Behavioral Economics distilled for CCA Design MBA Master Class

1. PRODUCT RESEARCH
STRATEGY
Inspired by Emotion
PAUL SAS
MOTIVATION ENGINEERS
QUANTIFIED
EMOTIONS
PAUL SAS
AUG 23, 2018

2. 2 © Motivation Engineers
AGENDA
OBJECTIVES DEFINED
Learn current state of psychological insight into emotion1
Deepen insight into scoping the questions that will help your design strategy2
Develop methods to analyze your progress as prototypes become products3
Stay close to our feelings throughout!

3. Understanding the Minds (& Hearts) of Customers
The Elephant & the Rider metaphor (back to Buddha)
The Elephant:
Strong
Persistent
Emotional
Impulsive power
The Rider:
Strategic
Planning
Rational
Relatively puny

4. Elephant & Rider translated to Behavioral Economics
Two systems operate in tandem
System 1 –
Automatic, intuitive, effortless
System 2-
Deliberate, demands attention, effortful
Most marketing primarily speaks to the conscious/planning rational
decision maker.

5. Emotional/impulsive/automatic (System 1) overrides
Rational System 2
What sounds more attractive?
90% fat free vs 10% fat

6. Emotional/impulsive/automatic (System 1) overrides
Rational System 2
What sounds more attractive?
90% fat free vs 10% fat
90% survive vs 10% die

7. ©2010DiamondManagement&TechnologyConsultants,Inc.
!7Principles of Behavioral Economics
Behavioral Economics Analysis Framework
Decision Shortcuts
Value Assessments
Emotional Impacts
Social Impacts
Consumer decisions are far more complex than they appear.
Consumers use mental "shortcuts" to guide them to what they
feel is the right decision. Understanding these shortcuts can
help companies guide consumers to the "right" decision.
Emotions get the better of people. Emotional impacts can
drive someone to or away from what would be considered the
"rational" economic decision. Appealing to these emotional
impacts can be more powerful than a price reduction in driving
demand.
Value is a relative concept. Is a television "worth" $300 or $400?
Is a warranty "worth" $29.99? In assessing the "value" of a
product or service consumers often use seemingly "irrational"
metrics and concepts to guide their behavior.
People are social. Consumers take into account behaviors
of fellow consumers and social norms to guide them to
what they believe is the "right" decision.
Relative Choices
Attribute Priming
Power of Defaults
Mental Accounting
Dominated Alternatives
Rules of Thumb
Choice Overload
Love of Free
Anchoring
Endowment Effect
Hyperbolic Discounting
Presentation Paradox
Social / Financial
Domains
Cheating Bandwagon Effect
Signaling
Risk Aversion
Loss Aversion
Hot vs. Cold States
Self Control Facilitation
Over Confidence
Labor Illusion
A
B
C
D
Framing
Peak & End Rule
Evelyn Gosnell, from Irrational Labs, may’ve introduced you to an overview of this

8. 7 © Motivation Engineers
WHEN YOU FEEL IT,
EMOTION RESEARCH REVIEW
YOU (USUALLY) KNOW & SHOW IT
Emotions
are complex,
multi-dimensional,
and hugely
important
Attention
compels, focuses,
resists intentional override
Cognitive
awareness, attributions,
goals, interpretations
Self-awareness of
motor expression
Personality
Type
Unconscious
perception
Motor expression
face, body, voice
Autonomic
hormonal and visceral
Memories
Cultural Appropriateness
WEIRD - Western, Educated,
Industrialized, Rich, Democratic

9. ©2010DiamondManagement&TechnologyConsultants,Inc.
!9
Exemplars of Emotional Engagement
Great Movies
My Music
Architecture with Feng Shui
Delicious/fine/comfort meals
Live performances
Dancing together
Zen Garden
Holiday Rituals (Thanksgiving)
Morning Coffee
Hanging out with friends (Cheers)
Personal trainer
Being Thanked/Recognized
Forest (Muir Woods)
InstructionalVideo
Your Music
Greyhound Bus Station
Jack in the Box
Bad Karaoke
Jr High School Dance
Tokyo Street Din
Death Marches/Fire Drills
Morning commute in traffic
Networking Events (Hi I'm…
24 Hour Fitness Sisyphus
Rudeness/Inconsideration
Mosquitoes & Flies
Story
Song
Space
Food
Communal art
Dance
Safe space
Ritual
Daily rhythm
Friendship
Coaching
Recognition
Primeval space

10. 10 © Motivation Engineers
EMOTION RESEARCH
EXPERIMENTAL PARADIGMS
EXERCISE 1 - TEN MINUTES
Write down the first emotion that comes up when you use your
most relied upon app/social media
Add any other emotions that are frequently evoked when you use your
most relied upon app/social media

