Choice Architecture Workshop by Pikant & Naumof at MediaLAB Amsterdam

On October 9^th I, Nicolae Naumof, gave a half a day workshop on the topic of choice architecture at MediaLAB Amsterdam, part of Hogeschool Amsterdam (University of Applied Sciences Amsterdam).

Sixteen students attended the workshop and they have been acquainted with some basic elements of choice architecture and with some real-life examples of how choice architecture is used. In the second part of the workshop, the students solved two case studies on analyzing and respectively constructing a choice set.

Here’s what Marco van Hout - Program and research coordinator MediaLAB Amsterdam said about the workshop:

Pikant & Naumof recently facilitated the workshop 'Choice Architecture' for the MediaLAB Amsterdam students. These students follow a high-paced design program and work for 20 weeks in multicultural and interdisciplinary teams on challenges from industry. Nicolae's workshop proved vital for their knowledge of human behavior, and in particular in how to design for and optimize choice architectures.

Besides being very informative, the workshop was full of fun facts and engaging examples/ exercises. I highly recommend this workshop to anyone interested in optimizing their product, interface or business model through clear guidelines in how to persuade, convince and nudge people's decisions.

For me, giving this workshop was a pleasure. For some time I had not worked with young people and it was a great pleasure to see the energy, enthusiasm and willingness to learn the students at MediaLAB Amsterdam.

Learn Choice Architecture: How to Design
Choice Environments that Influence Choice

Join me in Designing Decisions - Training on Choice Architecture.

Changing the Feeling Changes Your Mind – Emotional Framing

Earlier I’ve written this post: Changing the Point of View Changes Your Mind on how the framing of a message changes our minds (influences decisions).

The main idea behind the framing of outcomes effect is that we perceive outcomes as gains or losses and what represents a gain or a loss depends on a reference that can be manipulated. The change in decision and in behavior is due to loss aversion – losses loom larger than gains.

There is, however, a different type of framing – Emotional Framing – which doesn't rely only on loss aversion. The main psychological mechanism that powers emotional framing is the affect heuristic.

The very nature of negative emotions is to keep us from harm. Obvious examples are fear and disgust which are negative basic emotions and play an important role in keeping us safe from things that might kill us. Of course this was more the case with our very distant ancestors, but even nowadays it is wise to not stay too close to something that smells disgusting.

Naturally we tend to avoid things that have a negative emotion attached to it.

For example, in the recent wars in Iraq and Afghanistan, the expression of friendly fire was used extensively in reports about soldiers who died. The term friendly fire sounds benign and has a low load of negative emotion. Unfortunately the reality is that his very smartly chosen expression stands for we killed our own which you have to admit has a much larger negative emotions baggage.

In the year 2013 another term became very popular at least in the US and Europe: Monetary easing also known as Quantitative easing. This sounds really nice and at first glance I think we could all use some ease on our monetary affairs. Despite its benign sound, this expression stands for Printing Money. Of course, these days’ central banks are not actually printing extra money, but the outcome is exactly the same (e.g. inflation)…

Another area where emotional framing is present is in supermarket promotions, at least the ones in Albert Heijn (the main supermarket chain in The Netherlands). It is quite common to have promotions such as: 2 + 1 (Free) or the second identical item is half price.

If shoppers would actually give some thought to what the underlying message is, they would probably buy fewer items.

2 + 1 (Free) actually means that you get 33.33% discount if and only if you buy three items.

The second one is half price actually means that you get 25% discount if and only if you buy two identical items.

If we would actually think like computers it should make no difference how the message is framed, but we are not reasoning machines.

Learn Choice Architecture: How to Design
Choice Environments that Influence Choice

Join me in Designing Decisions - Training on Choice Architecture.

Challenging a Fundamental Assumption of Marketing

The essence of marketing is that a company should best adapt its offering (product / service, pricing, distribution etc.) to the target group’s needs and preferences.

This is based on the assumption that (all) preferences are pre-existent and stable. The classical example for this is: if you prefer apples over oranges and you prefer oranges over peaches then for sure you will NOT prefer peaches over apples.

Is this assumption solid?

Both real life and academic research say that it is not. We do not always have clear pre-existing preferences. Think about buying a washing machine… do you really know which one you want before starting to look for one?

