Wednesday, July 06, 2011

Dan Ariely: How Online Companies Get You to Share More and Spend More

How Online Companies Get You to Share More and Spend More

Photo: Christopher Griffith

Zynga, Facebook, Apple, and many other online companies and services are refining techniques developed by game developers to keep you in their game.
Photo: Christopher Griffith; brain created by Megan Caponetto/Apostrophe


You’re not stupid, but you can be fooled. For millennia, the best salespeople have known how to exploit the vulnerabilities of the human mind. In the burgeoning field of behavioral economics, we’ve begun to give precise names to the mental weaknesses that make us all susceptible to a well-crafted pitch. Drawing on the insights of psychology, behavioral economists have explained why we buy more stuff at $0.99 than at $1.00 (the “left-digit effect”), why we commit to gym memberships we’ll never use (“optimism bias”), and why we don’t return things we buy as often as we should (“post-purchase rationalization”). The giants of the web, from Amazon to Zynga, use similar tricks to keep us coming to their sites, playing their games, and buying their goods. In fact, that’s how they became giants in the first place. Here’s how they game us—and how, in some cases, we wind up gaming ourselves.

Eliminating small frictions can radically alter one’s decisions. An elegant demonstration of this comes from research by Eric Johnson and Dan Goldstein, who asked people whether they wanted to opt out of organ donation (i.e., starting with the choice preset at “donate”) instead of asking whether they wanted to donate (presetting at “don’t donate”). That switch caused the pro-donation response to rise from around 40 percent to more than 80 percent. This is the power of defaults: We have a marked tendency to take the path of least resistance.

For many of us, functions as a default because it has all our credit cards and addresses on file. If we asked people how much they would pay to save the time needed to retype that information on another site, they’d most likely say, “Not much.” Most of us don’t value our time so highly. But during the few seconds in which we make our buying decisions, when we are not thinking very deeply, the barrier to entering that data seems too forbidding and we default to Amazon.

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