A promotion was launched that gave Xbox users 20 Microsoft points, a digital currency issued by Microsoft that could be used purchase a range of digital goods. There were a number of criticisms of this since discontinued digital currency, not least because points were deceptive in terms of actual real-world cost. 79 Microsoft Points was, at one point, worth about $0.99 USD.
Some back-of-the-napkin math shows Microsoft’s birthday present of 20 Microsoft points was worth just $0.25! “Don’t spend it all at once”, “100 more years and I can buy a game” and “thanks Microsoft!” are just a few of the sarcastic comments posted in the very public Xbox forums.
Microsoft got it wrong. In this instance no reward, the status quo, or simply saying “thank you” would have been better than all the negative press garnered from offering such a relatively small sum to reward users.
We reject “petty” financial rewards that do not meet our expectations. When we do accept them, it can have a negative impact on our satisfaction.
So the local community has formed a group called EXIT, to help educate and de-radicalise young people, to encourage them to leave the group and help them find better lives.
But EXIT needs funding.
So the townspeople have decided, since they can’t stop the neo-Nazis marching, to use the march for their own ends.
Instead of resisting the march they are now encouraging the march.
Because they are using the march to raise money.
For every metre the neo-Nazis march, local businesses are donating ten euros to EXIT.
So the neo-Nazis will now be marching to fund EXIT.
The further they march, the more money EXIT gets.
If the neo-Nazis don’t like it they can stop marching.
Whichever way they decide, it’s a result for the local community.
Whether the neo-Nazis march or not, the little village wins.
The inhabitants now treat the march as something to enjoy and have fun with.
Every 100 metres there are signs stencilled on the ground, thanking the marchers for the money they’re raising:
YOU HAVE RAISED 1,000 EUROS FOR EXIT.
YOU HAVE RAISED 2,000 EUROS FOR EXIT.
YOU HAVE RAISED 3,000 EUROS FOR EXIT.
And so on.
By the time the neo-Nazis reach the cemetery they’ve marched a kilometre, which means they’ve raised 10,000 euros for EXIT.
So there is a huge rainbow sign thanking them, and the locals throw rainbow confetti over them.
Loewenstein writes of a test in which participants were confronted by a grid of squares on a computer screen. They were asked to click on five of them. Some participants found that with each click, another picture of an animal appeared. But a second group saw small component parts of a single animal. With each square they clicked, another part of a greater picture was revealed. This second group were much more likely to keep on clicking squares after the required five, and then keep going until enough of them had been turned that the mystery of the animal’s identity had been solved. Brains, concluded the researchers, seem to become spontaneously curious when presented with an ‘informations set’ they realise is incomplete. ‘There is a natural inclination to resolve information gaps,’ wrote Lowenstein, ‘even for questions of no importance.’
Excerpt from: The Science of Storytelling by Will Storr
In advertising, we assume the only way to get an emotional response is with an emotional appeal.
But Bill Bernbach knew that isn’t true.
Look at the history of Volkswagen advertising.
For fifty years they did product demonstrations.
And they build a brand that has massive emotional appeal.
Ask anyone about VW and they’ll say “reliable”.
That’s an emotional response based on rational advertising.
Because a rational demonstration can have a more powerful emotional affect than something vacuous designed purely to appeal to the feelings.
Done properly, reason is emotion.
Excerpt from: Creative Mischief by Dave Trott
Reason, despite what we would like to think, is not why we do what we do: it is the result of what we feel or do.
Famed adman David Ogilvy recognized this long ago when he wrote:
“Customers need a rational excuse to justify their emotional decisions. So always include one.”
(In France I once saw this expressed as “le rationnel est l’alibi du desir”.)
Why I love this observation is that Ogilvy uses a word not often given an airing in the communications business: excuse. Not reason or even (eugh) benefit or proposition, but excuse.
