newmr behavioural economics

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Speaker: Ray Poynter, VCU @ Vision Critical, UK NewMR Behavioural Economics Event, 19 April 2012, Session 1 An Introduction to Behavioural Economics 19 April 2012

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Page 1: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

An Introduction to Behavioural Economics19 April 2012

Page 2: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Agenda

1. The context for Behavioural Economics

2. Key themes

3. Implications for market research

4. Further reading

5. Closing thoughts

Page 3: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Rational

Consumers

Page 4: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Wages are

sticky

Page 5: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Psychology

Cognitive Psychology

Social Psychology

Evolutionary Psychology

Page 6: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Ultimatum Game

Originally proposed by Güth, Schmittberger, and Schwarze

Page 7: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

We are to thinking as cats

are to swimming

we can do it if we have to

Daniel Kahneman

Page 8: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

System 1 and 2

System 1

– Make a disgust face when

shown horrible picture

– Calculate 2+2=?

– Drive car on empty road

– Detect that one object is

more distant than another

– Complete the phrase

“Bread and ……”

System 2

– Focus on one person’s

voice in a crowded room

– Fill out a tax form

– Walk faster than is normal

for you

– Compare two washing

machines for overall value

– Look for a woman with

white hair

From Daniel Kahneman’s Thinking Fast and Slow

Page 9: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Context

Dan Ariely

Page 10: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Default and Inertia

Page 11: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Rating Problem

Page 12: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Priming, Anchoring, Framing

How expensive do you think a business return

flight from London to New York in May will be?

______

What would you expect to pay for an

economy return flight from London to Paris

in May? (pick the answer closest to the number in your mind)

a. Less than £40

b. £40

c. £80

d. £120

e. £160

f. More than £200

a. Less than £100

b. £150

c. £200

d. £250

e. £300

f. More than £300

Page 13: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Implications for Market Research

1. Back to basics– Research is a psychological instrument

– Experimental design

– Consistent relationship between response & action

2. Key elements– Context

– System 1 or 2

– Is the decision personal or social?

Page 14: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Further Reading

Page 15: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

4 Thoughts

1. Don’t throw the baby out with the bathwater

2. The issues raised by BE are reasons to use professional researchers, and a risk for DIY

3. Don’t just use a technique you’ve used before, think about why and how it might work?

4. Of all the points BE raises, context is probably the most ‘powerful’

Page 16: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Thank You

Page 17: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Q & A

Sue York

NewMR

Ray Poynter

Vision Critical

Page 18: NewMR Behavioural Economics

Speaker: Ray Poynter, VCU @ Vision Critical, UKNewMR Behavioural Economics Event, 19 April 2012, Session 1

Ray Poynter and Vision Critical

1-7 Boundary Row

London, SE1 8HP

United Kingdom

Phone: +44 (0) 20 7633 2900

T: @RayPoynter

L: http://www.linkedin.com/in/raypoynter