O Behave! Issue 5 (August Edition)

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O Behave! is a monthly newsletter brought to you by #ogilvychange that encompasses the latest research in behavioural science. Enjoy!

Text of O Behave! Issue 5 (August Edition)

  • 1. O BEHAVE! Issue 5 August 2014
  • 2. You Can Bet Your Bottom Dollar 3 Bias of the Month 4 How Menu Design Can Nudge Healthy Living5 The Evolution of Casino Psychology6 The Midlife Personality Crisis 7 The Summer School 8 Real Life Nudge of the Month 9 Upcoming Events9 Coming Up: Happiness By DesignLaunch10 CONTENTS
  • 3. We all know its painful to run out of money at the end of the month, but new research shows that this can even affect our satisfaction with the items we purchase with the last few pennies in our bank accounts, a phenomenon known as the bottom dollar effect. Soster, Gershoffand Bearden (2014)gave their participants credits with which they could purchase short films, and asked them to rate their enjoyment of the films afterwards. Participants with only enough credits to purchase three films were significantly less satisfied with their third film choice than participants who had enough credits to buy two more, and satisfaction ratings steadily declined as budget dwindled. The authors suggest this decrease in satisfaction is due to the pain of paying, which occurs when we have to part with our money, being exacerbated as funds drop to zero, and this feeling of discomfort is conflated with our opinion of the product we received in exchange. YOU CAN BET YOUR BOTTOM DOLLAR The bottom dollar effect was modulated by the amount of effort that went into earning the credits; participants who had to perform a tedious task to earn their credits were significantly less satisfied with the last film they could afford, while the effect was reduced for those who received a windfall of free credits. This is consistent with previous work on mental accounting: the way in which we think about different pots of money, such as a salary versus a bonus, despite it all being the same on a rational level. In other words, you are likely to be less happy with an item bought with the last of your hard-earned salary than something bought with an bonus, which feels more like a treat. Intriguingly, the effect was also reduced by knowing that the supply of credits would soon be replenished; participants who were approaching the end of their budget did not show the bottom dollar effect when they knew they would receive more credits imminently. Moreover, participants who werent approaching their limit but knew they would not receive more credits for a while were far less satisfied with their choice. In all, this study demonstrates that stress associated with running out of money is translated into dissatisfaction with the items we buy with the last of it, an effect which is influenced by how the money was earned and when the money would be replenished. In other words, go out and treat yourself on pay day, when youll be most satisfied with whatever you buy. Soster, R.L., Gershoff, A.D. & Bearden, W.O. (2014). The Bottom Dollar Effect: The Influence of Spending to Zero on Pain of Payment and Satisfaction. Journal of Consumer Research, forthcoming. .
  • 4. BIAS OF THE MONTH The Introspection Illusion As conscious animals, we are constantly in touch with our thoughts and feelings and we judge ourselves and predict our behaviour according to this internal dialogue, despite evidence that we also have implicit attitudes and motivations we are not aware of. This means we can often see bias in others but not in ourselves, and perceive others as being influenced by external factors, like advertising, while feeling that we ourselves are immune, as they operate separately from our conscious access. Given we have access to our own mental states but not those of others, we also tend to overemphasise the importance of them when predicting our own future behaviour, but largely ignore the capacity for a rich inner life in others and judge them solely on their behaviour. University students and their peers were asked to estimate how long it would take them to complete various projects. The students, biased by their virtuous intentions to finish quickly, underestimated how long it would take; their peers on the other hand, who were basing their prediction on past behaviour and remembered their friends previous all-nighters in an attempt to get work finished, were much more accurate. The introspection illusion means were not as impartial as we think we are, and perhaps we dont know ourselves as well as we think we do either. Pronin, E. (2009). The Introspection Illusion. In M. P. Zanna (Ed.), Advances in Experimental Social Psychology, Volume 41. Burlington, MA: Academic Press.
  • 5. HOW MENU DESIGN CAN NUDGE HEALTHY EATING With most Western countries facing an obesity crisis, many believe that new legislation on reduced portion sizes and soft drink sizes should be implemented in restaurants to help solve the crisis. Brian Wansink, marketing professor and director of the Cornell Food and Brand Lab, argues that this is not necessary and we should instead look to menu psychology to encourage people to make healthier choices. He argues that by using psychological insight, menus can be designed in such a way that nudges people to choose low calorie options with high profit margins which benefits both consumers waistlines and the financial health of restaurants. In a recent paper, Wansink and Love (2014) explain four different nudges that can be implemented on a menu to influence consumers food choices. The first nudge is menu anchoring, where healthier, low cost starters are placed around the restaurants most expensive item. These starters, which previously didnt seem particularly good value, now seem like a great deal as they surround the expensive item. The second nudge he refers to is about reducing the pain of paying. For this nudge he explains that by removing the pound sign, people become less conscious of the price of the item and are therefore more likely to choose it. Thirdly, as most customers read menus by scanning the four corners of the page before flipping to the next, Wansink advises restaurants to place the healthy choices in these locations to ensure customers engage with the healthy items which therefore increases the likelihood that they will purchase them. The final nudge is about utilising the power of adjectives: Research has shown that children are more likely to order X-ray carrots than just carrots, and adults are more likely to order a succulent Italian seafood filet than fish sticks. Wansink believes restaurants arent doing enough in terms of using language to push healthier choices, but often use the enticing words to push the unhealthy items. For example, he suggests that restaurants should take the velvet from velvety chocolate mousse and apply it items such as velvety mashed cauliflower and the South-Western in the South-Western Tex-Mex salad can be applied to South-Western kale salad. Restaurants dont need to implement these suggestions for moral reasons, as Wansink argues that restaurants can also financially gain from selling healthier food. He notes that healthier food is cheaper and easier to make and therefore by increasing the number of people who purchase the healthier food, restaurants will only stand to make a profit. Wansink, B., & Love, K. (2014). Slim by Design: Menu Engineering Strategies for Promoting High-Margin, Healthy Foods. International Journal of Hospitality Management, 42, 137-143.
  • 6. THE EVOLUTION OF CASINO PSYCHOLOGY If you were to ask most people to think of a casino and say where all the big spending and winnings happen, most would say blackjack, roulette and poker. If you were to say, What about the slot machines?, most would say, to quote a friend, That is where old ladies and amateurs sit. Until recently, I would have agreed. Recent research by Natasha Dow Schull, a cultural anthropologist at MIT who spent the last 15 years in Las Vegas tracking the evolution of slot machines states that although slot machines were once only marginally successful for casinos, they are now driving the industry and responsible for 85% of the profits. What caused this change? Firstly, new relaxed legislation on the availably of slot machines that were implemented during the recessions in the early 1990s and mid 2000s (see Pulmer, 2014), but secondly and more importantly for those interested in psychology, casinos are now drawing on psychological insights to help them design an environment and devices that will maximize time on device. Casinos have carefully designed their environment in such a way that allows people to move around the area without ever having to consciously make decisions. They have started implementing curving hallways within the environment so people never have to make a 90 degree turn. This is because, according to Schull(2012),when people make a right angled turn, they are forced to activate the decision-making part of their brain and therefore reflect on their behaviours. Casinos do not want people to do this, so by having curved hallways people are free to walk around without having to consciously think. They have also designed the slotting machines themselves and their environments in such a way that allow people to sit on play the device comfortably for hours. T