Excerpt from: The Storytelling Book (Concise Advice) by Anthony Tasgal
Think of all the ways people steal your time. Seneca, the Roman Stoic philosopher, wrote, ‘People are frugal in guarding their personal property; but as soon as it comes to squandering time, they are most wasteful of the one thing in which it is right to be stingy.’ Though Seneca was writing more than 2,000 years ago, his words are just as applicable today. As he noted, people protect their property in all sorts of ways – locks, security systems and storage units – but most do little to protect their time.
They invited students to a lab at Harvard University and asked them to rate pictures of various home interiors. In exchange for their time, they were given $10, but told that they were required to pay a “lab tax” of $3. The instruction was to put $3 in an envelope and hand it to the experimenter before they left. The students were not thrilled by this plan. Only half complied; the other half either left the envelope empty or gave less than the required amount.
Another group of participants, however, was told that they could advise the lab manage on how to allocate their tax money. They could suggest, for example, that their taxes would be spent on beverages and snacks for future participants. Astonishingly, merely giving participants a voice increased compliance from about 50 percent to almost 70 percent! That is dramatic. Imagine what such an increase in compliance would mean for your country, if it were translated to federal taxes.
Why do guests do this? In 2011, Francesca Gino from Harvard and Frank Flynn from Stanford conducted an experiment to find out. They recruited ninety people and then allocated them to one of two conditions. Half became ‘senders’ while the other half became ‘receivers’. The receivers were then asked to go to Amazon and come up with a wish list of gifts priced between $10 and $30. Meanwhile, the senders were allocated to either choose a gift from the wish list, or a unique gift.
The result were emphatic. The senders expected that recipients would prefer unique gifts – ones they had chosen themselves. They supposed that recipients would welcome the personal touch. But they were wrong. Recipients would welcome the personal touch. But they were wrong. Recipients, in fact, much preferred gifts from their own list. The psychologist Adam Grant reports the same pattern with friends giving and receiving wedding gifts. Senders prefer unique gifts; recipients prefer gifts from their wedding list.
Why? It hinges upon perspective blindness. Senders find it difficult to step beyond their own frame of reference. They imagine how they would feel receiving the gift that they have selected.
The students were unanimous. And full of bravado. Of course they would honk. And they certainly wouldn’t make any distinction between the two cars. Some claimed they would honk sooner at the high-status car. But what actually happened on the roads that subsequent sunny Sunday morning told a different story. Whilst overall close to 70 percent of waiting drivers sounded their horns in frustration, the distribution of results was unevenly split between the two cars. Fewer than 50 percent honked at the high-status car; 84 percent hooted at the lower-status car. Not only was a Californian driver’s likelihood to honk influence by the status of the car that was delaying them, but their latency to honk was influenced, too. When behind a low-status car, people would sound the horn much sooner than when behind a high-status one. Very often, more than once.
A clever study by the Rotterdam School of Management analysed more than three hundred real-world projects dating back to 1972 and found that projects led by junior managers were more likely to succeed than those with a senior person in charge. On the face of it, this seems astonishing. How could a team perform better when deprived of the presence of one of its most knowledgeable members?
The reason is that this leadership comes at a sociological price when linked to a dominance dynamic. The knowledge squandered by the group when a senior manager is taken out of the project is more than compensated for by the additional knowledge expressed by the team in his absence.
I’ve been to several scientific conferences at which Professor Kahneman has spoken; and, when Daniel Kahneman talks, people listen. I am invariably among them. So I took special notice of his answer to a fascinating challenge to put to him not long ago by an online discussion site. He was asked to specify the one scientific concept that, if appreciated properly, would most improve everyone’s understanding of the world. Although in response he provided a full five-hundred-word essay describing what he called “the focusing illusion,” his answer is neatly summarized in the essay’s title: “Nothing in life is as important as you think it is while you are thinking about it.”
