Decision making and the brain

The Power of FREE!

A few days ago, I wrote about the power of the word “New” to get our attention – if there’s a more potent attractor out there, it’s almost certainly “FREE!” For years, advertising gurus have listed “free” on every compilation of powerful headline words. Now, research conducted by Dan Ariely (a Duke behavioral economist, previously at MIT) shows us that “free” is far more effective than “almost free.” Indeed, a preference for “free” seems to be another feature hardwired into our brains. […]

By |July 10th, 2008|

Bikinis, Babes, and Buying

Scantily clad women have been used to sell products to men for decades, and likely for millennia in one form or another. There’s little doubt that the typical male brain is wired to respond to attractive females in revealing attire. But is this a cheap attention-getting trick that has no real impact on sales, or does it actually work? Researchers shed new light on this topic by exposing subjects to either videos of women in bikinis or more neutral videos, and evaluating their decision making ability. […]

By |June 24th, 2008|

Neuroeconomics and Investment Insanity

The human brain didn’t evolve to pick stocks, which explains why there are so few Warren Buffets among the ranks of fund managers. Jason Zweig, author of Your Money & Your Brain (reviewed in Ignore Your Brain and Get Rich), did a lengthy interview with the Journal of Indexes. The publication, which seems to be geared to promoting index funds (funds that invest in large baskets of stocks without active stock-picking by fund managers), could hardly have chosen a better subject to interview. […]

By |June 13th, 2008|

Sexy Pics Beat Ugly Spiders

Erotic images sell better than pictures of office supplies, and a lot better than photos of hairy spiders. Who knew? Actually, that’s a bit of an oversimplification. Stanford researchers led by neuroeconomics prof Brian Knutson have found that positive images, in this case mildly erotic photos of men and women shown to heterosexual men, stimulate the reward center in the brain and induce the viewers to take greater financial risks than subjects who saw neutral (office supplies) or negative (big spider) images. This effect was purely a priming effect, as all of the images were irrelevant to the subsequent decision. The implications of this work could be broad, impacting such diverse areas as gaming and auto sales. […]

By |April 3rd, 2008|

B2B Marketing: Play Fair, Maximize Profit

Businesses are often portrayed as rapacious partners, seeking to squeeze every penny out of their deals. Indeed, some are… the result is often a relationship between defined by a fat contract that seeks to protect both parties against bad behavior by the other. New research, which draws on both conventional research and brain-scan driven neuroeconomics studies, reaches the surprising conclusion that fairness is the key to maximizing profits: […]

By |March 18th, 2008|

Placebos, Price, and Marketing

Hot on the heels of learning that more expensive wine tastes better, we find that more expensive placebos are more effective at controlling pain: […]

By |March 6th, 2008|

Barack Obama and Neuroeconomics

Behavioral economics and neuroeconomics are closely related fields, rather in the same way that psychology and neuroscience are related. It seems that Democrat presidential hopeful Barack Obama has a behavioral economist on his staff. The New Republic […]

By |February 29th, 2008|

Why Choose This Book?

Why Choose This Book? How We Make Decisions by Read Montague sounds like the perfect read for neuromarketing and neuroeconomics enthusiasts. In fact, the book does provide some interesting insights but the overall density of actionable information, at least for marketers, is fairly low. The title might lead one to believe that the book is a distillation of consumer purchasing behavior, but in fact it is a wide-ranging discussion of the neuroscience of human decision making. […]

By |January 28th, 2008|

The Brain’s “Aha!” Spot

Long recognized psychological phenomena and various aspects of human behavior are being localized in the brain daily, it seems, and the latest to be studied is discovery, often referred to as an “Aha!” or “Eureka!” moment. This is the turning point when one realizes that one has found what one is looking for or has solved a vexing problem. Before we get carried away with spotting the next Archimedes or Einstein, caution is in order – researchers based their conclusions on studying Rhesus monkeys, a species not often known for deep reflection or scientific discovery. […]

By |January 24th, 2008|

Why Expensive Wine Tastes Better

For Neuromarketing readers, it’s not big news that the perception of wine drinkers is altered by what they know about the wine (see Wine and the Spillover Effect, for example). Now, researchers at Stanford and Caltech have demonstrated that people’s brains experience more pleasure when they think they are drinking a $45 wine instead of a $5 bottle – even when it’s the same stuff. The important aspect of these findings is that people aren’t rationalizing on a survey, i.e., reporting that a wine tastes better because they know it’s a lot more expensive. Rather, they are actually experiencing a tastier wine. […]

By |January 16th, 2008|