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A Presenta*on from The NewMR Behaviour Economics Event
19 April 2012
Delivering client advantage with Behavioural Economics Bri Williams, People Pa:erns
Event sponsored by Greenbook All copyright owned by The Future Place and the presenters of the material
For more informa>on about Greenbook visit www.greenbookblog.org For more informa>on about NewMR events visit newmr.org
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Delivering client advantage with Behavioural Economics
Bri Williams Principal Consultant
People Patterns Pty Ltd April 2012
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Businesses seek to resolve issues
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
When they are really looking to resolve behaviour
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
From Browser Competitor Occasional Low spend Small
To Buyer You Frequent High spend Large
Business is about behavioural change
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Our issue Research Resolution
Businesses turn to Research to resolve this uncertainty
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Client issue Research Resolution
Traditional Research engagement process
Market share decline of 2.5%
> Reinvigorate brand
> Preferred to competitor > Gain market share
Product concept Launch
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Client issue Research Resolution
Market share decline of 2.5%
> Reinvigorate brand
> Preferred to competitor > Gain market share
Product concept Launch
Clients can be blindsided by behaviour
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
There is a gap between intended and actual behaviour
Intended behaviour
Actual behaviour
• Speculative • Contextual response
• Historical • Rationalised explanation
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
I will… I would… I think…
They did… I observed…
Most research is based on might do or have done
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
What will they do?
I will… I would… I think…
They did… I observed…
When clients want will do
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
I will… I would… I think…
They did… I observed…
Behavioural Economics
They are
likely to…
Behavioural Economics can bridge the gap
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
The study of emotional, cognitive and social
influences on economic decision making behaviour.
What we do. How we are influenced. What we are likely to do.
Behavioural Economics
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
“Rational man” Psychological needs states
Behavioural Economics
Behavioural Economics fits between economics and psychology
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
We are irrational We are irrational
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
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We are irrational We are irrational Patterns to behaviour
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
Patterns of irrational behaviour are identified through scientific study
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
These principles can be grouped into four categories
4. Ownership
Own position
3. Potency
Vividness of outcome
1. Congruence
Make sense of things
2. Simplification
Simplify decisions
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
1.Congruence
1. Congruence
Make sense of things
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
2. Simplification
2. Simplification
Simplify decisions
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
3. Potency
3. Potency
Vividness of outcome
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
4. Ownership
4. Ownership
Own position
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
People Patterns Behavioural Economics framework
4. Ownership
Own position
3. Potency
Vividness of outcome
1. Congruence
Make sense of things
2. Simplification
Simplify decisions
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Ambiguity effect Anchoring
Bandwagon effect
Certainty bias
Choice bracke>ng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discoun>ng
Informa>on avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accoun>ng
Loss aversion
Representa>veness
Resolving cogni>ve dissonance
Status Quo(default) bias
Adapta>on
Comple>on
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
PaPern recogni>on Procedural fairness
Rela>vity Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heuris>c Halo effect
Systems 1 & 2
Scarcity percep>on
Heuris>cs Deple>on effects
Free
Inter temporal choice
Confirma>on bias Choice paradox Rules of thumb
People Patterns Behavioural Economics framework
4. Ownership
Own position
3. Potency
Vividness of outcome
1. Congruence
Make sense of things
2. Simplification
Simplify decisions
Are likely to
do
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Industry examples of applied Behavioural Economics
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Are likely to do
Have done
Say they’ll
do
A behavioural framework can deliver answers about what people will do
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Are likely to do
Have done
Say they’ll
do
Helping your client resolve their issue
3. Potency
Scarcity perception
4. Ownership
Loss aversion
2. Simplification
Bandwagon effect
1. Congruence
Information avoidance
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Deliver behavioural answers to your clients
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Thank you
Bri Williams
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Q & A
Sue York NewMR
Bri Williams People Patterns
Speaker: Bri Williams, People Patterns, Australia NewMR Behavioural Economics Event, 19 April 2012, Session 1
Bri Williams
Email [email protected]
Call 0408 392 173
Follow @peoplepatterns
Visit www.peoplepatterns.com.au
Read more on Behavioural Economics
Bri’s blog www.peoplepatterns.com.au
Bri’s book 22 Minutes to a Better Business
A Presenta*on from The NewMR Behaviour Economics Event
19 April 2012
Delivering client advantage with Behavioural Economics Bri Williams, People Pa:erns
Event sponsored by Greenbook All copyright owned by The Future Place and the presenters of the material
For more informa>on about Greenbook visit www.greenbookblog.org For more informa>on about NewMR events visit newmr.org