Today, information technology is changing the world making it more idea intensive, better connected, and ultimately more urban. Improvements in information technology seem to have increased, rather than reduced, the value of face-to-face connections, which might be called Jevons’s Complementarity Corollary. The nineteenth-century English economist William Stanley Jevons noted that more fuel-efficient steam engines didn’t lead to less coal consumption. Better engines made energy use effectively less expansive, and helped move the world to an industrial era powered by coal. The term Jevons’s paradox had come to refer to any situation in which efficiency improvements lead to more, not less consumption — one reason why low-calorie cookies can lead to larger waistlines and fuel-efficient cars can end up consuming more gas. Jevons’s paradox applied to information technology means that as we acquire more efficient means of transmitting information, like e-mail or Skype, we spend more, not less, time transmitting information.
Excerpt from: Triumph of the City by Edward Glaeser
Yet there are, when you think about it, two different approaches to business. The is the ‘tourist restaurant’ approach, where you try to make as much money from people on their single visit. And then there is the ‘local pub’ approach, where you may make less money from people on each visit, but where you profit more over time by encouraging people to come back. The second type of business is much more likely to generate trust and yield positive-sum outcomes than the firsy.
How might people distinguish the second type of business from the first? Well, the scoop of extra fried you get at Five Guys is one such gesture – an immediate expense with a deferred pay-off. It is a reliable signifier that you are investing in a repeat relationship, not milking a single transaction. Likewise, when your company pays your salary this month, it says you are worth this money for now; when it sends you to Kitzbuhel, it signals that it is committed to you for a few years at least.
All too often, we find ourselves unable to predict what will happen; yet after the fact we explain what did happen with a great deal of confidence. This “ability” to explain that which we cannot predict, even in the absence of any additional information, represents an important, though subtle, flaw in our reasoning. It leads us to believe that there is a less uncertain world than there actually is, and that we are less bright than we actually might be. For if we can explain tomorrow what we cannot predict today, without any added information except the knowledge of the actual outcome, then this outcome must have been determined in advance and we should have been able to predict it. The fact we couldn’t is taken as an indication of out limited intelligence rather than of the uncertainty that is in the the world.
In general people prefer something freely chosen to the same thing forced upon them. The effect is dramatically revealed in a study that did not directly involve reward or punishment. Lottery tickets costing $1 each were sold to the employees of two companies. Some of the employees were allowed to choose the number of their tickets, others had no choice but were merely handed a ticket. Just before the draw, the experimenter approached each subject offering to buy the ticket back. The subjects who had no choice were prepared to sell back for $1.96 on average, but those who had selected their own tickets held out for an average of $8.67. There could be no better demonstration that we irrationally overvalue what we freely choose.
Excerpt from: Irrationality: The enemy within by Stuart Sutherland
Big doesn’t necessarily mean good. It could even be bad.
By contrast, there are tremendous advantages to making small changes.
Behavioural science has shown that tiny variations in phraseology can cause huge change.
Small changes are usually less costly, and often free.
Small changes attract less attention from bosses and meddlers, so they are easier to implement.
Small changes are easier to rectify if they don’t achieve their original objective.
So bear in mind that the ‘next big thing’ could be small.
Naive realism suggests an answer: they do. It calls to mind a famous line of George Carlin’s: “Have you ever noticed that everyone driving slower than you is an idiot, and anyone going faster is a maniac?”
The worst-performing clubs were built on affective ties and primarily social; the best-performing clubs had limited social connections and were focused on increasing returns. Dissent was far more frequent in the high-performing clubs. The low performers usually had unanimous votes, with little open debate. Harrington found that the votes in low-performing groups were “cast to build social cohesion rather than make the best financial decision.” In short conformity resulted in significantly lower returns.
Some people, and businesses generally, love having lots of people rushing around.
It makes them feel productive.
Regardless of what they are doing, all the frenetic activity suggests that much helpful work is being done.
People even say sometimes that they like the buzz.
But it’s a bit like a goalkeeper diving to save a penalty.
He might be just as effective staying exactly where he is.
So movement doesn’t necessarily mean progress.
