Tag Archive for Behavioral Economics

Anchoring Errors, Pipsqueak Articles, Scaffolding

Hacking Weight-loss with Brain Science

by Olga Werby • February 18, 2016

Financial rewards for weight-loss and exercise work…but only if you take the money away at the end for non-performance. Rewards are just not as effective as punishments! [Study: Framing Financial Incentives to Increase Physical Activity Among Overweight and Obese Adults: A Randomized, Controlled Trial] This result is, of course, very consistent with Dr. Daniel Kahneman’s work in behavioral economics, memory, and our perception of happiness. One of the key points is how we assign value on items that we already owe versus those that we are considering acquiring. Consider your house (if you own one) or your car. Would you sell it for the same amount of money as you would be willing to buy it for? The answer is no! We value what we own far more than other people’s stuff. Our reaction to ownership is emotional. Mathematics of equivalence just doesn’t penetrate how we feel through to our judgement. Consider the following social incentive program: At the start of my weight-loss program, I get $50 to lose 10 pounds over a 6 months period. At the end of that time period, I only lose 4 pounds. I have to give back $30 — that’s the deal, right? I…

Review: Gamification at Work: Designing Engaging Business Software

by Olga Werby • June 12, 2013

Interaction Design Foundation is about to publish Janaki Mythily Kumar’s and Mario Herger’s 2013 book: “Gamification at Work: Designing Engaging Business Software.” [reference: Kumar, Janaki Mythily and Herger, Mario (2013): Gamification at Work: Designing Engaging Business Software. Aarhus, Denmark, The Interaction Design Foundation. ISBN: 978-87-92964-06-9.] Kumar and Herger put together history and background of gamification among a broad spectrum of ventures and included a quick guide for how to apply some of the ideas and key concepts to the design of corporate dynamics for your company! Here are a few gems from the book: Figure 2.1: Player Centered Design Process. Courtesy of Janaki Kumar and Mario Herger. Copyright: CC-Att-ND (Creative Commons Attribution-NoDerivs 3.0 Unported). Figure 3.3: Bartle Player Types. Courtesy of Janaki Kumar and Mario Herger. Copyright: CC-Att-ND (Creative Commons Attribution-NoDerivs 3.0 Unported). If you think of these as user-types, then Kumar and Herger provide a set of ideas of how to design to meet the needs of these different player groups. They provide a great Player Persona Template. In Chapter 4, they explain how to gather the data for a particular company and develop user personas based on actual ethnographic information. Chapter 5 explores the motivational drivers and even…

Daniel Kahneman, Customer Service, and Perception of Quality

by Olga Werby • April 9, 2013

Last week, we went to listen to a talk by Daniel Kahneman and by coincidence I’ve just finished reading his book, Thinking Fast and Slow, just a few months ago. The ideas in the book are amazing and worth a read (it would be great if the two academic papers included in the back of the book and for which Dr. Kahneman received his Nobel Prize in Economics were printed in a font larger than 8 points!). And a few days after the lecture, I was struck by an obvious application of his ideas, or more to the point, how his experiential self versus remembering self concepts help explain the customer service phenomenon. It has been known for a long time that politeness of error messages and civility of customer service play a strong roll in how the experience with the product is remembered. Above a small portion of the Google Image Search results for “error messages”. The internet is full of these because people get so irked by such messages that they want to share their bad experiences with others. The results are just as illuminating for “bad customer service stories”. Again, a good bad story has legs! But…

Google Apps New Pay Policy and Behavioral Economics

by Olga Werby • December 8, 2012

Yesterday, Google flipped a switched on its Google Apps policy — starting with December 7th, 2012, Google Apps will no longer be free! The change is for Google Apps for Business and it effectively ends the ability to create free accounts for groups of 10 or fewer users (here’s Google’s announcement). Individuals could still have a personal account, but businesses will have to pay $50 per user, per year… That is NEW business customers will have to pay — if you had a business account prior to the announcement, you get to keep it on the same terms you’ve signed up for — free! But all new Google Apps business customers from this point forward will pay to play. There’s a lot of chatter about whether Google’s customers will pay or walk away, but I’m interested in the behavioral economics analysis of this change. Allow me describe a few experiments on anchoring — the psychological phenomena where individuals get attached to the first result they witness and base their subsequent decisions on that original priming. The experiments I’m going to describe come from two books: Dan Ariely’s “Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions”…