31 January 2014

Choice Architecture Training by Pikant & Naumof at Storm Software Solutions Bolton UK

On 3-4 December 2013 I, Nicolae Naumof - The Behavioral Science Trainer, gave a session of the Choice Architecture Training Program Designing Decisions for Storm Software Solutions in Bolton UK.

Four very eager to learn employees of Storm Software Solutions attended the training. Here’s what Paul Flood, Managing Director of Storm Software Solutions said about the Choice Architecture Training:

Fascinating program covering Choice Architecture. Nicolae presents the content in an easy to understand way and adds his own perspective on this exciting   area of behavioral science.


Below are some pics from taken while the participats were solving the case studies on designing choice environments using tools of choice architecture.




For me, giving this training was a pleasure and I was delighted by the participants’ openness and their willingness to learn. Moreover, I was very pleasantly surprised by the Northern English Hospitality.



24 January 2014

Airplane Crash, Blinding Emotions and Uncritical (Causal) Thinking - Irrationalities of WHY Part 2

About four days ago, a small airplane crashed in the western mountains of Romania. There are two particularities of this airplane accident: First, the passengers were medical doctors who were transporting an organ for a transplant – life savers. Add to this that the pilot of the plane was more or less of a “media personality”. The second particularity of this accident is that everyone survived the impact. However, due to injuries the pilot and a medical student died before help reached them (which took about 6-7 hours).

Not surprisingly, the mass media was and is full of stories, news etc. regarding this accident and some heads (including Minister of Internal Affairs) rolled as a punishment for the chaotic manner in which the saving operation has happened. (Just as a note: a lot of hindsight bias here). Not surprisingly there is a lot of emotion attached to this sad event and this led to it overshadowing other events much more important for the country, but this is not what I want to talk about…

The public opinion is outraged of the fact that two people died because help arrived at the scene too late. I would see the up-side… help arrived in time to save another five people… in case you don’t know it’s literally freezing in the mountains in winter.

And the weather and winter conditions are what I want to talk about. Thick snow (between 30 and 60 cm) is one of the causes that led to help arriving late (another is a bit of traditional Romanian idiotic management). Cold weather and thick snow for sure didn’t help the people who were in the airplane after it crashed. Broken bones and being in the cold for seven hours are not exactly a pleasant mix.

But there is another thing about cold weather and thick snow: I believe that it was the thing that saved the lives of the five people who survived. It sounds a bit paradoxical since thick snow and the cold caused a delay in help arriving (hiking on mountains in the summer time is wonderful, doing so in winter is dreadful). Moreover, low temperatures might have contributed to the death of the two victims.

Leave these negative influences of the snow and cold weather and think how come that all seven passengers survived the actual impact… the airplane is a small – light-weight one… and as you already know mountains are made of rock and the soil (ground) on top of the rock is quite thin. Without claiming that I am an expert in physics, I believe that the thick lair of snow on the mountain had a huge contribution in making the impact non-lethal… Naturally the pilot’s actions played a role too… may he rest in peace…

Add to this that there was no fire, despite the airplane loosing fuel … When metal hits rock there can be sparks… when it hits snow, not so much…

Something that is the cause of a bad thing can be a hidden cause of something good…






21 January 2014

Traditional Winter Payments and their Pain of Paying

When putting together the words “Traditional” and “Winter” the first thought goes to Christmas and New Year since these are the main events of winter and they happen each and every year. Naturally, both Christmas and New Year come with some expenses and subsequent payments. Every payment hurts and I believe that payments made for the usual Christmas and New Year purchases are less painful than are other payments. For Christmas and New Year people have money allocated for things such as gifts, food, booze (after all it’s a reason to party) etc. Moreover, Christmas and New Year most often come with joy and reasons to celebrate or at least party.

There are, however, other payments that are specific to the winter season and are completely unrelated to the holidays. These payments include paying (local) taxes, paying the regularization (balancing) for utilities such as energy, water etc., paying one-year fees for very necessary services such as sanitation (picking up the garbage) and sewerage. All these payments are due in the winter months (at least in some countries).

Naturally all these payments have to be made and everyone is more or less aware of this fact. However, these payments come with an increased level of pain of paying – the psychological discomfort experienced when making payments.

