#592 - Richard Shotton - 8 Fascinating Psychological Biases

Behavioral science, the study of how people actually behave rather than how they claim to, is a crucial topic for anyone looking to influence or bring about behavior change. It's relevant, robust, and has a vast range of studies to draw from. For instance, a study by psychologist Louis Cheskin showed that people's perceptions of taste were influenced by the color of food, leading margarine to be perceived as tasteless when it looked gray, but delicious when it looked like butter. This highlights how our expectations shape our experiences and how understanding behavioral science can lead to effective marketing strategies. Despite commonplace business theories, not all findings are backed by data. It's essential to approach information with a critical eye and be open to the power of experimentation in behavioral science.

People's stated preferences, what they say they want, can be different from their revealed preferences, what they actually do. This discrepancy can lead to inaccurate information for businesses and marketers who rely solely on direct questioning of consumers. Psychologists suggest that people often confabulate, meaning they try to tell the truth but may not have full introspective insight into their own motivations. Observing people's behavior in test and control situations can generate more accurate answers. This concept was discussed in relation to mating preferences, where women may express acceptance of certain qualities but end up preferring partners who are taller, better educated, and wealthier. This phenomenon is not about deception but rather a result of social pressures and the fact that people don't always know their own motivations. Data from sources like Google searches can reveal more accurate information about people's genuine preferences. Prioritizing data from situations where people think no one is watching is a powerful tool for understanding true consumer behavior. Additionally, habit formation plays a significant role in decision-making, as people often rely on heuristics or repeat the same behaviors to conserve mental energy.

Humans are "cognitive misers," meaning we conserve our mental energy and engage in habitual behaviors to save effort. However, there are predictable moments when our habits are weakened, making us more open to change. Psychologist Katherine Milkman calls this the "fresh start effect," which suggests that our desire for consistency drives us to repeat behaviors. This desire for consistency is so strong that it even influences the behavior of hardened criminals. Milkman's research shows that people are more open to change at the beginning of new time periods, such as the start of the year, month, week, or after significant life events like birthdays. Businesses and individuals can leverage this insight to maximize the impact of their communications or interventions by timing them to coincide with these moments of weakness in existing habits. For example, Spotify's Discover Weekly feature saw success when launched on a Monday, tapping into the fresh start effect. Even institutions like the Catholic Church have recognized this bias and created moments of reappraisal, such as the confessional, to encourage change. Understanding the fresh start effect can help us strategically target moments to break habits and create new ones, particularly when dealing with uncertain rewards or loyalty schemes.

Unpredictable rewards are more effective in creating and reinforcing habits than fixed rewards. This principle was discovered through experiments with rats by B.F. Skinner, who found that rats continued to press a lever even when the sugar drops were no longer given, if there was an element of variability in the reward. This concept was later supported by research on humans by Sharon Fishback. Companies can apply this principle to their loyalty schemes by introducing an element of uncertainty in rewards, rather than offering fixed rewards. For example, instead of giving a free coffee after purchasing ten, staff could be given the option to give out roughly 10% of coffees for free randomly. This unpredictability keeps customers engaged and motivated. This principle also applies to other areas, such as social media and gambling, where the excitement of not knowing what reward or outcome will be received keeps users coming back. However, it's important to note that excessive use of variable rewards can have negative consequences, as seen in the case of the McDonald's Monopoly game, where some individuals took advantage of the system and defrauded the company.

Making things easy for people can have a significant impact on their behavior, often more so than increasing motivation. This concept was highlighted in an experiment where parents were encouraged to sign up for a service to help their children work harder. By reducing the number of steps required to sign up, the enrollment rates increased dramatically. However, experts underestimated the impact of this reduction in friction, demonstrating that they may have an inaccurate mental model of human behavior. Businesses, including nightclubs, can apply this lesson by focusing more on removing obstacles that prevent people from accessing their products or services, rather than solely relying on motivational tactics.

Small changes in the way information or choices are presented can have a significant impact on people's behavior. This concept was illustrated through the example of pension enrollment, where making the opt-out option the default led to a 22 percentage point increase in enrollment rates. This effect is due to various biases, such as present preference bias, which causes individuals to value immediate rewards over future ones. By understanding and applying these biases, businesses can effectively influence behavior and achieve their goals. In essence, the power to change behavior lies in making things easy and removing friction.

