Hitler and Nudge

October 5, 2010 BY danariely

We’ve seen numerous examples of how companies create an illusion of free choice when in fact they want us to choose one option over the other. The power of defaults takes advantage of our laziness and fear of making any changes when it comes to making complex, difficult, or big decisions.

Hitler seems to have had a few of these tricks up his sleeve as well, as seen here in this 1938 voting ballot:


Translation: “Referendum and Großdeutscher Reichstag; Ballot; Do you agree with the reunification of Austria with the German Reich that was enacted on 13 March 1938 and do you vote for the party of our leader; Adolf Hitler?; Yes; No”

A Focus on Marketing Research

May 25, 2010 BY danariely

When businesses want to find answers to questions in marketing, whom do they ask? Do they set up experiments to test their ideas, pitting the approach they think is most effective against alternatives? Do they survey consumers on a large scale? Do they go to experts who have questioned and requestioned their theories? Surprisingly, the answer is no. Most often, businesses rely on small “focus groups” to answer big questions.  They rely on the intuition of about 10-12 lay people with no relevant training who ultimately have no idea what they’re talking about.

I wonder how can this be a useful strategy? Why ask those who are lacking any kind of proficiency when, by definition, experts are more knowledgeable on the topic and have experience that could actually be beneficial? And even if experts are more narrowly focused, and tunneled vision, how can this be better than carrying out their own research?

Research in psychology and behavioral economics has shown time after time that people have bad intuitions. We are very good at explaining our behavior (sometimes shocking and irrational), and to do so we create neatly packaged stories – stories that may be amusing or provocative, but often have little to do with the real causes of our behaviors.  Our actions are often guided by the inner primitive parts of our brain – parts that we can’t consciously access — and because of that we don’t always know why we behave in the ways we do; still, we can compensate for this lack of information by writing our own versions.  Our highly sophisticated prefrontal cortex (only recently developed, by evolutionary standards) takes the reigns and paints a perfect picture to explain what we don’t know. Why did you buy that brand of fabric softener? Of course, because you love the way it makes your clothes smell like a springtime breeze when you pull them out of the warm dryer.

So, why do businesses go to our imagination when we know it’s just a cover for what’s really going on? Indeed, why do businesses go to the imaginations of a group of people to find real answers? I suspect that the story here is linked to another one of our irrationalities:  As human beings, we have an insatiable need for a story. We love a vivid picture, a penetrating example, an anecdote that will stay in our memories. Nothing beats the feeling of knowledge we get from a personal story because stories make us feel connected – they help us relate. Just one example of customer satisfaction has a stronger emotional impact than a statistic telling us that 87% of customers prefer product A over product B. A single example feels real, where numbers are cold and sterile. Although statistics about how a large group of people actually behave can tell us so much more than the intuitions of a focus group, the allure of a story is irresistible. Our inherent bias to prefer the story compels us to believe in the worth of small numbers, even when we know we shouldn’t.

This “focus group bias” is not just a waste of money it is also most likely a waste of resources when products are designed according to the “information” gathered from these focus groups. We need to find a way to base our judgments and decisions on real facts and data even if it seems lifeless on its own. Maybe we should try and supplement the numbers with a story to quench our thirst for an anecdote, but what we can’t do is forget about the facts in favor of fairy tales. In the end, the truth lies in empirical research.