Prime Decision is a marketing strategy firm that uses behavioural economics. Behavioural economics studies actual human behaviour and decision-making, rather than the rational "homo economicus" model. People are bad at judging probabilities but good at frequencies. Behavioural economists have discovered many cognitive biases that influence decisions, such as framing effects, availability heuristic, and defaults. Prime Decision applies these insights to problems by developing behavioural strategies and experiments. Their approach targets specific behaviours, interrogates the problem through lenses like script, social and structure, then experiments to find effective interventions. They gave an example of reducing insurance fraud through subtle changes to the claims process designed to promote honesty.
8. Which is the best option?
a. 40% chance of winning £22.50
b. 5% chance of winning £180.00
c. 65% chance of winning £15.40
d. 25% chance of winning £36.00
e. 80% chance of winning £11.25
9. a. 40% chance of winning £22.50 £9
b. 5% chance of winning £180.00 £9
c. 65% chance of winning £15.40 £10
d. 25% chance of winning £36.00 £9
e. 80% chance of winning £11.25 £9
Correct =
17. Framing effects
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52%
increase
68%
32%
16%
0%
84%
25. Experiment: Easter Bonus
I recognise that I have moral obligation to complete this task honestly.
0%
1%
2%
3%
4%
5%
6%
7%
8%
Control Opportunity Honesty
Pledge
75%
decrease in
high claims
95%
Decrease in
maximum
claims
26. Potential to scale
What would an insurance process look like that was
designed to promote honesty?
Claims process
Marketing touch-points
Customer communications
There is a tremendous scope to apply psychological insights to reduce fraud
28. Story:
What do people say?
What do they not say?
How do they justify
their choices?
Script:
What are the habits?
How could these be
strengthened/ disrupted?
Which other scripts could
be mimicked/leveraged?
Social:
What are others doing?
Are they aware of this?
What form does/could
this awareness take?
Sense:
What are the stimuli?
How/are they perceived?
How does this affect their
experience/choices?
Structure:
Which choices are
presented?
How are they framed?
What is the rationale for
the order/defaults?
Scenario:
Which external or
emotional/personal
factors could feature?
Is there scope to
modify/personalise?
Sync:
What are our own biases?
Have we tested our
assumptions? Have we
missed alternative contexts?
Questions to ask:
Script
SocialStory
Sync
Sense Scenario
Structure
People may judge the probabilities of future events based on how easy those events are to imagine or to retrieve from memory
People are generally attracted to options that dominate other options (Huber, Payne & Puto, 1982). They are also drawn disproportionately to "compromise" alternatives whose attribute values lie between those of other alternatives (Simonson & Tversky, 1992)
Forty-eight young adults completed a “language proficiency task” which would either activate a healthy lifestyle schema in the experimental condition or a neutral schema in the control condition. Participants in the experimental condition were more likely than the control group to use stairs, instead of elevators, to move up one floor to attend another unrelated study.