Adding a deliberate amount of friction in the user experience can increase perceived value and appreciation for a product. This concept, known as the IKEA effect, was demonstrated in a study where people were asked to bid on an IKEA box they had assembled themselves versus one that was already assembled. The group that assembled the box themselves placed a much higher bid on it. This principle can be applied to various industries, such as travel comparison sites, where adding a slight delay and visible effort can lead users to rate the results as better. However, it's essential to use this tactic carefully and not add unnecessary friction that may negatively impact the user experience. Additionally, a study showed that even something as simple as adding a loading bar in Excel can make users feel like they're going through a more involved process, increasing their engagement and satisfaction with the product.

The perceived effort put into a product or service significantly influences consumers' perception of its quality. This phenomenon is known as the IKEA effect and the illusion of effort. Consumers often use the amount of effort they assume a brand has put into a product as a proxy for evaluating its quality, even if it's not a rational decision. Brands and service providers can leverage this by being transparent about their efforts and communicating them effectively to consumers. This can include displaying visible signs of care and attention, providing detailed descriptions, and even pricing strategies. A study by Stanford psychologist Baba Shiv demonstrated that consumers rate the same product much higher when they believe it's expensive, highlighting the power of setting positive expectations. Brands like Dyson and artisanal food and drink businesses have mastered this concept by showcasing their efforts and creating an image of quality and care.

The power of engagement and the element of surprise can significantly enhance our appreciation and enjoyment of various experiences, including wine tasting and cooking. The documentary "Somme" showcases the rigorous training of sommeliers, who must identify the year, vintage, country, region, and harvest time based on the smell and taste of a wine. In a test, participants were unable to distinguish a red wine with food coloring from an actual red wine, demonstrating the importance of personal experience and testing assumptions. Similarly, the Gusteau food box model offers a balance of convenience and challenge by providing easy-to-use ingredients but requiring some effort to prepare meals. This balance of make it easy, make it hard, has been inspired by the IKEA effect, where adding an extra step to a product can increase consumer satisfaction. The generation effect, a psychological phenomenon discovered in the 1970s, suggests that people remember information better when they have to generate the answer themselves. This principle can be applied to advertising, where creating an engaging and memorable ad that requires some level of interaction or thought from the consumer can lead to greater impact. In essence, the key takeaway is that providing opportunities for engagement, surprise, and creativity can significantly enhance our experiences and memories, whether it's through wine tasting, cooking, or advertising.

Effective advertising often employs psychological insights in creative and unconventional ways to make the message memorable and engaging. The generation effect, a psychological phenomenon where people are more likely to remember information they generate themselves, is a powerful tool in advertising. An example of this is the Economist's "management trainee, age 42" ad from the 1980s. Instead of directly stating that those who don't read The Economist are failures, the ad posed a puzzle that viewers had to solve, making the message stickier and more memorable. However, it's important to note that the success of such ads depends on the brand's reputation and the creativity of the execution. Additionally, asking questions instead of making statements can boost credibility and believability, but only if the brand is admired. Brands can also creatively imply popularity through social proof without directly stating it. Red Bull's launch strategy around nightclubs is a great example of this. In summary, while psychological insights provide valuable hypotheses about human behavior, it's the marketer or entrepreneur's job to apply a dash of creativity to effectively communicate the message to the audience.

Understanding and applying behavioral science principles can significantly impact the success of marketing strategies, particularly in the digital content creation space. For instance, Red Bull's guerrilla marketing tactic of leaving empty cans in nightclub litter bins created a false sense of social proof among clubgoers. On a different note, optimizing YouTube thumbnails and titles using behavioral science insights can significantly increase click-through rates and watch time for creators and brands. Mr. Beast, a popular YouTube creator, reportedly spends millions on thumbnail options and reverse-engineers titles for maximum impact. The average character length and use of words that evoke powerful responses are crucial factors. Additionally, the pace of content, inspired by platforms like TikTok, plays a significant role in audience engagement. Behavioral biases, such as the illusion of control, can also provide valuable insights for content creators. For example, Ellen Langer's study on the endowment effect showed that people value things more when they have a sense of control over them. Overall, applying behavioral science principles to digital content creation can lead to increased engagement, higher click-through rates, and more effective marketing strategies.

