Insight: Anchors can be used as "Nudges" to influence behaviour when designing systems or products.
Insight: The more you ask for in negotiating, the more you tend to get.
Example: Tipping for taxis using technology to anchor passengers to suggested tips.
Example: Anchoring juries to sums won in previous similar cases, or to a company's profits.
Example: Most people believe homicides are more prevelant than suicide because they are more heavily reported in the media.
Insight: People assess the likelihood of risk, by questioning how readily examples come to their mind.
Insight: The availability heuristic explains risk-related behaviour, including whether people buy insurance.
Insight: Practices and traditions may be followed merely because we think that other people like it, or will respect us for it, not because they are what is best for the individual.
Insight: Sometimes a small disruption (a Nudge) can dislodge a long held practice or idea because it starts a bandwagon effect. An example is communism in the former Soviet bloc.
Insight: There is no such thing as 'neutral' design: all design influences how people respond.
Insight: Even small details can have a big influence on people's behviour.
Insight: A "Nudge" is an aspect of the choice architecture that changes people's behaviour in a predictable way, without limiting options or incentives. A nudge must be easy and cheap to avoid.
Insight: Active choosing, or presenting specific choices is also part of choice architecture.
Insight: Choice architects have the power to make people's lives significantly better by designing user-friendly environments.
Insight: Filters can make difficult choices easier.
Insight: Smaller, boutique stores cannot compete with larger stores by offering more choices. "Curation is essential for any business that wants to compete with online giants."
Insight: Offering more choices is not always optimal. More choices must be accompanied with effective choice architecture.
Principle: Designers should aim to make life as easy of possible.
Principle: The signal you receieve should be consistent with the desired action. Example: A red octagonal road sign with the word "GO" on it violates this principle.
Principle: A good choice architecture system helps people link choices with outcomes, and act in ways that makes them better off.
Principle: Make the desired activity fun.
Insight: It is not logically possible for two events to be more likely than one alone.
Reference: The Linda Problem: Kahneman and Tversky.
Insight: It is possible to change behaviour simply by communicating injunctive norms.
Reference: Robert Cialdini, petrified wood study - demonstrated that communicating injunctive norms is more often effective in creating positive social change ("Please don’t remove the petrified wood from the park, in order to preserve the natural state of the Petrified Forest") that using descriptive norms ("Many past visitors have removed the petrified wood from the park, changing the natural state of the Petrified Forest.").
Definition: A system that households, or individuals evaluate, regulate, and process their home budget.
Example: At the casino, gamblers tend to treat winnings differently - usually they are more willing to take risks.
Insight: One of the core properties of money is that it is fungible, meaning that no matter where it comes from a unit of currency holds the same value as a unit of the same currency (a dollar is a dollar is a dollar). Mental accounting violates this principle - accounts are treated differently.
Insight: We can take advantage of mental accounting with our savings, by directing funds automatically into 'accounts' where we will not see it or be tempted to spend.
Insight: We usually adopt mental accounting to control spending. It can work against us when we underestimate (we can be left without sufficient funds) or overestimate (we tend to spend the excess anyway) a particular budget item.
Insight: Unrealistic optimism can explain a lot of individual risk-taking.
Insight: When asked about the future, students typically say that they are less likely than their peers to be fired, have a heart attack or cancer, be divorced, or have a alcohol addition.
Insight: Unrealistic optimism is present across most societies, and economic groups.
Definition: The systematic tendency toward unrealistic optimism about the time it takes to complete projects.
Insight: Humans make predictable mistakes.
Insight: Everything takes longer than you think, even if you know about the planning fallacy.
Definition: Ignorance about what other people think.
Example: Following traditions not because we enjoy them, but because we believe other people do.
Example: Communism in the former Soviet block was thought to persist because of pluralistic ignorance - it toppled once people realised that a large share of the population despised the Soviet regime.
Insight: Many social practices persist because of pluralistic ignorance; small shocks or nudges can dislodge them.
Insight: Large scale social change can often happen when people are allowed or nudged to speak and act according to their actual views and values.
Insight: Nudges that give people permission to voice their actual opinion can create a cascade or bandwagon effect.
Reference: A study from Saudi Arabia, economist Leonardo Bursztyn, on the custom of "guardianship" - when husbands have the final say on whether their wives are allowed to work outside the home - demonstrated that an overwhelming majority of married men when asked in private approved of female labour force participation, but believed, wrongly, that most other men would not want their wives to join the labour force.
Insight: Humans spend a lot of effort conforming to social norms because we believe that others are paying close attention to what we are doing. In reality, people pay less attention to others than we think.
Reference: Thomas Gilovich: Barry Manilow experiment - showed that we overestimate the attention that people pay to what we are doing (or wearing).
Definition: A fancy name for human inertia.
Example: Retirement savings plan: most people pick an asset allocation and stick with it.
Insight: People have a strong tendency to go with the status quo or take the default option.
Insight: Loss aversion is one explanation for the tendency to stick with the current situation.
Insight: One of the causes of status quo bias is a lack of attention, it can make us mindless, passive decision makers.
Reference: William Samuelson and Richard Zeckhauser: named status quo bias for the tendency of people to stick with their current situation.
Example: The environment; dairy farmers, and fishermen - each individual farmer or fisherman pays a fraction of the cost of additional farming or fishing resources on the common good, whilst gaining the benefits.
Insight: Tragedy of the Commons occurs when individuals are unlikely to pay for the individual harm or impacts their choices have on common goods.
Insight: Ulysses pacts work well if (1) the risk of temptations can be anticipated (2) removing temptation is feasible.
