If providing information and using logic alone doesn’t always work, what does? The key is to understand the cognitive biases and emotions that drive decision-making.
I recently took the Behavioral Economics Bootcamp by Irrational Labs. Irrational Labs was founded by author and professor Dan Ariely and Kristen Berman. They use behavioral insights in order to help people be happier, healthier and wealthier. The organization advises businesses such as Google, Uber and Indeed.com
Over 8 weeks, I’ve learnt about the biases that influence everyday decisions and the techniques to guide others towards making better choices.
I’ve summarized my top 5 learnings from the bootcamp in this post and hope that they will help you become more persuasive as well.
I hope that this knowledge can be used to help you become more influential at work; build stronger relationships and even support your loved ones as they navigate challenging issues in their lives.
Table of Contents
1. Give them a sense of ownership over your idea or product
There is a tendency of people to value an object or idea that belongs to them more than they would value if they didn’t own it.
Ownership creates an association between the self and the item. This possession-to-self link increases the perceived value of the item. This is also known as the Endowment Effect.
The more time you spend using and interacting with a product, the more it starts to feel like yours, and the harder it is to part with it.
Sometimes, companies may try to create a psychological perception by the consumer that they already own the item, thus making them reluctant to part with it at the end of the trial period.
So, by offering a free return policy, or at least a lenient one, this will also show your customers how nice and easy your service is whilst endowing them with the products post-purchase.
An example of a company that has used this strategy really well is IKEA.
The IKEA effect was first described by behavioral economist, Dan Ariely, from Duke University. We show pride and admiration for a piece of IKEA furniture that we put together. Just because we did the final assembly ourselves. We are aware that a major part of the labor was done at the factory. Yet, people assign higher value to furniture they have had a role in making.
Another tactic used is to force consumers to put items in their cart with IKEA’s one-way traffic system. The design forces customers to put any item that catches their eye in their cart right away.
Why? Let’s say you stop to consider a lamp but then decide not to put it in your cart. If you change your mind, the store design makes it inconvenient to go back and get the lamp. You’ll have to walk through the entire store to get back to that section.
When a customer puts something in their cart they begin to dream about their future with that item. Fantasizing about how it will look in their living room, and how much guests will admire it. Once customers create “pre-memories” they become emotionally bonded to the item.
How can you apply this?
When you are trying to sell your idea at work, involve people in coming up with your idea. For instance, when pitching an idea at work, give your manager and colleagues a chance to contribute to a part of your idea.
In fact, studies have shown that co-creation makes your boss and coworkers overvalue your idea. We see this in organizations all the time when managers to continue to devote resources to failing projects in which they have previously invested.
They now have an emotional attachment to it and see a part of themselves in it. They will even defend your idea to get it accepted by others.
2. Let them compare your request to something bigger
Anchoring bias is the human tendency to put more weight on the first piece of information offered than everything that follows.
This type of comparison is also known as anchoring. It is the most prevalent and impactful cognitive biases that we encounter in our daily lives.
For example, if you tell someone a product normally costs $9.99 they’ll instinctively think they’ve found a bargain when they see it advertised somewhere for $7.99.
It plays an important role in how we understand and assess prices, especially for goods with which we are unfamiliar.
This is commonly used in salary negotiations.
Imagine that you are trying to negotiate your salary. You might hesitate to make an initial offer, but research suggests that being the first one to lay your cards down on the table might actually be the best way to go. This is especially if you have already found out the budget of the role via external recruiters or MyCareersFuture
Whoever makes that first offer has the edge since the anchoring effect will essentially make that number the starting point for all further negotiations.
It will bias those negotiations in your favor. That first offer helps establish a range of acceptable counteroffers, and any future offers will use that initial number as an anchor or focal point.
One study even found that starting with an overly high salary request actually resulted in higher resulting salary offers.
Anchoring effect can be present in other areas in our life and does not necessarily have to be linked to money.
For instance, how old should teeangers be before you allow them to date? If you started dating at 18, you may feel that 16 is way too young. The anchoring effect leads you to believe that 18 is the earliest age a teeanger should be allowed to date.
How can you apply this?
Say you would like to convince your significant other to buy a $50 item for you.
First talk to them about any product that costs $150. Don’t say you want it. Just bring it up in conversation but make sure you mention the price. After some time, ask them for the $50 item you want.
Now when they think about the $50 price, they are forced to compare it to an amount of $150. They now view $50 as a smaller amount. This is called anchoring and it uses the contrast principle.
The $50 item now seems cheaper.
3. Appeal to people’s need to conform to social norms
The urge to align ourselves with social norms is more powerful than most of us imagine. At a psychological level, we’re instinctively inclined to conformity.