Giving people a sense of control and choice, even if the choices are meaningless, can increase their appreciation and value for the product or service. This principle, as discussed, can be applied to various areas, including marketing promotions. A study from the late 1990s showed that rhyming phrases are more believable and memorable than non-rhyming phrases. However, the use of rhyme in advertising has significantly declined in recent decades, possibly due to the internal workings of the advertising industry and the preference for complex solutions over simple, effective ones. Overall, understanding the psychological effects of choice, control, and rhyme can provide valuable insights for businesses looking to engage and persuade their audiences.

Effective solutions don't always equate to large fees for consultants or agencies, but the perception of value can be influenced by the complexity of the solution presented. The Houston airport example illustrates this concept well. By sending passengers on a longer, zigzagging walk instead of reducing wait times at baggage carousels, complaints plummeted. This counterintuitive solution was more memorable and effective for passengers, despite being less costly to implement. Another key takeaway is the importance of understanding human behavior and preferences. Rory Sutherland's book, "Transport for Humans," highlights how transport providers often optimize systems for shortening time, but other factors like comfort and convenience can significantly impact the overall experience. For instance, taking a longer route with fewer changes can be less painful for commuters than dealing with multiple modes of transportation. Lastly, a study by Canadian psychologist Ian Begg demonstrates the power of concrete language in memory retention. Concrete phrases, like "square door," are more memorable because they can be visualized, while abstract phrases, like "subtle truth," are forgettable. Communicators should strive to translate abstract benefits into concrete, visualizable language to make their messages more impactful and memorable.

Businesses need to communicate abstract objectives in concrete, visualizable language to make them memorable and increase purchase intent. Apple's "1,000 songs in your pocket" example showcases this effectiveness. Perceptual fluency studies, such as Ryan Elder's fork placement experiment, also support this idea, demonstrating that reducing mental friction and making it easier for customers to imagine using a product can significantly impact desirability. Furthermore, stories are more relatable and memorable than statistics, as shown in Paul Slovic's identifiable victim effect study. As podcasters, we serve as "vibe architects," conveying the intangible aspects of information through storytelling and analogy, creating an emotional connection with our audience.

The power of stories and concrete details can significantly impact how we remember and believe information. The speaker shared a personal experience of feeling underprepared for an exam and how the interaction with his housemate left a lasting impression. He also mentioned how stories, whether ancient or modern, are more memorable when they contain vivid and concrete details. The speaker then discussed a study that showed people are more likely to believe precise numbers in advertisements, as they perceive it as a sign of knowledge and credibility. He also mentioned how authors like Morgan Housel and David Goggins use storytelling effectively to make complex topics more engaging and memorable. The speaker concluded by emphasizing the importance of precision and concreteness in communication to increase its believability and impact.

Alcohol can act as a cultural technology that enhances truth-telling and reduces lying. This is because when people are under the influence of alcohol, they may find it harder to come up with complex, convoluted lies, making it easier for others to detect potential dishonesty. This effect has been observed and utilized for bonding purposes, particularly in armed forces. However, there's an argument that people may deceive themselves before deceiving others, so getting drunk might not necessarily lead to revealing unwanted truths. Additionally, precision plays a role in our perception of value. In studies, people tend to believe that precise prices are marked up more fairly than round ones, leading businesses to potentially increase their prices and perceived value by providing precise pricing information. This phenomenon has been supported by real-world data from companies like Uber.

While perfect reviews might seem appealing, they can actually be off-putting to potential customers. A study from Northwestern University found that as product reviews get better, the likelihood of a purchase peaks, but then declines if the reviews are too perfect. This phenomenon, known as "affection is too good to be true," suggests that consumers are more likely to suspect manipulation or editing of reviews when they see nothing but 5-star ratings. In the podcast industry, this could mean that shows with a seemingly perfect 5-star rating on platforms like Spotify and Apple Podcasts might not be converting potential listeners as effectively as those with a more balanced set of reviews. It's important for businesses to consider the potential impact of behavioral science on their marketing strategies, even if it means embracing the idea that less than perfect reviews can lead to better conversions. To learn more about this concept and others, check out Richard Shotton's book "The Choice Factory" available on Amazon or his company website astro10.co.uk. And if you're interested in applying this to your business, feel free to reach out to him for consultancy services.