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Wisdom Wednesdays: Is your brain being seduced by clever marketing tactics? · Hardiness with Dr Paul Taylor

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  Speaker 1: Hey, everyone, welcome to another edition of Wisdom Wednesdays. Now,
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  Speaker 1: before we get into this week's Wisdom Wednesday, a couple
• 0:17
  Speaker 1: of announcements, one of which is pretty excact. Say, they're
• 0:19
  Speaker 1: both pretty exciting. One is a little bit more exciting
• 0:22
  Speaker 1: than the other. My new book, The Hardiness Effect is
• 0:26
  Speaker 1: not on seal for pre order. You can buy it
• 0:31
  Speaker 1: on Amazon or if you live in Australia you can
• 0:35
  Speaker 1: buy it in book toopia dot com dot au and
• 0:39
  Speaker 1: it's got a twenty six percent discount, which I wasn't
• 0:43
  Speaker 1: even a whord off. So the full title love it
• 0:45
  Speaker 1: is The Hardiness Effect. Grow from Stress, optimize health and
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  Speaker 1: live longer. And the second announcement is that I am
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  Speaker 1: shortly going to be changing the name of the podcast
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  Speaker 1: from the Poultale Podcast to the Heartiness Lab Podcast. And
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  Speaker 1: that is really to coincide with the activation of the
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  Speaker 1: Hardiness Lab with my old mate, Professor Grant Schofield. And
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  Speaker 1: if you're a longtime listener, you will have heard Grant
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  Speaker 1: on the podcast probably four times I think, and we
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  Speaker 1: are collaborating to research all things hardiness. And if you
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  Speaker 1: really want to know what that's about, get in and
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  Speaker 1: pre order the book. On book Toopia or on Amazon,
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  Speaker 1: and I enough of the plugs, let's get on with
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  Speaker 1: the podcast. So today I'm going to talk about something
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  Speaker 1: that actually came across today and just remembered about it.
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  Speaker 1: And it's something that happens almost every time you make
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  Speaker 1: a purchase, or quite often not every time, but it's
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  Speaker 1: whether you're buying popcorn at the movies, a coffee or tea,
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  Speaker 1: a holiday package or a phone plan. Now you probably
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  Speaker 1: think when you're making these decisions of if there's different
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  Speaker 1: things on offer, that you're making a rational choice. But
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  Speaker 1: the truth is that often you're being nudged, coaxed, and
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  Speaker 1: sometimes outright who dwinked by some very clever psychological tactics.
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  Speaker 1: And two of the big ones that marketers use are
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  Speaker 1: the decoy effect and anchoring bias. So let's start with
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  Speaker 1: the decoy effect. So imagine you're at the cinema and
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  Speaker 1: you go to buy some popcorn and you see a
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  Speaker 1: small bucket of popcorn for four bucks and a large
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  Speaker 1: one for seven bucks, and you're leaning towards the small,
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  Speaker 1: and then you see a medium one for six dollars fifty.
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  Speaker 1: Now suddenly the large one seems like a no brainer,
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  Speaker 1: and you walk away patting yourself on the back, thinking
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  Speaker 1: that you're a savvy shopper, But you've just been played.
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  Speaker 1: The medium one wasn't really there to be sold. It's
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  Speaker 1: a decoy designed to make the large one look like
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  Speaker 1: a bargain. And this is done with lots of different products. Now,
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  Speaker 1: probably the most famous demonstration of this decoy effect was
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  Speaker 1: actually an experiment run by the behavioral economist Dan Arley,
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  Speaker 1: and I read about it in his book is brilliant
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  Speaker 1: book actually, which is called Predictably Irrational. The hidden forces
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  Speaker 1: that sheep are decisions and it's a book that everybody
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  Speaker 1: should read. But anyway, he did this real world experiment
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  Speaker 1: were he persuaded the magazine The Economist to enable him
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  Speaker 1: to control or to set some pricing for them, and
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  Speaker 1: he offered web only subscription for fifty nine bucks, then
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  Speaker 1: a print only subscription for one hundred and twenty five bucks,
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  Speaker 1: and a web and print subscription for one hundred and
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  Speaker 1: twenty five bucks. Now, the print only option makes no
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  Speaker 1: sense whatsoever. Why would you pay one hundred and twenty
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  Speaker 1: five bucks for print only when you could get web
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  Speaker 1: in print for the same price. But when he had it,
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  Speaker 1: there most people went for the Web in print coumbo.
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  Speaker 1: But then he run the experiment where he took it
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  Speaker 1: away and only offered the web only and the Web
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  Speaker 1: in print, and far fewer bought the Web in print,
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  Speaker 1: and he showed that the decoy had done its job,
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  Speaker 1: steering people towards the most profitable choice without them even
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  Speaker 1: realizing it. Now, let's talk about another one that's quite similar,
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  Speaker 1: is called anchoring bias, and that's our tendency to rely
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  Speaker 1: too heavily on the first number we see when making decisions.
