There have never been more options to choose from when paying. Under conventional Economics assumptions, this should not make a difference in either decision-making or outcomes. According to behavioral economics, however, the payment method chosen does impact (financial) decision-making and its possible outcomes. In this article we dive into the impact a payment method can have on financial decision-making.
The research literature on nudge effectiveness is growing. 2022 started with a new PNAS article reporting a meta analysis of 455 effect sizes from 214 publications. Here's a short summary.
Should we postpone a decision to collect more information or decide based on the information already available? This is a typical dilemma not only in business life. Psychologists have found that most people tend to wait too long and spend too much on information collection. Why is that the case? Our study gives a surprising answer.
Obesity has become a health crisis in many countries. Some governments have begun to mandate the display of calorie information on fast-food menus. However, research has offered mixed results regarding the effect of calorie information on consumed calories. This may be partly explained by two opposing forces: the calorie content of food alternatives and the relative calorie distance between food items. New research reported here suggests that the impact of calorie information depends on the relative magnitudes of these two variables.
Consumers are becoming increasingly concerned about data privacy in their interactions with tools that support financial decision-making. The authors of this TFI research project investigate the impact of privacy concerns on consumers’ use of financial support tools by conducting four experiments using a savings calculator tool, a mortgage calculator tool and an investment advice tool.
Marketing theories on loyalty mostly dismiss the idea that consumer's repeated usage of the brand may be a result of a habit, rather than any emotional commitment to the brand. As a result, loyalty marketing often misses one vital component of generating customer stickiness - trying to convert brand choice into a habit. Neuro-imaging suggests that as actions are repeated, the activity in areas of brain involved in decision making actually decreases. This calls for an additional perspective of looking at loyalty as creating a habit loop. It may not involve significant additional resources, but can substantially enhance the effectiveness of the loyalty programs or marketing.
There are “moral meanings” that people ascribe to objects in white and black colors. We show that consumers see buying a product in white color as an act that is morally good and buying a product in black color as an act that is morally bad. Those who buy white-colored products feel licensed to behave less prosocially afterward, while those who buy black-colored products are more prosocial as they feel a need to compensate for their initial misconduct.
There is a growing concern that the academic literature, because of publication biases and other limitations of single-shot, lab-based studies, overstates the power of nudges in real life. We examined this issue in a 10-week RCT in 60 supermarkets comparing 4 front-of-pack simplified nutrition labels. The good news is that the ordering of the nutrition labels was the same as in published lab-based studies. The bad news is that our effect sizes were, on average, 17 times smaller than in the published literature.
Gauri Chandra discusses the negative implications of charging for single-use plastic bags and suggests alternative behavioural interventions.
Applied behavioural science is facing some tough challenges, in the form of an ongoing replication crisis and a public debate on limits to nudging (including COVID-related stumbles). At the same time, we believe there is reason to be optimistic: the fusing of behavioural knowledge with data science methods means that we can see some of these shared challenges in a completely new light. In this article, we show how a transformation of our interactions with consumers and employees can usher in a new age for the field.
