Let’s try to understand this area called behavioral design or, in other words, the architecture of choice.
There’s been quite a bit of buzz lately around the subject of “behavioral design” and against everyone who deals with the subject, including the author of this column. Vaccine opponents accused me in Israel of helping the Israeli government convince citizens to get vaccinated against their will, using manipulations based on behavioral economics and playing with people’s minds.
But the truth is that we are all “mind designers”. The very fact that you make sure there’s a tray of cut vegetables in the fridge to hide the chocolate cake so you don’t get tempted, you help shape the behavior. Even when you decide to close the chip bag with a chip clip and not just roll the bag opening closed, you are a conscientious designer. Studies show that when it is more difficult for us to open the bag, the risk of being tempted to eat it decreases.
Understanding behavioral design
Let’s try to understand in depth this field called behavioral design or in other words, the architecture of choice. Imagine you decide to go see a movie and buy a ticket for $15. You arrive at the counter and discover that you have forgotten your ticket. Are you going to pay $15 more for a new ticket?
Now let’s try another question: You decided to go see a movie, but you didn’t buy a ticket in advance. When you get to the cashier, you find that you have lost the $15 cash in your wallet. Will you always buy a ticket with a credit card?
In both cases it is the same financial loss, but in the first case mental calculation or mental accounting results in a strong feeling of frustration, as if we had paid double for the ticket. On the other hand, in the second scenario, the $15 you planned to spend on the movie would not be tied to the $15 in their wallet, so most people will still buy a ticket for the movie in the second scenario but not in the first. a.
This is called framing – the exact same issue will trigger completely different feelings in a different framing of things. Framing the problem as in the first option leads to a terrible feeling of frustration. In contrast, losing that $15 in the second option might bother us much less. Our decisions are driven by emotion, so different framing will lead to completely different results for the simple reason that it evokes a different emotion in us.
Information processing is full of cognitive biases
These examples illustrate the new understandings we have formulated about human behavior, understandings included in the discipline of behavioral economics founded by Amos Tversky and Daniel Kahneman. They proved to the world that the information process is full of cognitive biases.
But how can humans predict their behavior if they don’t obey rational laws? Here is the great discovery of Tversky and Kahneman: they showed that if human beings do not follow pure economic logic, deviations from the economic model are not random but predictable.
Alongside Kahneman and Tversky was Professor Richard Thaler from the University of Chicago, who provided a wonderful explanation on the ticket issue for the film. He called the process “mental accounting”. He said we treat the same amount of money from different sources differently. For example, if you won the lottery, your attitude towards money will be different than if you were working to wash floors to win it. Thaler is the one who coined the term “nudge” – an almost imperceptible intervention aimed at changing the way people make decisions and behave.
Can you change the behavior of others?
How can you push people to make a decision without changing the rewards offered? Very simple. Change the way the reward is displayed. Thaler noticed that refuellers are willing to pay a little more for payment on credit, but when the extra payment is presented as a fee, people are suddenly reluctant to pay it. Understanding human bias allows us to gently pull the strings, and each pull will result in different behavior.
This is how you can shape your behavior effortlessly. It is the purpose of nudge. For example, one of the global hotel chains tried to encourage its customers to reuse towels to save money on towel sterilization, but all attempts to tell customers about it failed.
It turns out that one of the greatest moments of joy for people who come to a hotel is to use a towel once and throw it away for a new, clean towel. Appealing to people’s conscience and asking them to “save the environment” has not proven particularly effective. The solution was to change the way the incentives were presented. When the message was “75% of customers reuse towels”, the response rate increased to 44%. And when he said, “75% of guests who stay in this room reuse towels,” the response rate jumped to 49%.
We were able to evoke a sense of belonging, social proof, the need to feel part of the group. In this case, the guests didn’t want to damage the reputation of the venue, even though they had no idea who the other guests were.
Recognize what motivates us to make decisions
Now, this may surprise you, but it turns out that financial incentive isn’t necessarily more effective than social comparison. Sometimes a fine even does the opposite, as in the following case: You probably know that one of the biggest problems for kindergartens is parents picking up their children late from kindergarten.
Professor Uri Genizi investigated whether a fine is an effective deterrent to behavior change, but the result was the opposite: in kindergartens where parents were fined, the number of lateness jumped by compared to kindergartens where no fees were charged. This study illustrates the elusive power of incentives: in the case of kindergarten parents, imposing a fee transformed “being late” behavior from misbehavior into a matter of price.
Another bias inherent in us is loss aversion. People want more things that are scarce or in danger of running out. When trying to convince people to get vaccinated, the message that has worked best is: “Your vaccine dose will be reserved for you for a week. This post performed better than all the others because it evoked a sense of belonging and loss aversion.
The extra reminder made participants feel that the vaccine dose was already theirs and that if they didn’t get vaccinated, they would lose. This created a need for reciprocity by making participants feel that someone had already made an effort to save the vaccine dose for them and that it would be nice to come and get vaccinated.
The idea of behavioral economics is that with small nudges you can influence, save more for retirement, spend less energy or save the environment.