Let’s take the example of paying the regularization (balancing) for utilities bills. In The Netherlands (and in some other countries) for energy people pay a fix amount each month and at the end of the year a computation is made in order to see whether the individual paid more or less than she has actually consumed.  Not surprisingly there are quite some cases in which people consumed more than what was estimated. When the invoice comes it is a painful one. Energy is something we don’t see; it’s the electricity that powers my laptop, the heat in the room (in The Netherlands usually it is quite cold) and the electricity or gas that makes the cooking stove work. Moreover, when being informed at the end of the year that you need to pay more for something that you have consumed during the entire year, there is a feeling of paying for nothing. Those 400 Euros you have to pay extra include the electricity consumed by the light that you forgot to switch off in March. It simply feels awkward…

A very important factor involved in the pain of paying experienced in relation to these “traditional winter payments” is the way in which the payment is made. Let’s stick to the example with balancing energy bills. Usually in The Netherlands such bills are paid using the “Direct Debit” method which means that the amount due to be paid is withdrawn from the bank account of the client by the company that issued the bill. In essence, the payer does not have to do anything, except for making sure that there are enough money in her bank account, which can be quite challenging since a lot of money was spent on Christmas and New Year.

Now, imagine that this method of payment would not be available and the only way in which someone could pay this bill would be to go to one office of the energy company which is half-way across the city in winter weather and the payment can be made only in cash (bills and coins).

It is obvious that the level of discomfort associated with the payment is higher in the second case than it is when using direct debit.  

“Traditional Winter Payments” are annoying by their very nature. However, most people simply accept them as a given status-quo. Everyone realizes that energy bills have to be paid and that annual payments for sanitation and sewerage services are mandatory if one wants to have the benefits of civilization…  Minimizing the pain of paying associated with these payments is a worthy endeavor.

Take a moment and think of how other payments that are less vital for a civilized standard of living (having energy and sewerage) influence purchasing behaviour and customer satisfaction. Purchasing behaviour is influenced by many factors including the price, income etc. What is often ignored is the level of pain of paying associated with a purchase…



And


15 January 2014

The Irrationalities of WHY – How We Fail to Incorporate (True) Causality in Our Decisions and Judgments

Children between the ages of tree and five have an (annoying) habit of asking repeatedly Why. Although these repeated questions of why may get to the nerves of many adults, they are very useful for intellectual development. We humans have a very basic need of understanding why things around us are the way they are and why they happen the way they do.

Despite this intrinsic curiosity and need for understanding the whys of the world, we are very often incapable of understanding (true) causality. It seems to be a paradox, but there’s a reasonable explanation, which is that as long as we find a plausible answer to the question why, we do not look any further.

Let me illustrate this with an example from Mother Nature. Earthquakes are reality of our planet. Most importantly, earthquakes come with damage if they are quite large. Engineering has tackled some of the downsides of earthquakes such as buildings collapsing, but by far there still are buildings that fall and people are killed and injured in earthquakes. In face of a big earthquake there is nothing anyone can do. It is only naturally that people fear earthquakes and it is only natural that only the possibility of a big earthquake generates a bit of hysteria.

Apart from the disasters they generate, earthquakes have another particular characteristic, namely that they can’t be accurately predicted with more than a few tens of seconds before they happen. Even the current technology can’t do very well when it comes to predicting earthquakes. Just as a note, even those 30 seconds are a great achievement and come with huge benefits such as the possibility of switching off nuclear power-plants, natural gas distribution in cities etc.

Although we cannot accurately predict earthquakes, we know what generates them: the collision between tectonic plates. Putting things very simplistically, in essence an earthquake is the release of accumulated tension between two tectonic plates.

Knowing this and keeping things simple, the tension accumulated between two tectonic plates can be released gradually – which results in many small earthquakes, or it can be released at once which results in big earthquakes.

Keeping in mind this simplistic rule, we can say that when a small (and non-dangerous) earthquake happens, it is in fact good news. This is because some of the tension accumulated between two tectonic plates was released, thus the remaining tension is smaller which in turn means that the probability of a big (and dangerous) earthquake occurring in the near future decreased.

Human psychology is, however, quite different. We humans become scared and even panicked when we experience a small earthquake. This is because the notion of earthquake is suddenly very salient in our minds and all the disastrous consequences of a big earthquake are vivid in our imagination.

To sum up, when a small earthquake occurs, the objective probability of a big earthquake to hit in the near future decreases because part of the tension between the tectonic plates was released. However, in our minds, the occurrence of a small earthquake makes the possibility of a big one to hit in the near future more vivid, thus increasing the subjective probability of it occurring.

