Author: David Greenwood

💎 A real world example of the power of defaults in shaping behaviour (car insurance)

The taxpayers of New Jersey and Pennsylvania felt the brunt of this firsthand in a real-life experiment in 1992. Both states switched that year to a no-fault insurance regime where consumers could save money by limiting their right to sue for tort damages, but the way the option was framed differed by state: New Jersey made limited right to sue the default option, while Pennsylvanians were presumed to select full right to sue, unless they opted out. This small change in the status quo had a profound effect on their behavior: 75 percent of Pennsylvania consumers paid to retain full tort, while only 20 percent of New Jersey consumers did.

Similar effects have been found with many other kinds of behavior, including student loan repayment and even, interestingly, willingness to donate organs.

Excerpt from: Blindsight: The (Mostly) Hidden Ways Marketing Reshapes Our Brains by Matt Johnson and Prince Ghuman

💎 How constraints inspire creative thinking (the birth of just-in-time manufacturing)

It’s often assumed that Just-in-Time (JIT) Manufacturing was devised by the Japanese in the 1970s. It wasn’t. The Empire State Building, built in 1931-32, is a great example of JIT building. New York City refused the builders permission to store materials on site in case it disrupted traffic on Fifth Avenue. To overcome the problem, the architects, working without a computer, scheduled the delivery of all materials so that they could be unloaded from a truck and immediately fitted into place on the building. At the height of the construction, trucks were drawing up outside the building site every ten minutes!

Excerpt from: The Little Book of Big Management Theories: and how to use them by James McGrath and Bob Bates

💎 On the folly of forecasting (those who predict don’t have knowledge)

As the sixth-century BC poet and philosopher Lao Tzu observed, “Those who have knowledge don’t predict. Those who predict don’t have knowledge.”

Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier

💎 On how we evaluate ourselves by comparing to known references (cognitive dissonance)

Leon Festinger and Merrill Carlsmith of Stanford University once asked their students to carry out an hour of excruciatingly boring tasks. They then divided the subjects into two groups. Each student in group A received a dollar (it was 1959) and instructions to wax lyrical about the work to another student waiting outside – in other words, to lie. The same was asked of the students in group B, with one difference: they were given $20 for the task. Later, the students had to divulge how they had really found the monotonous work. Interestingly, those who received only a dollar rated it as significantly more enjoyable and interesting. Why? One measly dollar was not enough for them to lie outright; instead they convinced themselves that the work was not that bad. Just as Aesop’s fox reinterpreted the situation, so did they. The students who received more didn’t have to justify anything. They had lied and netted $20 for it – a fair deal. They experienced no cognitive dissonance.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On harnessing social proof in ads (and not making it dull)

Many years ago, the Ford Motor Company wanted to tell American motorists that they sold more convertibles than did any other automobile manufacturer. They could perfectly well have said: ‘America’s bestselling convertible.’ Instead they ran a headline that read: ‘The only convertible that outsells Ford.’ And the picture was of a baby-carriage. That is a kind of humour; and it’s almost a joke. It certainly depends entirely on a contribution from its audience for the communication to be complete. But the contribution is a small and pleasurable one, well within the capacity of anyone in the market for a car. And what could have been a piece of self-congratulatory manufacturer’s so-whattery became engaging evidence of confident leadership. The point had been seen.

Excerpt from: Behind the Scenes in Advertising, Mark III: More Bull More by Jeremy Bullmore

💎 On how survey answers vary according to the medium (whether asked online or in the presence of someone else)

But people give different answers to certain questions when they are sitting in front of a computer screen alone from those they express when someone is there to ask the question. In one study, the answers to questions such as “How do you manage on your income?” varied between 29.9% and 47.7% saying they were “comfortable,” depending on whether the question was answered in the presence of someone else or not.

Excerpt from: Consumerology: The Truth about Consumers and the Psychology of Shopping by Philip Graves

💎 On comparing new technology to old (to anchor improvements)

The long-distance telegraph began with a portent—Samuel F. B. Morse, standing in the chambers of the US Supreme Court on May 24,1844, wiring his assistant Alfred Vail in Baltimore a verse from the Old Testament: “WHAT HATH GOD WROUGHT.” The first thing we ask of any new connection is how it began, and from that origin can’t help trying to augur its future.

