Week 6 Decision Making & Changing Behavior

Overview of Behavioral Influences

• Follow-up on Cialdini's work on influence.

• Focus on encouraging behavior change and better decision-making.

• Two key books: Thinking, Fast and Slow by Daniel Kahneman and Nudge by Richard Thaler and Cass Sunstein.

  • Both authors are credible, Nobel Prize winners in Economics.

  • Their work is based on solid experimental results, unlike many self-help approaches.

  • Nudge is more accessible compared to Kahneman's dense writing.

Key Concepts in Behavioral Science

Dual System Model of Thought

• System 1 (Fast thinking):

  • Automatic, instinctive responses (e.g., pulling back from heat).

  • Functions rapidly without conscious thought.

  • Influenced by emotional reactions.

• System 2 (Slow thinking):

  • Rational, deliberate decision-making.

  • Requires more cognitive effort (e.g., solving mathematical problems).

Cognitive Biases

• Mistakes made unconsciously during judgment; associated with both modes of thought.

1. Framing

• The way information is presented affects decision-making.

  • Example: Surgery decision framed positively (90% survival) versus negatively (10% mortality).

  • People accept surgery more readily when framed positively.

  • Important to frame questions carefully, especially in surveys or organizational communication.

2. Loss Aversion

• People fear losses more than they value equivalent gains.

  • Study Example: Coin toss with potential loss of €100 or potential gain of €200 indicates losses must be twice as significant to motivate risk-taking.

  • This bias explains decisions in contexts like sports (e.g., golfers putting under pressure).

3. Anchoring

• Initial exposure to a number or concept influences future decisions.

  • Experiment: Students who saw the number 90 guessed Gandhi's age at death higher than those who saw 20, demonstrating how anchors affect judgment.

  • Common in sales, where high initial prices anchor perceptions of value.

4. Sunk Cost Fallacy

• Continuing to invest in a decision based on prior investments rather than future value.

  • Example: Investing further in a failing venture to avoid losing initial money.

5. Availability Heuristic

• Decisions influenced by recent information or experiences.

  • Example: Fear of flying after hearing about a recent crash increases car travel, leading to more accidents on the road.

Choice Architecture

• Presented by Thaler and Sunstein in Nudge.

• Individuals who organize choices impact decision outcomes (choice architects).

  • Supermarket shelf placement impacts buying behavior, leveraging eye-level display for products.

Strategies for Encouraging Change (Based on Switch by the Heath Brothers)

1. Direct the Rider (Rational Brain)

• Persuade with logical arguments, but knowledge alone is insufficient.

2. Motivate the Elephant (Emotional Brain)

• Engage emotions to foster commitment (e.g., emphasize job security linked to cybersecurity).

3. Shape the Path

• Make desired behaviors easier through environmental changes.

  • Example: Remove temptations (e.g., avoid passing a donut shop to prevent impulse buys).

  • Practical security measures: Use fobs instead of keypad codes to control access more securely.

Experiments Demonstrating Behavioral Change

• Popcorn and soup studies illustrate how portion sizes influence consumption (larger containers lead to larger consumption).

• Selecting products: Fewer options lead to higher sales (jam experiment with 6 vs. 24 jars shows less choice leads to more purchases).

Storytelling as a Persuasion Tool

• Springboard Stories personalize messages, leading to stronger emotional connections.

  • Example: A story about a child needing surgery led to immediate public response and change in healthcare policy.

• Effective in cybersecurity: Show real examples of attacks to emphasize the need for security measures.

Conclusion

• Understanding behavioral influences can significantly enhance the effectiveness of communication and decision-making strategies.