11. 11 © Motivation Engineers
MULTIPLE WAYS TO MODEL
EMOTION RESEARCH REVIEW
Ekman’s 6 Basic Emotions
Happy Sad Fear
Anger Surprise Disgust

12. 12 © Motivation Engineers
Intensity & Valence
EMOTION RESEARCH REVIEW

13. 13 © Motivation Engineers
EMOTION RESEARCH REVIEW
COGNITIVE APPRAISAL
Responsibility
Who is to blame?
Control
Am I the Boss?
Cope by seeking slivers of
control over outcomes
Legitimacy
Am I getting what
I'm owed?
Fair/deserved or unfair
Effort
How hard do I
have to work?
Energy demand minimized to
dodge an unpleasant emotion
Attention
Attention attracted
over time.
Focusing Illusion
Pleasantness
How good do I
feel right now?
Pleasing, attractive aspects
Obstacle
Is anything frustrating
my will?
Blocking goals
interpreted as personal
Certainty
Confidence
about outcome

14. 14 © Motivation Engineers
Emotions Are Goal-Oriented
EMOTION RESEARCH REVIEW
EVENT
Yes
Emotion
Goal
Relevant?
Ego
Involvement?
Yes
Positive Emotion
Happiness
Pride
Love
Not
Relevant
Boosts
self-esteem
Mutual
Affection
Negative Emotion
Anger,
Shame
Fear/ Anxiety
Sadness
Damages
self-esteem
Threat
to self
Loss
to self
No No Emotion
Goal
Congruent?
No

15. 15 © Motivation Engineers
MARKETING GOAL MAP
EMOTION RESEARCH REVIEW
Adventure
Popularity/
Connection
Discipline/
Competence
Security
Stimulation Autonomy

16. 16 © Motivation Engineers
FLOW IMPACTS EMOTION
EMOTION RESEARCH REVIEW
SKILL

17. 17 © Motivation Engineers
FLOW IMPACTS EMOTION
EMOTION RESEARCH REVIEW

18. 18 © Motivation Engineers
2 PUBLISHED SCALES TO
MEASURE FLOW
EMOTION RESEARCH REVIEW
On the Measurement and Conceptualization of Flow —
Giovanni B. Moneta
The Manual for the Flow Scales - Jackson, Eklund, & Martin

19. 19 © Motivation Engineers
6 QUESTIONS TO MEASURE FLOW
EMOTION RESEARCH REVIEW
I felt just the right amount of challenge
My thoughts/actions ran fluidly and smoothly
I did not no4ce 4me passing
The right thoughts/ac4ons occurred of their own accord
I knew what I had to do each step of the way
I felt that I had everything under control
Please rate the extent to which each statement below characterizes your experience
while comple6ng the task.
Recommendation: Never ask more questions than necessary
Estimate Importance* to identify point of diminishing returns
*Estimators of Relative Importance in Linear Regression Based on Variance Decomposition
Ulrike Gromping The American Statistician, May 2007, Vol. 61, No. 2

20. ©2010DiamondManagement&TechnologyConsultants,Inc.
!20
20
Kano Model of Product Innovation
EMOTION RESEARCH REVIEW

21. ©2010DiamondManagement&TechnologyConsultants,Inc.
!21
Delight conceptualized
21

22. 22 © Motivation Engineers
CIRCUIT OF EMOTIONS THOUGHTS BEHAVIOR
EMOTION RESEARCH REVIEW
E B
T
T H O U G H T S
What we THINK affects
how we act and feel
E M OT I O N S
How we FEEL affects
what we think and do
B E H AV I O R
What we DO affects
how we think and feel

23. 24 © Motivation Engineers
Self-reports (Many Different Instruments)
Participants rate overall experience
Second by second changes might using rating dial
Subjective crowdsourced ratings
Workers (e.g., MechTurk) can identify/measure/rank emotion in content
AI / Machine Learning for text
Large data sets can be trained to recognize
Pupil dilation
Changes in pupil size show cognitive demand
Facial coding
Automatic coding of facial responses
Voice
Expressive
Analyze words used, and voice pitch and volume
Heart rate
Measure changes in heart beat rate
Skin response
Measure changes in skin conductivity (sweating)
1
2
3
4
5
6
7
8
METHODS FOR MEASURING EMOTIONS

24. 24 © Motivation Engineers
METHODS FOR MEASURING EMOTIONS
Self Report Instruments respondents assess feelings on multiple dimensions
PANAS (Positive & Negative Affect Scale) - Likert rating used in academic studies
The words listed below describe different feelings and emotions. Read each item and then, in the space next to that word,
indicate the extent to which you feel that way.
Very slightly
or not at all
A little Moderately Quite a bit Extremely
1 2 3 4 5
Interested
Distressed
Excited
Upset
Strong
Guilty
Scared
Hostile
Enthusiastic
Proud
Very slightly
or not at all
A little Moderately Quite a bit Extremely
1 2 3 4 5
Irritable
Alert
Ashamed
Inspired
Nervous
Determined
Attentive
Jittery
Active
Afraid