Quite often, our preferences are constructed while choosing and what we prefer is significantly influenced by the choice environment. The constructive nature of (some of) our preferences leads to the instability of preferences. In simpler words, our preferences can change depending on which choice environment we are in while making the decision.

During the Why We Want What We Want - Webinar we will challenge the assumption of stable pre-existing preferences and take a look at how they are constructed.

You will be introduced to the concept of constructed preferences and you will be acquainted with examples of how factors other than individual preferences influence choice.

You will be acquainted with the preconditions for construction of preferences and

You’ll see how we get to like what we have chosen through post-rationalization.

Join me on November 12 for the Why We Want What We Want – Webinar from Pikant & Naumof

15:00 Central European Time (Amsterdam, Brussels, Berlin, Paris, Rome, Madrid, Budapest, Bern, Prague Stockholm, Copenhagen etc.)

14:00 GMT (British Time)

16:00 Eastern European Time

Duration: 50 minutes

Registration for Why We Want What We Want webinar

There are 80 Fully Subsidized seats.

Registration beyond this quota will be charged, the price being 19Euros / attendee (VAT applicable for clients in The Netherlands)  

Sign up early and get an unpaid seat for the Pikant & Naumof webinar on the November 12.

Why We Want What We Want - Webinar 12 Nov

Each and every day we make choices.

Many professionals in areas such as marketing, human resources, sales etc. want to influence other people’s choices. For example, marketers want people to choose the product of the company they work for and not the competition’s product. Moreover marketers want to influence people’s choice so that clients pick up the product / service that has the highest profit margin.

The general view is that a company should best adapt its offering to the target group’s preferences and this will lead to higher market success. However, this view is based on the assumption that (all) preferences are pre-existent and stable.

Is this assumption solid? Can it be challenged?

During the Why We Want What We Want - Webinar we will challenge this assumption and take a look at how preferences are constructed.

You will be introduced to the concept of constructed preferences and you will be acquainted with examples of how factors other than individual preferences influence choice. 

You will be acquainted with the preconditions for construction of preferences and you’ll see how we get to like what we have chosen through post-rationalization.

When

The Pikant & Naumof webinar Why We Want What We Want will take place on

November 12 (Tuesday) 2013 at

15:00 Central European Time (Amsterdam, Brussels, Berlin, Paris, Rome, Madrid, Budapest, Bern, Prague Stockholm, Copenhagen etc.)

14:00 GMT (British Time)

16:00 Eastern European Time

Duration: 50 minutes

Registration for Why We Want What We Want webinar

We offer 80 Fully Subsidized seats.

Registration beyond this quota will be charged, the price being 19Euros / attendee (VAT applicable for clients in The Netherlands)  

Thus, sign in early and you do not pay for attending this Pikant & Naumof webinar on the November 12.   

First Edition of Designing Decisions – Training on Choice Architecture – Review

October 3 & 4 marked the first (open session) training by Pikant & Naumof - Designing Decisions – training on choice architecture. 

The session was hosted by  Design Thinkers Academy. I, Nicolae NAUMOF, gave this training to five very curios, hardworking and nice participants.

The first day was dedicated to the presentation of the main tools of choice architecture (established psychological effects on choice). During the first day everyone felt intrigued (according to feedback forms).

The second day of the workshop was dedicated entirely to participants solving case studies on choice architecture.

First, they analyzed a choice set…

Then I was asking questions that didn’t have an obvious answer…

The next three case studies solved by participants were a bit more demanding since now they had to (re)Design Choice sets and apply tools from choice architecture …

And after some hard work they went on to present their propositions:

And here are some of the results… 

Throughout the second day of the workshop all participants felt happy (according to feedback forms).

Here's what Zuzana Vagnerova (from UN development program) said about the training:

The training was very inspirational, energizing  bringing lots of ideas, with both substantial and in-depth knowledge together with case studies, learning from experience and being fully practice-oriented. The composition of participants contributed to interesting and focused discussions and exchanges. I will hopefully be able to put some of it into practice.

The trainer was excellent instructor who maintained the desire to learn through his enthusiasm and very relevant knowledge. He responded to questions well and is very approachable and competent instructor. Thank you

An analysis on the indicators from the feedback forms concluded that overall the participants were happy with the training’s content, delivery and organization.

For me, personally, giving this training was a real pleasure. The atmosphere was wonderful and I had the feeling that everyone learned new things and had an enjoyable two days session.

Finally you can enjoy this movie. 

