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11 Jun 18 13:31

One reason I love attending the annual behavioural economics conference Nudgestock is that I always pick up a few brilliant insights that make me see the world in a totally different way.

And in my opinion, no-one does this better than Rory Sutherland, the brains behind the event and head of Ogilvy's Behavioural Science unit.

He kicked off the day conference by asking the audience: What do you think of the fact that a number of behavioural science tests have failed to replicate?

It's a valid point. Indeed, one of the criticisms of behavioural science is that some of the trials haven't achieved the same results when tested in different countries, with different people, or in different settings. 

So is this a problem? Yes – but only if we've presumed that people's behaviour is governed by rules or laws that are unaffected by context, time, or environment.

But they're not.

Human behaviour is not like a Physics or Engineering problem. Contextual factors – even seemingly irrelevant ones - do matter enormously in shaping how we behave!

Take the famous "Jam experiment". It showed (counter to traditional economic theory) that more Jam options can actually lead to fewer purchases – due to the phenomenon of "choice overload." In some scenarios, this trial has failed to replicate.

But perhaps the scenario itself could be the critical factor in determining how people behave.  As Rory brilliantly explained: yes, someone who is busy doing their weekly shop may be put off by too many Jam options… but if a customer has travelled for an hour to go to a shop called "World of Jams", they obviously would not be overwhelmed by hundreds of choices!

Once again, we come back to our core principle of human behaviour: context matters. 

We also see that a lot of human behaviour comes down to the way choices are presented. Did you know that a standard Starbucks offers you thousands of drinks combinations? What's funny is that we don't find this confusing, because of the way they have structured the choice (with decisions made in stages). Imagine if these options were laid out like a typical restaurant menu – it would be around 20 pages long!

So my takeaway is this: let's not put too much energy into looking for "generalizable laws" of human behaviour… because they may not even exist. If there were context-free, global "laws" of human behaviour, it would be very hard for any company to gain a sustainable competitive advantage: once the "law" was out there, everyone would use it and the advantage would disappear.

Instead, we should see this "failure-to-replicate" as an opportunity and put our effort into rigorously learning what works for our customers in each unique environment. 

Do get in touch if you're interested in finding out how my colleagues and I are applying behavioural economics to help improve our everyday interactions with customers at iptiQ and ReAssure.

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Location: Folkestone, UK


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