Letters Remain

Tag: money

  • The Cashless Effect: Financial Abstraction Increases Spending

    I previously wrote about the denominationĀ effect, where people spend the coins faster than banknotes because coins are perceived as ‘smaller’, creating fewer psychological barriers. This raised the question of whether increased “financial abstraction” leads to higher spending, too. Indeed, research confirms that the lower the payment transparency, the greater the spend. This is the cashless…

  • First Offers and Aggressive Offers: Optimal Negotiating Tactics

    When negotiating ensure that you make the first offer and make sure it’s an aggressive one: this is almost always the optimal negotiation strategy. That’s the conclusion from a study looking at negotiation tactics and the anchoring effect (from the same researchers that discovered the optimal starting prices for negotiations and auctions). One of the…

  • Abstraction to Increase Effort (and Spending)

    When there is a medium placed between our effort and a desired outcome, we strive to maximise this medium regardless of whether or not it leads optimally to that outcome (think points or virtual currencies as a medium when attempting to obtain goods). That’s my attempt at a concise summary of the findings from a…

  • Negotiating Over ‘Sacred Values’

    When requested to give up a “sacred value”, the inclusion of a financial incentive incites moral outrage, decreases general support for a compromise, increases anger and increases a subject’s approval of “violent opposition”. Research looking at our reactions to such proposalsĀ offersĀ sameĀ suggestions for negotiating over sacred values. A more successful tack for negotiating over sacred values,…

  • A Summary of Happiness Research

    David Brooks brings ‘happiness research’ back to the wider public’s attention with a succinct summary of research into what does and does not make us happy: Would you exchange a tremendous professional triumph for a severe personal blow? [ā€¦] If you had to take more than three seconds to think about this question, you are…

  • The Denomination Effect: Banknotes vs. Coins

    The denomination effect is the phenomenon whereby people spend coins faster than banknotes: it shows that we are more willing (there are fewer psychological barriers) to spend the same sum of money in coins than in ‘bills’. It’s obvious, but I like having these things ‘confirmed’ and having a name to go with them. Another experiment involved [NYU…

  • Credit Card Customer Profiling and the Luhn Algorithm

    From a Q&A with a VISA fraud prevention agent on reddit: Some years ago, someone wrote a paper claiming he could get the age, gender and race only from the credit card purchase history. It worked very well. Today, with your full purchase information, we can even “guess” your income range, number of dependants and…

  • The Irrational Use of Credit Cards

    Our irrationality toward money and inability to fully visualise the impact of distant events is how credit card companies thrive and many bank balances suffer. That’s the conclusion one draws after reading this article from Time that looks at a number of studies showing that we fail miserably in making logical decisions about money when…

  • Want Happiness? Buy Memories, Not Objects

    In one of my very first posts, I wrote about an article that noted how “money will make you happier, up to a point. After that, it makes no difference. That point is the wonderfully quantitative ‘point of comfort‘. That is, once we have enough money to feed, clothe and house ourselves, extra money makes…

  • When Money Buys Happiness (or Not)

    After discussingĀ consumer signalling and Geoffrey Miller’s Spent in hisĀ Findings column (mentioned previously), readers of John Tierney’s Lab were asked, List the ten most expensive things (products, services or experiences) that you have ever paid for (including houses, cars, university degrees, marriage ceremonies, divorce settlements and taxes). Then, list the ten items that you have ever…