Behavioral Economics 101For Product Design

O’Reilly Webcast January 29, 2014

Steve Wendel (@sawendel) Principal Scientist, HelloWallet

Help your users overcome obstacles

What is it?

What is it?

Thorndike et al. 2012 (American Journal of Public Health)

So what’s a Habit?

What’s Behavioral Economics?

Core lessons for product design

Habits and other stuff

A behavioral approach to product design

Topics

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Where I work, HelloWallet

Best in Class User Experience

Behavioral Science Driven Software Backed by Consumer

Finance Expertise

Community Partnerships

B2B SaaS Company

To learn more

oreilly.com/go/behavior-change

What is it?

New books from researchers

And practitioners

What’s Behavioral Economics?

Core lessons for product design

Habits and other stuff

A behavioral approach to product design

Next Up – Core lessons for product design

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Defaults matter. A lot.

And can be used practically in products

Why? In part, “laziness”

We’re fundamentally limited

attention

willpower

memory

handling complex decisions

So build accordingly.

attention

willpower

memory

handling complex decisions

Avoid unnecessary complexity

In menus or anywhere else

And automate where possible

We’re unsure & look to our peers

We’re often on autopilot

What’s behavioral economics?

Core lessons for product design

Habits and other stuff

A behavioral approach to product design

Next Up – Habits and other stuff

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Many types of decision making

So what’s a habit?

Adapted from ABC Model (eg Miltenberger 2011) and Duhigg 2012

What can they be used for? The good…

And the bad

How to Form ‘em, Take 1

Repetition,with

Consistency

How to Form ‘em, Take 1

How to Form ‘em, Take 2

Invest: change

the process itself

How to Form ‘em, Take 2

Ain’t never gonna be a habit

Nor is this

Many different strategies to change them

What’s Behavioral Economics?

Core lessons for product design

Habits and other stuff

A behavioral approach to product design

Next Up – A behavioral approach

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It doesn’t matter how awesome the product is

Find the behavioral obstacles

Figure out what to change / try

Component: To Do This: Try This:

Cue Cue Action Tell the User What The Action Is

Increase Power of Cue Create Clear Affordances

Increase Power of Cue Clear the Page of Distractions

Reaction Increase Trust Make Site Beautiful and Professional

Increase Interest & Trust Social Proof

Increase Interest & Trust Display Strong Authority on Subject

Bypass Automatic Rejection Be Authentic and Personal

Evaluation Increase Motivation Prime User-Relevant Associations

Increase Motivation Loss Aversion

Increase Motivation Peer Comparison

Increase Motivation Peer Competition

Increase Motivation Make the Rewards Vivid

Decrease Costs Default Everything

Decrease Costs Lessen Burden of User Action (cheat)

Decrease Costs Reduce information required for user to proceed (simplify)

Decrease Costs Avoid choice overload

Ability Increase Logistical Ability Implementation Intentions

Decrease Resource Constraints Automate

Increase Sense of Feasibility (Self-Efficacy) (Positive) Peer Comparison

Time Pressure Increase Urgency Frame text to avoid temporal myopia

Increase Urgency Remind of prior commitment to act

Increase Urgency Make it scarce Increase Urgency Make it time-sensitive

Test, Test, Test

Controlled Experiments: The Gold Standard

Statistical Models w/ Controls

You’ll get it wrong

Summary

Behavioral econ: uses economics & psychology to understand quirks of behavior

We’re all fundamentally limited; design accordingly

Users are often on autopilot (habits, etc.)

Look for behavioral obstacles and rigorously test interventions

Designing for Behavior Change

oreilly.com/go/behavior-change

Comments? Suggestions?

@sawendel www.about.me/sawendel

Thank You!