Companies know this and thus they often try to guide our decision-making with reviews and testimonials from other customers. They sometimes also highlight specific products as “best-sellers” or marking one choice as “recommended” when multiple choices are presented.
Sometimes this is actually harmful. In some situations, our tendency to follow social norms can veer into conformity, leading us to behave in harmful ways, or holding us back from taking action.
The desire to “fit in,” and to avoid being the one who goes against the grain, can stifle dissenting opinions, and give rise to pluralistic ignorance, where we don’t realize many other people privately disagree with something or hold a different attitude than the majority.
However, it can also be used for social good
How can you apply this?
If you’re a charity, you probably most want people to donate. This is the behavior you want to frame as the obvious social norm. In this case, a button that says “donate with 2,300 others” could be more powerful than “donate.”
This technique is being used in Giving.sg website as shown in the screenshot above. The website cleverly uses social norms to drive good behaviors such as giving back to our society. I personally automate my donations on a monthly basis.
Another example of how this is used in our daily lives is our utilities bill where they compare you with the national average and neighbour average.
4. Provide only 2-3 choices
Why do we have a harder time choosing when we have more options?
People get overwhelmed when they are presented with a large number of options to choose from, according to the Choice Overload theory, also known as the Paradox of Choice.
There is a widespread misconception that more choice equals more freedom, and more freedom is always, unambiguously, a good thing.
However, empirical evidence on choice overload contradicts this idea: In many cases, more variety makes our lives harder and less pleasant.
Delayed and more difficult decision making: We have limited cognitive resources, so having more options to consider drains our mental energy more quickly, overwhelming us.
Less satisfaction and lower confidence in our choice, as well as a higher chance that we will regret our decision.
How can you apply this?
When trying to arrange an outing with friends, rather than leaving it open-ended such as “Where do you want to go? What do you want to do?”, you can instead offer two choices. This cuts the debate from 20 minutes to two. For instance, “Shall. we go to Hort Park or Botanic Gardens?”
You can also use this in the business context. For instance, when trying to get a meeting with someone, instead of asking “How does you calendar look next week? you can ask “How about Tuesday, 1030AM or Wednesday, 3 PM?”
We can even apply this to our romantic lives. As we go through life, there will always be people who are more appealing than our significant other in some way: people who are more successful, smarter, more attractive, and so on.
If we allow ourselves to, we can get caught in an eternal sandtrap of regret and FOMO, feeling like we’ve made a mistake for not choosing the “best” person.
If we want to be happy, we have to simply tell ourselves that we’re not going down that road; we’ve made our decision and committed to somebody and we are not the “best” choice ourselves as well.
In our personal lives, we can also cultivate a deliberate practice of gratitude. Choice overload can blind us to all the positive aspects of the things we’ve chosen, nudging us to obsess over their shortcomings instead.
This robs us of the joy of experiencing these things as they are. By making this a gratitude a daily routine, you can shift the focus of your attention to the positive, and avert the emotional consequences of choice overload.
5. Offer immediate positive feedback for good behaviour
All animals (including humans) learn how to act in the world based on the consequences of their past behaviour.
If you act a certain way and it leads to a positive outcome, that behavior will be reinforced, and is more likely to recur in the future.
However, for incentives to work best, we want our rewards to be given at the time the behavior occurs or immediately after wards. This is so that they will make a clear connection between the behavior and the reward.
After all, it’s much easier to get motivated to do something if the positive consequences of doing it are immediate and tangible.
What are some examples of incentives we can use? This include praise, social recognition, gifts and even money are examples of rewards.
How can you apply this?
Say you are designing an online survey and want people to complete it, something as simple as create a progress bar filling up after you fill in part of the answers can help in motivating others to complete all the questions.
If you would like. to encourage. a friend to quit smoking or drinking, offering immediate praise when they share their efforts with you are much more effect than preaching about the health consequences.
It is important to use monetary incentives wisely though. Some countries are using cash payments to encourage others to get vaccinated. However, a problem with states offering cash payments is that people may interpret them as a signal that the vaccine is dangerous, perhaps reinforcing their own beliefs. Research also suggests that perks may be more effective than cash.
The only way to get people to actually improve is to relentlessly point out all the good they do. Try this on your kids and watch how they prosper in school and other activities. No criticism, only praise.
Shaun Mendonsa, PhD
If we always acted in our best interest, we’d all have bikini bodies, never overeat, and exercise regularly. We’d also have tons of money saved for retirement and we’d never overspend.
However, human nature does not work that way. We are influenced by various biases and the environment within which we make our decisions. We don’t always act in our best interests in the long term.
When we understand human behaviour, we can build and sell products, services, and policies that change lives. We can use this knowledge to make positive changes in our relationships. We can guide the people we love towards better decisions in life.