Learning and applying the principles of behavioural economics and the mental shortcuts or biases which we are all prone to can be bewildering and frustrating. When I checked on Wikipedia, there are 173 pages relating to biases of judgement and decision making, including long lists of decision making, belief and behavioural biases, social biases, and memory errors (link below). Similarly, The Visual Guide to Cognitive Biases by the Royal Society for Account Planners (worth reading, link below) lists over 100 different biases. Surely there must be some key principles to these?
In putting together a framework for thinking about behavioural change through the lens of these biases (called BehaviourWorks™), I believe that there are five core themes across the majority (not all) of the biases, and in the spirit of the first principle (simplicity), I have summarised these as SNAPP decision making, which stands for:
The first principle of Simplicity is that we are all easily overwhelmed by two much choice (even though we love to think it’s good for us). Too much information leads to poorer decision making (or no decision at all), as demonstrated in the famous jam experiment and discussed in The Paradox of Choice. We like to use simple rules of thumb, framing helps us choose the relevant (and limited) context for a decision, we don’t like change and we tend to go with default options (as in the example of organ donation cards).
To change or encourage a behaviour, this principle means that we should pay attention to the way choices are structured, use defaults and opt in/out to help decision making, provide hierarchy and chunk information for ease of understanding and remembering (as in SNAPP).
The second principle is that Normative behaviour is the norm. We like to follow what others are doing, and fit in with what others are thinking (even when we know they’re wrong in some situations). We follow the crowd, listen to authority figures, believe in those who have confidence, and follow local customs. The fundamental attribution error shows that context is far more important than we are prepared to believe.
To use this principle, give social proof, share norms and examples, provide ‘authoritative’ advice or develop rituals and interactions which people want to copy.
The third principle is Availability. We pay more attention and weight as more important, information which is “top of mind” be that because the outcome is more vivid (plane vs car safety) or more immediate (short term and long term impact of diet and exercise). This means that we are more likely to purchase something which appears more ‘scarce’ and are often impulsive. Impulsivity can of course be harnessed in good ways (as in the Westpac impulse saver app).
To harness this influence, understand the role of self control in a behaviour and the short and long term consequences. Harness impulsivity if it helps and above all make outcomes vivid and immediate. As we have written before, marketing is all about mental and physical availability.
The fourth principle is Personal, as we like to maintain a positive perspective on ourselves, even when we have competing drives or contradictory behaviours and beliefs. This is one of the reasons we are loss averse, and why cognitive dissonance is such an important issue in psychology. It’s also why we are always hopelessly over-confident in the future and our own abilities.
To leverage this principle, understand what there is to lose for the customer (time, money, status, effort, etc). Use guarantees, loyalty initiatives and starter points ton encourage behaviour. And remember that a small commitment at first can lead to bigger commitments later.
The fifth principle is Pattern. Our brains are constantly seeking patterns in the world, and we are strongly influenced by first impressions and by our anticipation of events, even when the information it provides is irrelevant. That’s why playing French or German music influences wine sales and why sitting someone in a soft chair can help you in negotiations. It’s also why anchoring is such an important issue in marketing and research, which is why pricing and choice frameworks can have such profound effects on decision making.
To harness the power of pattern, manage first impressions for long term impact (for example, by using packaging to create a wow), understand the context of decision making, and sequence choices deliberately (just as estate agents do).
In summary, here are five key themes of behavioural psychology:
- Keep it simple
- Go with the norm
- Make yourself available
- Keep it personal
- Leverage familiar patterns
Thinking, Fast and Slow by Daniel Kahneman
The Paradox of Choice by Barry Schwartz
List of biases in judgement and decision making at Wikipedia
The Visual Guide to Cognitive Biases by Royal Society of Account Planners