Behavioral Economics 101For Product Design
Action Design DCAugust 12, 2014
Steve Wendel (In: sawendel) Principal Scientist, HelloWalletZarak Khan (In: khanzarak) Senior Consultant, Booz Allen
Help your users overcome obstacles
What is it?
Thorndike et al. 2012 (American Journal of Public Health)
500 Million Dollars in Savings on Energy Bills…
…And a billion dollar valuation
Why? Are we just that lazy?
What’s Behavioral Economics?
Core Lessons for Product Design
How Habits Fit In
Behavioral Methods for Product Design
Topics
1
2
3
4
About Steve
And Zarak
Maybe someday I’ll grow up to be a management consultant and wear vests every day!
What is it?
Well, maybe not so thoughtful
The first behavioral economist?
Behavioral economics meets the public
And practitioners
Who uses it?
What’s Behavioral Economics?
Core Lessons for Product Design
How Habits Fit In
Behavioral Methods for Product Design
Next Up – Core lessons for product design
1
2
3
4
Bag of Tricks
4 Big Lessons
1: We have two independent systems
2: We’re imperfect
3: Choices are relative, contextual & social
4: Friction Matters
Lesson 1: Dual processes - a rider & an elephant
Marketing that appeals to emotion
Lesson 2: We’re just not perfect.
attention
willpower
memory
handling complex decisions
So build accordingly.
attention
willpower
memory
handling complex decisions
In menus or anywhere else
And automate where possible
Lesson 3: We’re unsure & look for clues: comparisons, context, and peers
“9 out of 10 people in your area have already paid their taxes”
Especially in pricing
Lesson 4: Minor frictions matter. A lot.
And can be used practically in products
What’s Behavioral Economics?
Core Lessons for Product Design
How Habits Fit In
Behavioral Methods for Product Design
Next Up – How Habits Fit In
1
2
3
4
So what’s a Habit?
So what’s a habit?
Adapted from Duhigg 2012
What can they be used for? The good…
And the bad
Building them means taking action, repeatedly
Nir Eyal’s Model
Remember, we’re often on autopilot
What’s Behavioral Economics?
Core Lessons for Product Design
How Habits Fit In
Behavioral Methods for Product Design
Next Up – Behavioral Methods
1
2
3
4
A philosophy and a method
There are no magic wands.
We’re always wrong.
Experiments can make us less wrong.
Sorry, none of this works
Because we’re always wrong
So, be less wrong
With experiments – A/B, RCT, ABC, etc.
Controlled Experiments: The Gold Standard
Statistical Models w/ Controls
Summary
Behavioral econ: uses economics & psychology to understand quirks of behavior
We’re all fundamentally limited; design accordingly
Users are often on autopilot (habits, etc.)
Assume you’re wrongand rigorously test interventions
Comments?
sawendel khanzarak
Thank You!
Find the behavioral obstacles
Figure out what to change / try
Component: To Do This: Try This:
Cue Cue Action Tell the User What The Action Is
Increase Power of Cue Create Clear Affordances
Increase Power of Cue Clear the Page of Distractions
Reaction Increase Trust Make Site Beautiful and Professional
Increase Interest & Trust Social Proof
Increase Interest & Trust Display Strong Authority on Subject
Bypass Automatic Rejection Be Authentic and Personal
Evaluation Increase Motivation Prime User-Relevant Associations
Increase Motivation Loss Aversion
Increase Motivation Peer Comparison
Increase Motivation Peer Competition
Increase Motivation Make the Rewards Vivid
Decrease Costs Default Everything
Decrease Costs Lessen Burden of User Action (cheat)
Decrease Costs Reduce information required for user to proceed (simplify)
Decrease Costs Avoid choice overload
Ability Increase Logistical Ability Implementation Intentions
Decrease Resource Constraints Automate
Increase Sense of Feasibility (Self-Efficacy) (Positive) Peer Comparison
Time Pressure Increase Urgency Frame text to avoid temporal myopia
Increase Urgency Remind of prior commitment to act
Increase Urgency Make it scarce Increase Urgency Make it time-sensitive
Want more?
www.designforaction.org
Want more?
Well, four of you. Fame, friends and a free
ticket.
Want more?
$99 for first 25 peoplewho use code “be_dc”
$150 for the next 50
$250 -> $400 for the rest
Capped at 400 people
www.designforaction.org