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  Speaker 1: So let's say you're looking at you're looking at buying
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  Speaker 1: a fancy watch, and the tag says was twelve hundred bucks,
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  Speaker 1: now four hundred and ninety nine. Now that twelve hundred
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  Speaker 1: figure might be plucked out of thinner, but it's and
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  Speaker 1: I anchored in your brain as the real original value,
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  Speaker 1: making the four hundred and ninety nine dollars one look
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  Speaker 1: like a steal. And this trick works even when the
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  Speaker 1: anchor is a relevant right. So studies show, and I've
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  Speaker 1: actually run experiments on this in the workshop, that if
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  Speaker 1: you get somebody to think about a random number, or
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  Speaker 1: in these studies, you spin a wheel and there's a
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  Speaker 1: random number that's generated, and they see that number before
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  Speaker 1: they make a guess about a question or statistic. Their
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  Speaker 1: guess is skewed towards the number you saw. And you
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  Speaker 1: can run two different experiments, and I've run this before.
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  Speaker 1: So you divide a room into three groups and they
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  Speaker 1: get three different Those groups get different bits of paper
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  Speaker 1: and they're all about guessing the length of the Mississippi River.
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  Speaker 1: So one of them, it's just a piece of paper
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  Speaker 1: and it says what's the length of the Mississippi River?
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  Speaker 1: And what happens is the median estimate is about eight
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  Speaker 1: hundred miles. This is an experiment done by Dan Canneman,
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  Speaker 1: and I've actually repeated this experiment, right. So the first
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  Speaker 1: one where you just straight out ask them the length
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  Speaker 1: of it in miles, the median answers eight hundred. Then
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  Speaker 1: a second group has a piece of paper and it's
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  Speaker 1: two questions. Is the Mississippi River greater or less than
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  Speaker 1: seventy miles long? The second question is what is the
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  Speaker 1: length of the Mississippi River. The third group gets a
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  Speaker 1: different sheet of paper. Is the Mississippi River greater or
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  Speaker 1: less than two thousand miles long? And then the second
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  Speaker 1: question is what is the length of the Mississippi River?
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  Speaker 1: So all three groups are guessing. Right. The first group,
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  Speaker 1: whether you just asked them what is the length? Their
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  Speaker 1: median the middle estimate is eight hundred miles. The second group,
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  Speaker 1: where you anchor that with the question is a greater
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  Speaker 1: or less than seventy miles long, they actually guess and
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  Speaker 1: the median guess is three hundred miles. And then the
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  Speaker 1: third group, where the anchoring question is is the Mississippi
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  Speaker 1: River greater or less than two thousand miles long? Their
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  Speaker 1: median answer for the length is actually fifteen hundred miles.
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  Speaker 1: So just that showed that putting a low anchor drives
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  Speaker 1: it down than what people would actually guess, and a
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  Speaker 1: high anchor actually drives it up. And it is being
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  Speaker 1: widely replicated. So we are often duped by this anchoring tactic. Right,
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  Speaker 1: So going back to that watch that twelve hundred dollars
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  Speaker 1: was twelve hundred dollars is just an anchor's now four
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  Speaker 1: hundred and ninety nine. And multiple supermarkets in Australia have
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  Speaker 1: been shown they've been prosecuted for inflating prices. They was
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  Speaker 1: originally this and then they drop it down, it was
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  Speaker 1: never that price. All sorts of shops do this as well.
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  Speaker 1: So you might be book in some travel and a
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  Speaker 1: travel website might show you there's a luxury suite at
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  Speaker 1: a ridiculous price, and that's right next to deluxe option
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  Speaker 1: that's only slightly more than the standard, And the pricey
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  Speaker 1: luxury suite suite is not there to be sold at all,
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  Speaker 1: it's just to make the deluxe options seem irresistible. Now,
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  Speaker 1: the thing about both of these tactics is that they
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  Speaker 1: make you feel like you're making an informed choice, but
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  Speaker 1: in reality, you're making a relative choice, not an absolute one.
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  Speaker 1: Your brain is comparing options in front of you, rather
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  Speaker 1: than asking do I even need this? And if I do,
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  Speaker 1: what's at worth to me in isolation. So here's the takeaway.
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  Speaker 1: Next time a deal feels too good to pass up,
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  Speaker 1: strip away the context. Would you still choose it if
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  Speaker 1: the other options weren't there? Would you still think five
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  Speaker 1: hundred bucks was cheap if you'd never seen the original
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  Speaker 1: twelve hundred dollars price. And if anybody's ever been to
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  Speaker 1: countries where they haggle, and you will see this over
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  Speaker 1: and over again, whether it's Asia, Middle East, or South America.
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  Speaker 1: You will see going up and you ask the price
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  Speaker 1: of something, and you'll see them start with a ridiculously
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  Speaker 1: high price, and then you start to haggle, but they've
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  Speaker 1: actually set the anchoring. So I'd actually taught my kids
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  Speaker 1: when we were traveling. When that happens, your first price
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  Speaker 1: goes really low so that you set a counter anchor,
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  Speaker 1: and then you meet somewhere in the middle. So it's
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  Speaker 1: a really interesting little experiment. So remember in marketing, the
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  Speaker 1: most effective way to guide you isn't to take away
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  Speaker 1: your freedom of choice. It's to make you feel like
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  Speaker 1: you're making a free choice while quietly nudging you exactly
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  Speaker 1: where you want you to go. So the key here
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  Speaker 1: is to be curious and skeptical. Catch you next time.