Interaction designers craft experiences by curating the flow of information within contexts that aim to focus attention & interest. Subtle psychological details can dramatically transform an experience. The current excitement about "gamification" has begun to draw on the powerful ways that packaging can convert a mundane task into an engaging challenge. Experimental results from behavioral economics spotlight opportunities for improving the dynamics of an interaction: The presentation frame can harness intrinsically motivating cues, enabling people to develop behavioral patterns that harmonize with their deepest aspirations.

1. Wellness, Wealth Management, & Will Power
Interaction Design through the Lens of Behavioral Economics
Paul Whitmore Sas
wit@psych.stanford.edu
July 28, 2011 for ESI lunch talk

2. “Framing” Links Psychology to Behavioral Economics
Contextual cues, situational aspects, environmental
associations shape/structure perception
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3. Behavioral economists view Designers/Product
Managers as CHOICE ARCHITECTS
Opt
ion
A
Opt
ion
B
“Many features, noticed and unnoticed, can influence
decisions. The person who creates that environment is, in our
terminology, a choice architect.” (Thaler & Sunstein)
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4. Case Study: BofA’s Keep the Change
Subjective Valuation:
1. Psychophysics of Value
2. Mental Accounting
David Fetherstonhaugh, IDEO Behavioral Economist in Residence

5. 1. Psychophysics of Value
Diminishing Returns (Weber-Fechner Law)
Response starts big, and with each additional increment,
gives less and less bang
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6. 1. Psychophysics of Value
Pain of Spending
Purchase of
$5.10
1st 2nd 3rd 4th 5th 6th

7. 1. Psychophysics of Value
6th
5th
4th
Pain of Spending
3rd
2nd
1st
90
¢
$1 $2 $3 $4 $5 $6
Actual Dollars Spent

8. MPC = ~1.0 MPC < 1.0 MPC = ~0
Violate economic notion of fungibility (money has no labels: money is one unitary metric).
People behave as if money in one account is not a substitute for money in any other account.
Marginal Propensity to Consume (MPC) very dependent on “account” in which it’s held
11 adapted from Prof Russell James III, Texas Tech U

9. 2. Mental Accounting
Rounds up to
90¢
Mental Spending Account Mental Savings Account
Pain of Spending
Joy of Saving
o!
Waho
90¢
saved
Actual Dollars Spent Actual Dollars Saved

10. Automating Choice
Subscription to reduce friction of decision-making
 Theater tickets / Gym membership
 Amazon: 2 ways – PRIME & 15% off if a purchase is
transformed from a one-off purchase to a subscription
 Medical insurance –Seems irrational to choose high
premium, low deductible, yet many don’t want to make
repeated calculations about trade offs
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11. Endowment Effect explains one way
subscriptions change framing
Mug Experiment at Cornell in 1985
Every other MBA class was given a $6 mug
Buyer reserve price $2.50 ; Seller reserve $5.25
Expected trades 11; actual number below 2.
Random distribution should not have guessed
which people preferred $ to a Cornell mug.
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12. How do subscriptions change the framing?
 How does endowment effect show up in subscription
momentum?
 Once something is part of ME, letting go of it feels like a
loss, even if offered a compensatory gain
 I lose part of me, and gain mere $ back.
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13. Subscriptions can support behavioral change
Set up a policy where I am guaranteed not to have to
make a sequence of choices
Don’t Make Me Think
Create a climate of “us” where trust is supported
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14. Understanding Preferences
Building a better Eliza (1966 computer program)
ELIZA mimicked a therapist by returning
whatever user typed with a question
> How does that make you feel?
> Tell me more about …
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15. People are not adept at knowing what they want
Choosing for tonight Choosing for next Choosing for second
Thursday Thursday
Next week I will want things that are good for me…
adapted from Prof Russell James III, Texas Tech U

16. Asking people about their goals is tricky
When asked to
describe personal
priorities, people
provide more
articulate & explicit
goals for lower
priorities
Delmore Effect - http://www-psych.stanford.edu/~wit/PhDraft.pdf