Don’t confuse the two.
One day, Korzybski offered to share a packet of biscuits, which were wrapped in plain paper, with the font row of his lecture audience. ‘Nice biscuit, don’t you think?’ said Korzybski, while the students tucked in happily. Then he tore the white paper and revealed the original wrapper – on it was a picture of a dog’s head and the words ‘Dog Cookies’. Two students began to retch, while the rest put their hands in front of their mouths or in some cases ran out of the lecture hall to the toilet. ‘You see,’ Korzybski said, ‘I have just demonstrated that people don’t just eat food, but also words, and that the taste of the former is often outdone by the taste of the latter.’
Only 1.5 percent of the purchase price goes directly into your agent’s pocket.
So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500… Not bad, you say. But what if the house was actually worth more than $300,000? What if, with a little more effort and patience and a few more newspaper ads, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. But the agent’s additional share — her personal 1.5 percent of the extra $10,000 — is a mere $150…
It turns out that a real-estate agent keeps her own home on the market an average of ten days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and to make them fast. Why not? Her share of a better offer — $150 — is too puny an incentive to encourage her to do otherwise.
When our bathroom scale delivers bad news, we hop off and then on again, just to make sure we didn’t misread the display or put too much pressure on one foot. When our scale delivers good news, we smile and head for the shower. By uncritically accepting evidence when it pleases us, and insisting on more when it doesn’t, we subtly tip the scales in our favor.
There is a parallel in the behaviour of bees, which do not make the most of the system they have evolved to collect nectar and pollen. Although they have an efficient way of communicating about the direction of reliable food sources, the waggle dance, a significant proportion of the hive seems to ignore it altogether and journeys off at random. In the short term, the hive would be better off if all bees slavishly followed the waggle dance, and for a time this random behaviour baffled scientists, who wondered why 20 million years of bee evolution had not enforced a greater level of behavioural compliance. However, what they discovered was fascinating: with out these rogue bees, the hive would get stuck in what complexity theorists call ‘a local maximum’; they would be so efficient at collection food from known sources that, once these existing sources of food dried up, they wouldn’t know where to go next and the hive would starve to death. So the rogue bees are, in a sense, they hive’s research and development function, and their inefficiency pays off handsomely when they discover afresh source of food. It is precisely because they do not concentrate exclusively on short-term efficiency that bees have survived so many million years.
If you optimise something in one direction, you may be creating a weakness somewhere else.
In fact, the fun in gamification may crowd out important motives by changing how people see the experience entirely. In the late 1990s, economists Uri Gneezy and Aldo Rustichini tried to discourage parents from showing up late to collect their children from ten Israeli day care centers. The rational economic approach is to punish people when they’re doing the wrong thing, so some of the day care centers began fining parents who showed up late. At the end of each month, their day care bills reflected these fines — an attempt to dissuade them from showing up late the following month. In fact, the fines had the opposite effect. Parents at the day cate centers with fines showed up late more often than did parents at the day care center without fines. The problem, Gneezy and Rusitchini explained, was that the fines crowded out the motive to do the right thing. Parents felt bad coming late — until coming late became a matter of money. Then, instead of feeling bad, they saw coming late as an economic decision. The intrinsic motive to do good — to show up on time — was crowded out by the extrinsic motive to show up late in exchange for the fair price.
Business, technology and, to a great extent, government have spent the last several decades engaged in an unrelenting quest for measurable gains in efficiency. However, what they have never asked, is whether people like efficiency as much as economic theory believes they do. The ‘doorman fallacy’, as I call it, is what happens when your strategy becomes synonymous with cost-saving and efficiency; first you define a hotel doorman’s role as ‘opening the door’, then you replace his role with an automatic door-opening mechanism.
The problem arises because opening the door is only the notional role of a doorman; his other, less definable sources of value lie in a multiplicity of other functions, in addition to door-opening: taxi-hailing, security, vagrant discouragement, customer recognition, as well as in signalling the status of the hotel. The doorman may actually increase what you can charge for a night’s stay in your hotel.