25. 25 © Motivation Engineers
METHODS FOR MEASURING EMOTIONS
Self-assessment Manikin (1980) on 3 dimensions
Pleasure
Arousal
Dominance

26. 26 © Motivation Engineers
METHODS FOR MEASURING EMOTIONS
PrEmo Self Report
PrEmo portrays 14 emotions, each with an animation of dynamic facial, bodily, and
vocal expressions
Scales developed for responses to cars, so emotions include lust, love, worship
Requires a license from SuSa group
“The use of short animations is insightful for the emotion. Cartoons with sound makes
these powerful descriptions of the depicted state. - Don Norman”
http://www.premotool.com/

27. 27 © Motivation Engineers
EMOTION RESEARCH
EXPERIMENTAL PARADIGMS
EXERCISE 2 - TEN MINUTES
Rate, using the PANAS scale, what emotions are evoked when you use your
most relied upon app/social media

28. 28 © Motivation Engineers
EMOTION RESEARCH
EXPERIMENTAL PARADIGMS
EXERCISE 2
Tag Emotions Using Specific Instruments
Positive and Negative Affect ScaleE X A M P L E : PA N A S
The words listed below describe different feelings and emotions. Read each item and then, in the space next to that word,
indicate the extent to which you feel that way.
Very slightly
or not at all
A little Moderately Quite a bit Extremely
1 2 3 4 5
Interested
Distressed
Excited
Upset
Strong
Guilty
Scared
Hostile
Enthusiastic
Proud
Very slightly
or not at all
A little Moderately Quite a bit Extremely
1 2 3 4 5
Irritable
Alert
Ashamed
Inspired
Nervous
Determined
Attentive
Jittery
Active
Afraid

29. ©2010DiamondManagement&TechnologyConsultants,Inc.
!29
At Intuit, they care a great deal
about Designing for Delight

30. ©2010DiamondManagement&TechnologyConsultants,Inc.
!30
In 2012, I began to work on a quantitative model to predict
customer delight

31. !31 9
Examples of Behavioral Measures
Behavioral Attributes
Available to Analytics Data Type
Migrated from Classic/Desktop Yes/No
Length on current version/edition # months
Stretcher (switched to next product level) Yes/No
Time spent in QBO Minutes
Number of pages visited #
Number of log ins #
Invoice created Yes/No
(Number of) Vendors paid Yes #/No
Create/Import a vendor Yes/No
Number of vendors created #
Create/Import an invoice Yes/No
Number of invoices created #
Promo Yes/No
Free trial Yes/No
Set up payroll Yes/No
Number of transaction #
Ran a custom report Yes/No
(Number of) Watched videos Yes/No
Minutes spent watching videos Minutes
Tax form type Type
Mobile Yes/No
Behavioral Attributes
Available with Panelists
Time on Task to Create Invoice
Time on Task to Setup Employee
Time on Task (Other Actions)
Success rate Create Invoice
Success rate Setup Employee
Success (Other Actions)
Abandonment rate Invoice
Abandonment rate Payroll
Abandonment rate Other Actions
Create/Import an invoice
Number of invoices created
Set up payroll
(Number of) Watched videos
Minutes spent watching videos

32. ©2010DiamondManagement&TechnologyConsultants,Inc.
!32
These 3 categories are also used
at Facebook (by Julie Zhuo) and at
Forrester Research

33. ©2010DiamondManagement&TechnologyConsultants,Inc.
!33
3 factors could reliably predict
customer delight
Three factors predict / explain 71% of the
variance in Net Promoter (NPS)
27%
23%
21%

34. Three Questions to Ask
How easy was it to do your task?
(5 point pole-labeled scale: Not at all Easy to Extremely Easy)
How satisfied are you with _____'s
ability to meet your specific needs?
(5 point pole-labeled scale: Not at all Satisfied to Extremely Satisfied)
How delightful was your interaction
with _______?
(5 point pole-labeled scale: Not at all Delightful to Extremely Delightful)

35. 35 © Motivation Engineers
EMOTION RESEARCH
EXPERIMENTAL PARADIGMS
EXERCISE 3
Rate, using the 3 questions, how you feel about your most relied upon
app/social media

36. 36 © Motivation Engineers
EMOTION
EXPERIMENTAL COSTS & TRADEOFFS
Methodological considerations
How reliable is the
particular signal
collected?
How expensive is it
to collect that?
What does it cost to
accept the loss (in
reduced accuracy) of the
cheaper signal detector?
1 2 3

