Letters Remain

Tag: behavioural-economics

  • Optimism as Incentive

    Much has been written on the (ir)rationality of purchasing lottery tickets (Eliezer Yudkowsky’s viewpoint is particularly fine), but little has been said on applications of these biases that could improve the finances of all of those who buy a ticket. Now behavioural economists are attempting to boost the historically poor household savings rate by using our…

  • Barriers, Not Calories, Influence Eating Habits

    Informing consumers of the calorific value of their food options doesn’t change their ordering/eating habits (previously), but removing barriers and making the healthier options easy to order does. That’s the conclusion from Kevin Volpp’s lecture, ‘Using Behavioral Economics to Improve Health Behaviors’. Recent studies […] have indicated that providing nutritional information at restaurants and recommending…

  • Penny/Dollar Auction Psychology (The Workings of Swoopo)

    I first heard of the bidding fee scheme/online auction site Swoopo in a Coding Horror post that takes a look at the company’s business plan, calling it “pure, distilled evil”. It’s also a pretty simple (or, as the post said, “brilliantly evil”) plan: It’s almost an exploit of human nature itself. Once you’ve bid on…

  • Optimum Starting Prices for Negotiations and Auctions (and Why)

    A high initial offer in negotiations is more likely to lead to a high final price, yet in auctions a low start price is more likely to lead to a high final price. These are the findings of a recent study that attempted to find the optimal starting prices for negotiations and auctions. In negotiations…

  • How Congestion Pricing and Traffic Jams Help the Environment

    When us laymen think of ways to solve traffic congestion we typically think of two ways: congestion pricing to force those who are most price sensitive off the roads and on to public transport (which should be improved using the funds gained through said pricing), and adding capacity to the roads. But do these solutions…

  • The Deadweight Loss of Gift Vouchers

    Of the $92 billion spent on gift vouchers in the U.S. last year, $6 billion was lost to fees and unused cards. In response to this, the U.S. Credit Card Act now bans fees on vouchers that have been dormant for less than 12 months and expiration dates of less than five years from the…

  • The Problems with Saving

    In 2007 the average American saved 0.6% of their income. By February of this year that had risen to more than 4%, but in the 1980s it was 10%. With this in mind, Tim Harford asks why are we such awful savers, and what can we do to improve the situation? Behavioral economists […] have…

  • Psychology of Sales

    Retailers aren’t in sales; they’re “in the perception business”, says Jonah Lehrer while discussing how we perceive goods of varying prices, especially discounted goods. Consumers typically suffer from a version of the placebo effect. Since we expect cheaper goods to be less effective, they generally are less effective, even if they are identical to more…

  • Psychology of Money

    New Scientist provides a comprehensive summary of studies looking at the psychology of money. There are some fascinating findings here, including a study showing that “simply thinking about words associated with money seems to makes us more self-reliant and less inclined to help others [and] just handling cash can take the sting out of social…

  • How Reviews Influence Sales (Positive and Negative)

    Unsurprisingly, this brief analysis of how reviews influence sales on Amazon equates quite well with my purchasing behaviour; I wouldn’t feel comfortable buying a product with 100% positive reviews unless I knew personally that it was awesome. And a product with less than 15 reviews or so? Forget about it. [A] handful of bad reviews, it…