When every function of a business is looked at from the same narrow economic standpoint, the same game is applied endlessly. Define something narrowly, automate or streamline it — or remove it entirely — then regard the savings as profit.
It is natural — reflexive even — to see the causes of human action in the character and disposition of those doing the acting. But as George Eliot noted at the end of Middlemarch, “There is no creature whose inward being is so strong that it is not greatly determined by what lies outside it.”
Sticky ideas have to carry their own credentials. We need ways to help people test our ideas for themselves — a “try before you buy” philosophy for the world of ideas. When we’re trying to build a case for something, most of us instinctively grasp for hard numbers. But in many cases this is exactly the wrong approach. In the sole U.S presidential debate in 1980 between Ronald Reagan and Jimmy Carter, Reagan could have cited innumerable statistics demonstrating the sluggishness of the economy. Instead, he asked a simple question that allowed voters to test for themselves: “Before you vote, ask yourself if you are better off today than you were four years ago.”
A few year ago, students at Harvard University were asked to make a seemingly straightforward choice: which would they prefer, a job where they made $50,000 a year (option A) or one where they made $100,000 a year (option B)?
Seems like a no-brainer, right? Everyone should take option B. But there was one catch. In option A, the students would get paid twice as much as others, who would only get $25,000. In option B, they would get paid half as much as others, who would get $200,000. So option B would make the students more money overall, but they would be doing worse than others around them.
What did the majority of people choose?
Option A. They preferred to do better than others, even if it meant getting less for themselves. They chose the option that was worse in absolute terms but better in relative terms.
Excerpt from: Contagious: Why Things Catch On by Jonah Berger
In 1986, Jonathan Shedler and Melvin Manis, researchers at the University of Michigan, created an experiment to simulate a trial. Subjects were asked to play the role of jurors and were given the transcript of a (fictitious) trial to read. The jurors were asked to assess the fitness of a mother, Mrs. Johnson, and to decide whether her seven-year-old son should remain in her care.
The transcript was constructed to be closely balanced: There were eight arguments against Mrs. Johnson and eight arguments for Mrs. Johnson. All the jurors heard the same arguments. The only difference was the level of detail in those arguments. In one experimental group, all the arguments against her had no extra details; they were pallid by comparison. The other group heard the opposite combination.
As an example, one argument in Mrs. Johnson’s favor said: “Mrs. Johnson sees to it that her child washes and brushes his teeth before bedtime.” In the vivid form, the argument added a detail: “He uses a Star Wars toothbrush that looks like Darth Vader.”
An argument against Mrs. Johnson was: “The child went to school with a badly scraped arm which Mrs. Johnson had not cleaned or attended to. The school nurse had to clean the scrape.” The vivid form added the detail that, as the nurse was cleaning the scrape, she spilled Mercurochrome on herself, staining her uniform red.
The researchers carefully tested the arguments with and without vivid details to ensure that they had the same perceived importance — the details were designed to be irrelevant to the judgment of Mrs. Johnson’s worthiness. It mattered that Mrs. Johnson didn’t attend to the scarped arm; it didn’t matter that the nurse’s uniform got stained in the process.
But even though the details shouldn’t have mattered, they did. Jurors who heard the favorable arguments with vivid details judged Mrs. Johnson to be a more suitable parent (5.8 out of 10) than did jurors who heard the unfavorable arguments with vivid details (4.3 out of 10). The details has a big impact.
In his far from mediocre book Risk Intelligence, Dylan Evans describes a professional backgammon player by the name of J.P. “He would make a few deliberate mistakes to see how well his opponent would exploit them. If the other guy played well, J.P. would stop playing. That way, he wouldn’t throw good money after bad. In other words, J.P. know something that most gamblers don’t: he knew when not to bet.” He knew which opponents would force him out of his circle of competence, and he learned to avoid them.