Behavioural Economics was popularised in 2008 by the book Nudge. For the uninitiated, it's the study of effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and companies and how those decisions vary from those implied by classical economic theory (think Adam Smith etc).
Clifford Chance hosted a fun, fascinating event on Wednesday where Oxera Consulting took us through the basics and ran some experiments to demonstrate a range of biases. Even in an audience of Business Development & Marketers who knew they were being experimented on (many of whom had read about the topic) people still chose the options Tim Hogg, the Behavioural Economist expected.
Tim taught us about the difference between Nudges - using people's biases to make the right decisions and Smudges, using the same techniques to take decisions which are not in their best interest. Some of the biases we learned about are common knowledge such as loss aversion and social norms but others were new to me including Satisficing, which is making decisions with the aim of achieving a 'good enough' result rather than the optimal result and another: Peak-End Rule, which is rating a (positive or negative) experience according to the feeling at its most extreme and at the end of the experience (rather than according to the average feeling throughout).
An example which stood out was an experiment called Fruit or Chocolate. Office workers were asked if they would like fruit or chocolate as a snack next week. Around 80% said fruit. When next week came they pretended they had lost the list and went around asking each employee what they would like and roughly 70% of people chose chocolate! This resonated with me because at Passle we spend a lot of time meeting professionals who all know they should create more content but don't get around to doing it. I'd not previously considered myself a fruit pusher.