The first telephone call in history, made by Alexander Graham Bell to his assistant on March 10, 1876, began with a bit of a paradox. “Mr. Watson, come here; I want to see you”—a simultaneous testament to its ability and inability to overcome physical distance.

The cell phone began with a boast—Motorola’s Martin Cooper walking down Sixth Avenue on April 3, 1973, as Manhattan pedestrians gawked, calling his rival Joel Engel at AT&T: “Joel, I’m calling you from a cellular phone. A real cellular phone: a handheld, portable, real, cellular phone.”

Excerpt from: Algorithms to Live By: The Computer Science of Human Decisions by Brian Christian and Tom Griffiths

💎 On the power of anchoring (for items that are hard to value)

Another experiment: students and professional real-estate agents were given a tour of a house and asked to estimate its value. Beforehand, they were informed about a (randomly generated) listed sales price. As might be expected, the anchor influenced the students: the higher this price, the higher they valued the property. And the professionals? Did they value the house objectively? No, they were similarly influenced by the random anchor amount. The more uncertain the value of something – such as real estate, company stock or art – the more susceptible even experts are to anchors.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On the power of a small first commitment (foot-in-the-door)

In the mid-1960s psychologists Jonathan Freedman and Scott Fraser published an astonishing set of data. They reported the result of an experiment in which a researcher, posing as a volunteer worker, had gone door to door in a residential California neighborhood making a preposterous request of homeowners. The homeowners were asked to allow a public-service billboard to be installed on their front lawns. To get an idea of just how the sign would look, they were shown a photograph depicting an attractive house, the view of which was almost completely obscured by a very large, poorly lettered sign reading DRIVE CAREFULLY. Although the request was normally and understandably refused by the great majority (83 percent) of the other residents in the area, this particular group of people reacted quite favorably. A full 76 percent of them offered the use of their front yards.

The prime reason for their startling compliance has to do with something that had happened to them about two weeks earlier: They had made a small commitment to driver safety. A different volunteer worker had come to their doors and asked them to accept and display a little three-inch-square sign that read BE A SAFE DRIVER. It was such a trifling request that nearly all of them had agreed to it. But the effects of that request were enormous. Because they had innocently complied with a trivial safe-driving request a couple of weeks before, these homeowners became remarkably willing to comply with another such request that was massive in size.

Excerpt from: Influence: The Psychology of Persuasion by Robert Cialdini

💎 On the benefits of getting customer feedback on prototypes (as early as possible) rather than the finished product

The level of feedback you get is so much more valuable and impactful… The problem with showing something to consumers when it’s almost totally done, people don’t necessarily want to give negative feedback at that point because it looks like, “This company has spent a lot of money already getting it to this stage and now I’m going to tell them, ‘It sucks.’ ” On the other hand, if something hangs together with tape, and it’s clear that it’s an early prototype, the mindset of consumers often is, “These people still need some help, so let me tell you what I really think about it.”

Excerpt from: Little Bets: How breakthrough ideas emerge from small discoveries by Peter Sims

💎 On our desire for variety being greater at purchase not consumption (think All-Bran in cereal variety packs)

We also seem to crave more variety at the point of decision than we will actually desire down the road. When I was young, for example, I was obsessed by the Kellogg’s variety packs of cereal. Wooed by the sight of the Apple Jacks and Frosted Flakes jostling up against each other, I would clamor for my parents to buy the largest package on offer, a towering block of shrink-wrapped goodness. Having raced through my favorites, however, I would find my liking gradually diminishing, from dizzy Applejacks heights to the sad denouement of a few sparse clusters of Special K and All-Bran, which often went unconsumed, dying a slow death in a shroud of plastic. My parents would, of course have been better off simply buying a few boxes of my favorites, which I would reliably eat every day.

Excerpt from: You May Also Like: Taste in an Age of Endless Choice by Tom Vanderbilt

💎 On personalisation being nothing new (YOUR COUNTRY NEEDS YOU)

So they ran a recruitment poster.

But the visual didn’t show massed ranks of soldiers.

With the headline, ‘THE BRITISH ARMY IS SHORT OF TWO MILLION NEW RECRUITS’.

The visual was Kitchener pointing out of the poster, straight at the person looking at the poster.

And the headline said, ‘YOUR COUNTRY NEEDS YOU’.

One-to-one.

And that poster worked.

It got millions of recruits.

By talking to people one at a time.

