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Decision making and the brain

Taking the Pain out of Sushi Pricing

The menu designer for an Austin restaurant, Roll On Sushi Diner, must be a Neuromarketing or Brainfluence reader. A while back, I identified sushi-style pricing as being the worst possible approach because each tiny bite is a separate pain point (see Painful Sushi and Other Pricing Blunders).
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By |February 13th, 2013|

What Pricing Strategy Beats Discounts?

If you want to sell more product by running a sale, which would make more sense: advertising “price cut 33%” or “50% more” product? Functionally, the two are the same level of discounting. Researchers at the University of Minnesota found, though, that a “50% bonus pack” sold 71% more than a “35% discount,” even though the latter is a slightly lower price per unit. […]

By |November 15th, 2012|

The Hidden Danger in Product Bundles

Does grouping products together into a single-price bundle increase the perception of value? Most of us would answer “yes,” but surprising new research shows there is at least one condition where such grouping can actually reduce the apparent value. In fact, the bundle may be seen as worth not just less than the sum of its parts, but less than the individual product! […]

By |July 10th, 2012|

We All Lie and Cheat, but Not Much

Having demolished the belief that most people are rational in his last two books, Duke researcher Dan Ariely puts to death the concept that "most people are honest" in his newest book, The Honest Truth About Dishonesty: How We Lie to Everyone - Especially Ourselves.

By |June 5th, 2012|

How “Loss” Can Be a Winning Strategy

If I gave you $50 with the following two choices, what would you do?

Keep $30.
Gamble, with a 50/50 chance of keeping or losing the whole $50.

An experimenter posed that question to subjects, and found that 43% of the subjects chose to gamble. Then the options were changed to: […]

By |September 15th, 2011|

Stronger Contracts, Less Trust

Business agreements are usually secured by written agreements that define the obligations of the parties and state what happens under various conditions. Having been party to a few business deals launched based mostly on enthusiasm and trust, I can certainly vouch for the importance of such agreements. Not everyone relies entirely on extensive documentation, though – oilman T. Boone Pickens famously collected $3 billion when courts upheld his handshake deal to acquire a piece of Getty Oil. And, we find, there’s actually scientific evidence that stronger contracts can reduce trust. […]

By |August 4th, 2011|

Nudge by Thaler and Sunstein

Nudge is all about choice architecture, a discipline which structures choices in a way that produces the most beneficial outcome. I don't have to tell Neuromarketing readers that humans often behave in conflict with the traditional economist's view of rational decision-making. Thaler and Sunstein not only provide plenty of evidence of irrationality, but they show how to avoid some of the problems it causes.

By |July 25th, 2011|

The Upside of Irrationality by Dan Ariely

Nobody is doing more to add to our knowledge of the irrational side of human behavior than Dan Ariely. Not only does he conduct experiments that are elegant in their simplicity, but he writes about his work and that of other researchers in a highly acccessible way. Upside is the successor to the bestselling Predictably Irrational, and it takes to new topics, ranging from CEO pay to speed dating.

By |July 12th, 2011|

Closer to the Buy Button?

A specific part of the brain responsible for making decisions about value has been identified by neuroeconomics researchers at the University of Pennsylvania. Using fMRI, psychology professor Joseph Kable has shown that the ventromedial frontal cortex, or VMF, plays a key role in decisions involving value. […]

By |May 25th, 2011|

What’s A Return Policy Worth?

Ask catalog or Internet retailers what a return cost them, and they will likely be able to cite some very specific numbers reflecting shipping costs, processing labor, damaged packaging, and so on. But it turns out there’s a specific value that customers apply to returns, or, more accurately, the OPTION of returning a product. That value varies by the type of product, the product price, and other factors. […]

By |April 14th, 2011|