17. Eliciting Goals that Matter
Recalling past
successes just
makes it worse
Distracting people
by asking them
to think about
irrelevant topics
doesn’t help
either
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18. To recall a success, not connected to most
important goal, can help
1- Make it possible to accumulate info without deliberate action
2- Enable answers to “quiz” like questions to create small
successes to build greater engagement w/o triggering anxiety
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19. How to get people to talk about themselves?
Hunch is
exemplary
at playing
“the
question
game”
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20. Illusion of Control (Langer 1975)
Chance can be overcome by Choice
Lottery staged one week before Superbowl
Tickets were 4 x 2 inch football cards
Odds were 1:227
Asked to sell card back to someone else:
No choice: $1.96 Choice: $8.67
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21. Elicited versus Explicit Preferences
Knowing more about a person means that
the interaction can be more nuanced.
Transition from a statistical best guess to a
dialog that enables nuance and tuning
Not just the black hats should be using this
to attune messaging over time on the web
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22. Beware that Q&A can just be pesky
Eliza tricked people into thinking
that we are talking about me
Microsoft “Clippy” had much more
computational intelligence, but it
only directed attention to Clippy
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23. Making it fun / addictive
Zynga games appear deliberately designed to incarnate
the absinthe/crack cocaine elements of motivation and
engagement inside FaceBook.
84.2 Million Cityville players this January outstripped
Farmville’s maximum by over 500K
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24. Beyond Boredom and Anxiety
Csikszentmihalyi’s concept of Flow (adapted by Jenova Chen, MFA)
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25. Paradoxes of Hedonics (the study of experience)
 Experienced vs. Remembered Utility
Certain dimensions are easy to evaluate:
Most intense moment
Last moment
Other dimensions are nearly impossible to
guess:
Average height on a roller coaster ride
Average rate of winnings at a casino
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26. Peak and End Rule (Kahneman)
 Experienced vs. Remembered Utility
Our mind does not make movies; it takes
snapshots
Rather than guess the total amount of
suffering, people recall the worst instant,
and the last instant.
If you increase the amount of suffering, but
arrange for the last minutes to be less
intense, people report a longer period as
less painful

27. Peak and End Rule -- Pictograph
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28. Achievement Orientation as Motivator
Psychophysical Curve of Response to Increase Stimulus
Diminishing Returns (Weber-Fechner Law)
 Response starts big
 Each additional increment gives less & less bang
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29. Behavioral Economics can explain one way that games
hook into motivation
Move from framing where response is flat into framing where the payoff is
still increasing.
Games do this by slicing infinite horizon into smaller intervals
The reverse occurs with Subscription, and explains how friction reduces:
Move many short, sharp shocks toward one smooth flat perspective.

30. Social embeddings make habit change fun
 Quantified Self collecting a range of techniques/tools/
topics
 Sensors (Fitbit/Zeos/GreyGoose)
 Apps (Livifi/Procrastinator)
 Domains: Chronic Conditions to Optimization
 Transformation requires habit
“the enormous flywheel of society” (Wm James)
 Maker community building an economy of whimsy
 Hacker Dojo/NoiseBridge/Ace Monster Toys
 Bootcamps morph into “Summer of Riesling” with tasting
workouts
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31. Peak and End Rule for Designers
 The last moment of contact makes an inordinate
difference to the recalled value of experience
 Jared Spool's "Truth About Download Time"
 Nielsen concluded that users will be annoyed … by pages
that take any longer than about 10 seconds to load. (Since
most popular sites take 8 secs, and less popular take an
avg of 19 secs to download)
 No correlation between download times and perceived
speeds. Amazon.com, rated one of fastest, really one of the
slowest
 Strong correlation between perceived download time and
whether successfully completed task on a site

32. Sources for followup
Best Review book on the subject
Priceless: The Myth of Fair Value (and How to Take
Advantage of It) Poundstone (2010)
 Delmore Effect (Paul Whitmore Sas)
http://www-psych.stanford.edu/~wit/PhDraft.pdf
 Daniel Kahneman
http://www.nobel.se/economics/laureates/2002/kahneman-lecture.html
 Dan Ariely
http://danariely.com/the-books/
 Sheena Iyengar
http://www.columbia.edu/~ss957/articles.html
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