It was so successful the USA copied it a few years later with a picture of Uncle Sam and the same headline.

And it recruited millions of men there, too.

Excerpt from: Predatory Thinking: A Masterclass in Out-Thinking the Competition by Dave Trott

💎 On the power of prestige (name versus quality)

Of the twelve journals, only three spotted that they had already published the article. This was a grave lapse of memory on the part of the editors and their referees, but then memory is fallible; however, worse was to come. Eight out of the remaining nine articles, all of which had been previously published, were rejected. Moreover, of the sixteen referees and eight editors who looked at these eight papers, every single one stated that the paper they examined did not merit publication. This is surely a startling instance of the availability error. It suggests that in deciding whether an article should be published, referees and editors pay more attention to the authors’ names and to the standing of the institution to which they belong than they do to the scientific work reported.

Excerpt from: Irrationality: The enemy within by Stuart Sutherland

💎 On the secret behind the world’s first aspirational root vegetable (scarcity)

Scarcity is a great way to make something seem more attractive and valuable. The Blues Brothers famously played ‘for one night only’ and Bernd Pichetsrieder, the great BMW marketing guru insisted on ‘always selling one less than you can’.

This kind of strategy is sometimes called the ‘velvet rope’ – ‘you can’t come in’ often makes something that much more appealing. This was also the trick behind the story of how Frederick the Great turned Prussia into a potato eating nation – he insisted that no-one but the nobility could eat the potato. The ‘aspirational’ root vegetable? Believe it.

Excerpt from: Copy, Copy, Copy: How to Do Smarter Marketing by Using Other People’s Ideas by Mark Earls

💎 On the tendency to interpret information to fit with our own behaviour (smoking and lung cancer)

My personal favourite from Festinger’s many brilliant examples of cognitive dissonance deals with people’s beliefs about the link between smoking and lung cancer. He was writing at the very birth of research on the causes of cancer. It was a unique window of time during which it was possible to test whether groups of smokers and non-smokers would accept or reject new information that had been uncovered about a link. Festinger saw the effects you’d expect from anyone suffering cognitive dissonance: heavy smokers – those who had the most to lose from the new research being right – were the most resistant to believing that a link had been proven; only 7 per cent accepted the validity of the new research. Twice as many moderate smokers accepted the link, at 16 per cent. Non-smokers were much more willing than smokers to believe the link had been proven, but as a mark of just how far social norms have swung since then, only 29 per cent of them believed the link had been proven, despite having nothing to lose.

Excerpt from: The Perils of Perception Why We’re Wrong About Nearly Everything by Bobby Duffy

💎 On the power of choice architecture in determining what we eat (eat your Broccoli, kids)

Wansink moved broccoli to the beginning of the line. The first thing hungry students now saw wasn’t fast food. Fruit was taken out of functional containers and put in an attractive wooden bowl. The salad bar went in front of the tills, making it more prominent, something you couldn’t avoid. The ice cream freezer went from invitingly transparent to opaque. Buying sugar-rich desserts was made more complex, requiring additional calculations. Wansink hadn’t actually added anything, the food on offer was the same, but he rearranged the process. The results were clear.

Broccoli consumption increased by 10-15 per cent. Fruit sales from the wooden bowl doubled. Sales of salad tripled. The percentage of students buying ice cream fell from 30 per cent to 14 per cent. In general the composition of meals was far healthier. Arrangement, not any other inducement, led to healthy eating. Wansink studied other instances of how food’s presentation and arrangement affects our relationship with it.

Excerpt from: Curation: The power of selection in a world of excess by Michael Bhaskar

💎 On the power of personalised messages (especially images)

Recently, the Behavioural Insights Team began altering the letter sent to British citizens if they failed to pay taxes on their car. The traditional letter was all text, informing the subject that if they didn’t pay now they would be hit with various penalties, including a clamped or and hefty fines. To increase the effectiveness of the letter, the scientists began experimenting with various forms of personalization. The first variant involved making a more specific threat, telling recipients that they would lose their particular model of car if they didn’t pay the tax. The second variant featured a personalized visual, so that the letter came attached with a photograph of the actual car question. While both approaches increased compliance, the customized picture was the most effective—it increased the compliance rate from 40 to 49 percent.

Excerpt from: The Smarter Screen: Surprising Ways to Influence and Improve Online Behavior by Shlomo Benartzi and Jonah Lehrer