37. 37 © Motivation Engineers
EMOTION
EXPERIMENTAL COSTS & TRADEOFFS
C O N S I D E R A N A LO GY O F B M I
Simple charts calculate with just
Height & Weight as inputs
Hydrostatic Body Fat Test float
in a precise lab setting ($50 to
$150/test)
Adiposity doesn’t even require a
scale, uses only a tape measure to
compare hip size to height

38. Customer Based Brand Equity Model
!38
Keller's Customer Based Brand Equity CBBE

39. Emotional Dimensions of CBBE Model
!39
EMOTIONAL
attributes
Keller's Customer Based Brand Equity CBBE
Attachment Attitudes: Love/Like Brand; Proud
Community: Affiliation
Active engagement: Seek deeper connection
(Like FB page, want more info, join clubs)
Resonance
Congruence with psycho-demographic
segments
Popularity
Actual vs Aspirational
Personality: Aaker's 5 Brand Personalities
History: Nostalgia + Memories
Imagery
Feelings (acc to Keller)
Warmth, Fun, Excitement, Security, Social
Approval, Self-Respect

40. Why Ads work: Psychology of Mere Exposure
Mere Exposure defined: An item is rated as more favorably if the rater has been previously
exposed to that item. The increased favorability ratings occur without consciousness
1- Awareness isn't necessary to change favorability (subliminal exposures work)
2- Subjects deny familiarity, but liking is good discriminant of exposure
Typical question on Likeability used 5-point scale
3- Meta-analysis of 208 experiments show mere-exposure effect is robust (effect size of r=0.26)
4- Liking seems to achieve a maximum at 10–20 exposures
!40
© Motivation Engineers

41. Obtainability might be viewed in terms of
Aspirational contrasts -
Time horizon, Reward (hedonic),Demographic Affiliation
MAYA - most advanced (desire), yet acceptable (obtainability)
Feelings
Excitement, Social Approval, Self-Respect, Warmth, Fun, Security
Surprised Excited Attracted Inspired Confident Proud Content Affection
Hatred Repulsed Annoyed Inadequate Disappointed Guilty Unimpressed Sad
Imagery associations
Demographic congruence (& exclusion)
Personality esp Sincerity , Excitement, Sophistication
History/nostalgia associations
Judgment - Credibility, Pricing as Signal
Resonance -
Attachment
Loyalty (esp for luxury brands)
Methods for Measuring Attachment
!41

42. Desire measured in Implicit, Explicit and Intensive & Extensive Dimensions of Strength
Revealed - implicit choices without verbally expressed preference
Make trade-offs for X
Spend extra time searching for X
Do work for X / Cease doing work earlier if X absent
Game-based lab experimental economics
WTA (willingness to accept) - If you get less preferred Brand B, what do you have to be paid
to accept that substitute?
WTP (willingness to pay) - You get Brand B for free; how much to switch to preferred
Crucial fact - WTA can be 10X WTP
Expressed Purchase intent
Attachment
Loyalty
Methods for Measuring Desire
!42

43. 1- For emotion, measure Pleasantness + Arousal (intensity)
2- For pleasantness, independently probe
Positive (Attracted/Pleased) + Negative (Irritated/Bored)
3- Adapt measures of Customer Based Brand Equity (CBBE) 6 feelings
Warmth, Fun, Excitement, Security, Social Approval, Self-Respect
4- Consider adapting Aaker's 5 Brand personalities for further emotional insight
Sincerity (down-to-earth, honest, wholesome, cheerful)
Excitement (daring, spirited, imaginative, up-to-date)
Competence (reliable, intelligent, successful)
Sophistication (upper-class, charming)
Ruggedness (outdoorsy, tough)
Recommended approach to experiments
!43

44. 45 © Motivation Engineers
PHILOSOPHY & EMOTIONAL DESIGN
STEPPING THROUGH WHAT WE’VE LEARNED
ONTOLOGY: What are emotions1
EPISTEMOLOGY: How can we measure emotions?2
ESTHETICS: What are the most desirable emotions to evoke?3
ETHICS: What emotions SHOULD we evoke?4

45. © Motivation Engineers
AGENDA REVIEW
OBJECTIVES DEFINED
Learn current state of psychological insight into emotion1
Deepen insight into scoping the questions that will help your design strategy2
Develop methods to analyze your progress as prototypes become products3

46. 46 © Motivation Engineers
Single best summation: Thinking Fast & Slow
Most Enjoyable: Dan Ariely’s first 2 books
Predictably Irrational +
Upside of Irrationality
How Emotions are Made - Lisa Feldman Barrett
Also worthwhile: Art of Choice (Iyengar);
Why Axis (Gneezy); Nudge (Thaler & Sunstein)
References for further reading