why every business needs behavioural economics
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Every business is about behaviour, so isn't it important to know about what makes us do what we do?TRANSCRIPT
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What business are you in?
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Wrong.
You’re in the business of behaviour.
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I mean, just think about it.
We spend all day geDng people to DO something.
Turn up. Listen. Agree. Buy.
Write, read, type, talk, come, go…. 3 People Pa4erns Pty Ltd. All rights reserved.
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So isn’t it a good thing to understand what influences behaviour?
In fact, isn’t it an imperaOve?
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Welcome to behavioural economics.
Think of it like a playbook on human behaviour;
what influences us to DO something what influences us to NOT DO
something
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Like most things, it seems complicated when you start.
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I mean there are so many concepts to get across!
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Ambiguity effect
Anchoring
Bandwagon effect
Certainty bias
Choice brackeOng
Clustering illusion
Decoupling
Endowment effect
Diagnosis bias
Framing
Hedonic framing Hyperbolic discounOng
InformaOon avoidance
Actor-‐observer bias
Availability bias Impact bias
Mental accounOng
Loss aversion
RepresentaOveness
Resolving cogniOve dissonance
Status Quo(default) bias
AdaptaOon
CompleOon
Contra free loading Drop in the bucket effect
Herding
Ikea effect
Not invented here bias
Pa4ern recogniOon Procedural fairness
RelaOvity
Revenge
Short term bias
Self herding
Sunk cost
Vividness Fluency
Judgment heurisOc Halo effect
Systems 1 & 2
Scarcity percepOon
HeurisOcs
DepleOon effects
Free
Inter temporal choice
ConfirmaOon bias Choice paradox Rules of thumb
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But really it comes down to four core rules…
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4. Ownership
Own position
3. Potency
Vividness of outcome
1. Congruence
Make sense of things
2. Simplification
Simplify decisions
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And an understanding that as consumers, there are behavioural influences that compel us to do
something and to not do something
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As consumers we are kind of like magnets.
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Some behavioural influences a4ract us to DO something.
That’s a be4er opOon than the
other one
I can get it today!
I don’t have to pay for ages
I’m almost done so I may as well
finish
They’re almost out of stock so I be4er get one
now
I chose it last Ome and it was ok, so I’ll choose
it again
I prefer the one I helped design
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Whereas others influence us to NOT DO something.
It’s too hard to choose. I’ll just do
nothing
I’ll sOck with what I did last Ome
I’ve put too much effort in to stop
now
That fact doesn’t make sense with what I know so it must be wrong
I have more to lose than gain
My contribuOon won’t make a difference
My idea was much be4er
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Once you know the reasons behind what influences behaviour, you’ll see your business in a whole new
way.
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Because you’re in the business of behaviour.
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Email [email protected] Call 0408 392 173 Follow @peoplepa4erns Visit www.peoplepa4erns.com.au Read more on Behavioural Economics Bri’s blog www.peoplepa4erns.com.au Bri’s book 22 Minutes to a Be4er Business
Find out more about the business of behaviour
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