Another similar illustration on our fallacy to understand true causality comes from Australia where at the end of 2013 there was a huge bush-fire. Naturally there are many causes for a bush-fire such as negligence in using open flame, but one major cause of big bush-fires is that there is a lot of material that can burn. TV reports said that in the past ten years there were no considerable bush-fires in the areas hit. So, the physical, pragmatic cause of the huge bush-fire – flammable material – was there and has accumulated in quite a large time-span.

On the Psychology side, it is only natural for people to be terrified by huge fires (it is in our hard-wiring). However, I am convinced that in the ten years preceding 2013’s huge bush-fire, very few people were concerned or terrified by the lack of small-scale bush-fires. In fact, it is very plausible for people to have thought during those ten years that the danger (risk) of bush-fires to have decreased since no significant bush-fire happened in the recent past (this was before the huge one in the end of 2013).

This way of thinking has a huge influence on the behaviour of purchasing risk managing products and services such as insurance. The sales of insurance policies that cover the risk of earthquake (or bush-fires) increases after the occurrence of an earthquake (big or small, but big ones have a stronger influence). Similarly, sales of such insurance policies decrease when there hasn’t been an earthquake (or fire) for quite some time. Most interestingly, this dynamic of behaviour is completely the opposite of the dynamic of objective risks. After an earthquake (may it be small or big) the objective risk of a big earthquake occurring in the near future is lower, whereas during a period without earthquakes (or fires) the risk of a big one with subsequent big damages is, in fact, higher.

Small bad things such as small earthquakes and small bush-fires are, objectively, good news because they contribute to decreasing the risk of big bad things (big earthquakes and huge bush-fires that go out of control). However, the huge majority of people doesn’t think this way and panics when small bad events occur. Moreover, the lack of small bad things goes mostly unnoticed and when thinking of the risk of big bad things many people perceive it as being low since not even small bad things happened in the recent past.





13 January 2014

From a Rational Point of View, People Often Do Things that Make No Sense…

Adding knowledge from behavioral sciences helps remove the No from It Makes No Sense

From a rational point of view, people often do things that make little or no sense. But when these actions are viewed through the lens of behavioral sciences, a new interpretation emerges. Through the filter of a four-dimensional model of human behavior developed using top-level research in behavioral sciences, the reasons that people do what they do begin to come into focus. Building on this idea, It Makes (No) Sense: - Between the Joy of Gaining and the Fear of Losing offers a counter-intuitive perspective and macro-rules on human judgment, decision-making, and behavior.



The first section of the book, “How We Think,” explores human judgment and decision-making. This knowledge serves as the basic of understanding of how social factors, transient internal states, and physical environment elements influence human behavior. Sections two through six go on to describe the 4D Model of Human Behavior, a very effective tool for understanding, predicting, and influencing human behavior. This study gives particular attention to the drivers of human behavior beyond personality. Section seven, “An Alternative to Carrots and Sticks,” criticizes the established way of offering incentives and applying penalties in order to influence behavior. Through the careful application of knowledge from the behavioral and decision sciences, behavioral change can occur.

Some insights from early readers of the book: It Makes (No) Sense: - Between the Joy of Gaining and the Fear of Losing:

“In It Makes (No) Sense, Nicolae Naumof doesn’t just add structure to your ideas about how people think and decide, he also adds a lot of background information and plenty of great and very human examples. He’s comfortable relating advances in psychology to our evolutionary origins and goals, but just as good at creating compelling stories about how they affect our day to day lives. In its 75 chapters he will introduce you to a host of different psychological and behavioral effects – and just as importantly, how they fit together into a “4D model” of human decisions.

Oh, you might say, I’ve already read this bestseller or that one on decision making – why do I need another book? But you’d be wrong. For one thing, there’s so much in here you’ll surely learn something new. For another, Nicolae cares too much about this topic to simply repeat the hype. In fact, his final chapters – about how important experimentation is to behavior change, and what you can expect when you try to create it – are probably the most vital in the whole book. His message is simple: this is science, not magic, and it’s only by understanding why effects happen, and testing your interventions, that you can hope to create consistent change.”

The BrainJuicer Behavioral Change Consultancy.


“Great new Behavioural Science book: It Makes (No) Sense -Between the Joy of Gaining and the Fear of Losing” On Tweeter from John Kearon - CEO BrainJuicer