(Preventing) Manipulation Through Irrationality

Through the the­or­ies dis­cussed in Dan Ari­ely’s Pre­dict­ably Irra­tion­al (and largely based on the excerpts in Chris Yeh’s out­line of the book), two art­icles have emerged on dif­fer­ent sides of one top­ic: our irra­tion­al decision-mak­ing in terms of products and pur­chases.

One on how to take advant­age of our irra­tion­al­ity when mar­ket­ing products, and anoth­er on pre­vent­ing manip­u­la­tion by being aware of our own irra­tion­al­it­ies.

One point from each art­icle, per sec­tion:

Price Relativ­ity and the Encour­aging of False Com­par­is­ons

  • Offer a premi­um ver­sion of your product/service and make it easy to com­pare.
  • Real­ize that some premi­um options exist as decoys – that is, they are there only to make the less expens­ive options look more appeal­ing, because they’re easy to com­pare.

The Fal­lacy of Sup­ply and Demand and the Rein­force­ment of Anchor­ing

  • Set your­self against “premi­um” com­pet­it­ors in premi­um mar­kets. Pos­i­tion­ing is crit­ic­al to the per­cep­tion of value.
  • Scale your pur­chases to your needs, not your cir­cum­stances or wal­let size. Try to object­ively meas­ure the value of what you’re buy­ing.

The Zero Price Effect

  • Offer free stuff (espe­cially to those whose affections/actions you desire most), but make sure you get ROI from it.
  • Do not over­es­tim­ate the value of items you get for free. Res­ist this by view­ing free stuff scep­tic­ally rather than wel­com­ing it with open arms. What are the hid­den costs involved (restric­tion on future choices, time and effort expen­ded, etc.)?

The Exploit­a­tion of Social Norms

  • The mind­set of volun­teers vs. employ­ees (free vs. paid) is very dif­fer­ent – con­sider which beha­viour set you want before decid­ing on the type of labour to attract.
  • Con­sider care­fully before choos­ing to par­ti­cip­ate [for free].

The Influ­ence of Arous­al

  • Arouse your audi­ence and their beha­viour (espe­cially their decision-mak­ing) changes drastic­ally.
  • Be aware when you are being aroused (not just sexu­ally).

Design­ing for Pro­cras­tin­a­tion

  • Pro­cras­tin­a­tion is an extremely com­mon human beha­viour – plan for it in your busi­ness and take advant­age of it where it can help (tri­al offers that turn into paid ser­vices, for example).
  • Either favour fixed-rate, fixed-term plans – or become metic­u­lous about can­cel­ling unused recur­ring ser­vices, or ser­vices with auto­mat­ic price increases.

The Endow­ment Effect

  • ‘Free’ products are val­ued less than pur­chased products. It’s easi­er to get more money from your exist­ing cus­tom­ers than it is to attract new ones.
  • Be will­ing to walk away from–and nev­er rely on your intern­al value judg­ment of–already pur­chased goods/services. Ask an impar­tial third party for their object­ive advice.

Cap­it­al­isa­tion of our Aver­sion to Loss

  • Nar­row your cus­tom­ers’ choices and they’ll be more likely to com­mit.
  • If your choices are arti­fi­cially nar­rowed, don’t pass­ively get fun­nelled towards the goal you’re being herd­ing toward. Don’t pay extra for options, unless you can point to hard evid­ence that you need those options. Some options exist just to make you doubt your­self.

Engender Unreas­on­able Expect­a­tions

  • Take advant­age of expect­a­tions of value cre­ation. Pos­i­tion your brand so that users expect great things, and they’ll get them.
  • Let your own opin­ions guide you, not the opin­ions of oth­ers. Don’t let mar­ket­ing set your expect­a­tions. Rely on evid­ence and facts.

Lever­age Pri­cing Bias

  • High­er pri­cing means high­er expect­a­tions, but also more ful­fil­ment, even if the product isn’t actu­ally more ful­filling. The placebo effect is strong.
  • Price often has noth­ing to do with value. Don’t fall prey to the ‘money­moon’.