The endowment effect is old news: the amount that we value an object increases once we take ownership of it. The ‘extended version’ shows that the impact of the endowment effect increases with time: our valuation of an object increases more and more as the amount of time that we own it also increases. This is known as the length-of-ownership effect.
A recent study published in the journal Judgement and Decision Making1 has taken an even deeper look at this effect: studying how touching an object increases both our attachment to that object and how much we value itâ€¦ even if we don’t own it (also in pdf). Here are the key findings of this ‘pre-ownership exposure study’:
- Touching an object will increase our attachment to it and valuation of it, whether we own it or not.
- The longer we touch or handle an un-owned object, the greater we will value it and feel attached to it.
- Simply thinking about an un-owned object increases our valuation of it and how much we feel attached to it.
Related findings, cited in this article:
- If an object is being sold at auction, the amount that we value the object will increase as the length of the auction increases.
- Owning a coupon for an object increases our emotional attachment to that object.
- Making an item the “focus of a comparison” increases its attractiveness and the probability that it would later be selected. We will also feel more attached to the item and will value it higher.
via @stevesilberman and Lifehacker (suggesting that this duration-of-exposure effect’ is an explanation for why we have cluttered homes.)
1 What, you’re not reading Judgement and Decision Making? You should; it’s bimonthly and open access.
Why do unresolved issues linger in our mind, making us ponder them for days on end? Why are cliffhangers so successful in getting viewers to tune in to the next episode? How can we overcome procrastination? These questions can be answered by learning about the psychological concept/theory known as the Zeigarnik effect.
‘Discovered’ by Soviet psychologist Bluma Zeigarnik back in the 1920s, the Zeigarnik effect states that we remember incomplete or interrupted tasks better than completed tasks.
And so, to those questions. It’s easy to see how the Zeigarnik effect could be responsible for the success of suspense as a dramatic device, but for overcoming procrastination? Use the effect to your advantage and start at the simplest, smallest part of your task. After that, the unfinished nature of the larger task will push you toward action.
Beware, though: the effect has been shown to diminish if we don’t expect to do well on the interrupted task (or are otherwise completely not motivated).
Taking a systematic approach to implementing findings from behavioural economics into a sales cycle can “unlock significant value”, according to McKinsey’sÂ Ned Welch. To help business do exactly that, Welch–in what, at times, reads a bit like a ‘dark patternsÂ guide for marketers’–has written an article looking atÂ four practical techniques from behavioural economics that marketers should use to persuade purchasers. The techniques:
- Make a product’s cost less painful.
- Harness the power of a default option.
- Don’t overwhelm consumers with choice.
- Position your preferred option carefully.
There’s not much new here, but the summaries are nice and succinct. From item four, I found this bit of grocery store choice architecture interesting:
Another way to position choices relates not to the products a company offers but to the way it displays them. Our research suggests, for instance, that ice cream shoppers in grocery stores look at the brand first, flavor second, and price last. Organizing supermarket aisles according to way consumers prefer to buy specific products makes customers both happier and less likely to base their purchase decisions on priceâ€”allowing retailers to sell higher-priced, higher-margin products. (This explains why aisles are rarely organized by price.) For thermostats, by contrast, people generally start with price, then function, and finally brand. The merchandise layout should therefore be quite different.
(If you don’t have a McKinsey account, you can read the article hereÂ or here (PDF).)
A “felt need” is what differentiates a vitamin from an aspirin: when we crave something (relief from pain), a product that satisfies that desire becomes a must-have rather than a nice-to-have. Realising this and re-framing a product in terms of this craving is an important step in ensuring a product’s success, say Dan and Chip Heath, authors of the excellentÂ SwitchÂ andÂ Made to Stick.
Becoming aware of this idea is what led to the success of Netflix and NetAppâ€¦Â as well as the demise of countless other companies. In a brief article describing how re-framing a nice-to-have product as a must-have is all about discovering and exploiting a specific “felt need”, the Heaths look at Ray Bards failed attempt at getting his “vitamin” bookÂ publishedÂ and how realizing this idea of a felt need led him to become a successful publisher.
If entrepreneurs want to succeed [â€¦] they’d better be selling aspirin rather than vitamins. Vitamins are nice; they’re healthy. But aspirin cures your pain; it’s not a nice-to-have, it’s a must-have. [â€¦]
That aspirin quality is what Bard now looks for in a book. He says that successful books address a deep “felt need” – that is, readers hunger for the answers the book provides. Classic examples would be diet books, personal-finance books, and books that promise you mega success if you’ll just radiate positive energy to the universe, indicating your receptivity to mega success. Bard has become a talented diviner of felt need. Fully half of the books that he publishes become best sellers. [â€¦]
You’ve heard the old saying “If you invent a better mousetrap, the world will beat a path to your door.” Don’t bet on it. The world’s felt need isn’t for a better mousetrap. It’s for a dead mouse.Â [â€¦]
When engineers or marketers or entrepreneurs get too close to their products, it’s easy to mistake a vitamin for an aspirin. If your team is flirting with delusion, a little love might point you in the right direction.
The small sample size of Stanley Milgram’s small world experimentÂ means that the theory of ‘six degrees of separation’Â and the conclusion drawn from it–primarily, the Influential’s theory popularised by Malcolm Gladwell in The Tipping Point–could be deeply flawed. That was the starting point for Duncan Watts’ research that led him to say “the Tipping Point is toast”.
So to research how ideas and trends spread virally, Watts (who is author ofÂ Everything is Obvious,Â principal research scientist at Yahoo! Research (he directs their Human Social Dynamics group), and founding director of Columbia University’s Collective Dynamics Group) ran large-scale reproductions of the small world experiment and hundreds of computer simulations that brought forward two conclusions: the six degrees of separation theory is correct, but there is no evidence for super-connected ‘trend gatekeepers’ (such as Gladwell’s ‘Connectors’):
But Watts, for one, didn’t think the gatekeeper model was true. It certainly didn’t match what he’d found studying networks. So he decided to test it in the real world by remounting the Milgram experiment on a massive scale. In 2001, Watts used a Web site to recruit about 61,000 people, then asked them to ferry messages to 18 targets worldwide. Sure enough, he found that Milgram was right: The average length of the chain was roughly six links. But when he examined these pathways, he found that “hubs”–highly connected people–weren’t crucial. Sure, they existed. But only 5% of the email messages passed through one of these superconnectors. The rest of the messages moved through society in much more democratic paths, zipping from one weakly connected individual to another, until they arrived at the target. [â€¦]
[His computer simulation] results were deeply counterintuitive. The experiment did produce several hundred societywide infections. But in the large majority of cases, the cascade began with an average Joe (although in cases where an Influential touched off the trend, it spread much further). To stack the deck in favor of Influentials, Watts changed the simulation, making them 10 times more connected. Now they could infect 40 times more people than the average citizen (and again, when they kicked off a cascade, it was substantially larger). But the rank-and-file citizen was still far more likely to start a contagion.
I can’t help but find it somewhat ironic that, written almost four years ago, this argument hasn’t really gained much traction and Gladwell’s ideas are still discussed ad nauseam.