One of the case studies solved was "The Museum" which asked participants to restructure and redesign a choice set - namely the offer of a museum (tours). Here's what was proposed by the two teams ... 

Learn Choice Architecture: How to Design
Choice Environments that Influence Choice

Join me in Designing Decisions - Training on Choice Architecture.

Thinking Money - Preview

Here's a brief preview of Thinking Money - workshop on the psychology of money I will give on the 29th of October.

For more about the Psychology of Money and how it influences decisions and behaviors related to money,

Join me in Thinking Money -Training on the Psychology of Money. 

What You Don’t See Can’t Hurt You - How Visibility of Payment Influences the Pain of Paying

Use your imagination and picture a market in the mid XV-th century in Europe. Farmers and tradesmen sell their products in the square of the city. Others want to buy and search for the best offer. At one point the buyer chooses one seller and buys, say wool. In exchange for the wool the buyer will give the seller a number of coins – money.

If we think about this transaction – wool for coins – we notice that it is a very visible one. The buyer takes the coins out of his bag (pocket) and gives them to the seller in exchange for the product. Putting things a bit differently, for the buyer it is impossible to not see the coins (money) going out of his pocket and going into the seller’s hand and pocket.

Nowadays things are a bit different than in the mid XV-th century. Now we can pay without seeing the money going out of our pockets and into the seller’s hand. We can use checks, bank cards, vouchers, bank transfers etc.   

The visibility of a payment – of money going out of one pocket and into a hand – influences the amount of pain of paying associated with a payment. Think of the following scenario: Linda goes out on a weekend day and wonders the streets of the city center. At one point her eyes are drawn to a shop window and she sees a wonderful pair of shoes. They look absolutely gorgeous and she goes into the shop and tries them on. Miraculously they do not only look great, they also fit close to perfect. Linda looks at the price tag and feels a bit of chill; the shoes cost 129 Euros. Linda is perfectly aware that she doesn’t really need this pair of shoes since she has already more than 15(0) pairs. However she felt in love with them. In her wallet she has three 50 Euros bills and her bank card on which she has more than 129 Euros.

Do you think that Linda will pay in cash or using her bank card?

Most likely Linda will use her bank card because by doing so she will not see the (quite large) amount of money going out of her purse and into the hands of the cashier. The bank card transaction represents the same thing as paying in cash… Linda will still have 129 Euros less and a wonderful pair of new shoes. However, Linda will not see the payment. She will experience less pain of paying by using her bank card.

Linda goes out of the shop happy because she got a wonderful new pair of shoes and feeling quite good that she still has 150 Euros in her wallet. She didn’t see the 129 Euros (price of the shoes) going out of her purse and this contributed to her experiencing a low level of pain of paying. She goes into the street and walks around with a bright face (due to happiness). After about two minutes Linda’s phone rings. She received an SMS which says:

“Your Bank Inc. informs you that a payment of 129 Euros was made out of your account to Fantastic Shoes Ltd. If you do not recognize this transaction contact Your Bank immediately”

How do you think Linda feels now? She paid with her bank card so that the payment would be less visible and decrease her discomfort of paying a large price for a pair of shoes. Now the bank informs her that this payment was made, thus making it more visible. In terms of pain of paying reduction, almost the entire benefit of using a bank card is gone. Linda’s face is no longer bright and a feeling of pain mixed with guilt (for paying 129 Euros for a pair of shoes she didn’t really need) go through her mind…

The bank introduced this SMS service to prevent fraud and if people would be perfect reasoning machines without feelings it would be a very useful tool for increasing the safety of using bank cards. However, people have feelings and it is no wonder that when Linda got home she unsubscribed from this service.

The learning from the story of Linda buying shoes is that the more visible (salient) a payment is, the higher the level of pain of paying is experienced. So if you want to increase the pain of paying you should make the payment as visible as possible. Similarly, if you want to decrease the pain of paying you should make the payment as less visible as possible.

Just as a note… the difference between levels of pain of paying experienced when making a visible and respectively a less visible payment will be smaller for purchases that are frequent (e.g. groceries) and planned (e.g. buying a new laptop). This is not to say that there is no difference, rather it is to say that the difference is smaller than in the case of impulse, unplanned (even unnecessary) purchases. 

For more about the Psychology of Money and how it influences decisions and behaviors related to money,

Join me in Thinking Money -Training on the Psychology of Money.