Just submit a reasonable estimate”

Page 34: Natalie Horne - Behavioural Economics

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

Page 35: Natalie Horne - Behavioural Economics

Are you willing to tell the truth even if doing so will result in the denial of your claim?

Page 36: Natalie Horne - Behavioural Economics

Tactical example: In-person

Target behaviour:

Reduce wasteful energy behaviours in laboratories, especially during peak hours

Script

SocialStory

Sync

Sense Scenario

Structure

Page 37: Natalie Horne - Behavioural Economics

The typical communications approach:

putup

posters

Page 38: Natalie Horne - Behavioural Economics

Story

“We can’t afford nice-to-haves”

Page 39: Natalie Horne - Behavioural Economics

Script

Page 40: Natalie Horne - Behavioural Economics

Tactical example: In-person

Solution: 5 at 5

Page 41: Natalie Horne - Behavioural Economics

The Seven Lenses

Script

SocialStory

Sync

Sense Scenario

Structure

One of Prime Decision’s proprietary methodologies

Page 42: Natalie Horne - Behavioural Economics

Aim

Behaviour

Context

Starting point: behaviour mapping

Page 43: Natalie Horne - Behavioural Economics

pinterest.com/primedecision

Page 44: Natalie Horne - Behavioural Economics

meetup.com/behavioural

Next session: Thursday 20th 6.30pm

Page 45: Natalie Horne - Behavioural Economics

Questions? Get in touch

Natalie Horne

prime-decision.com | 0117 910 5200

[email protected]

@natalie_horne @primedecision

Page 46: Natalie Horne - Behavioural Economics

Sense

Script

SocialStory

Sync

Sense Scenario

Structure

Page 47: Natalie Horne - Behavioural Economics

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®

Page 48: Natalie Horne - Behavioural Economics

Social

Script

SocialStory

Sync

Sense Scenario

Structure

Page 49: Natalie Horne - Behavioural Economics
Page 50: Natalie Horne - Behavioural Economics

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

Page 51: Natalie Horne - Behavioural Economics

Structure

Script

SocialStory

Sync

Sense Scenario

Structure

Page 52: Natalie Horne - Behavioural Economics

Web subscription $59

Print plus web $125

Web subscription$59

Print only$125

Print plus web$125

52%increase

68%

32%

16%

0%

84%

Page 53: Natalie Horne - Behavioural Economics

Scenario

Script

SocialStory

Sync

Sense Scenario

Structure

Page 54: Natalie Horne - Behavioural Economics

Sync

Script

SocialStory

Sync

Sense Scenario

Structure

Page 55: Natalie Horne - Behavioural Economics

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


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