the company saying you are checking expenses more thoroughly in future, for example)7 will not solve the problem.
This is because emotions play a key part in decision-making: our behaviour is not just governed by financial benefit. Although it fell in 2018 to 72% from normal levels of 90%,8 the murder detection rate in London is so high that no one would ever rationally consider it a wise course of action. Yet over 130 murders were committed in the capital that year, most of which had no obvious utility to the perpetrator. Clearly, there are other drivers of criminal behaviour.
Ariely’s work has shown that emotions can be effectively used to combat dishonest and illegal behaviour. In one case, he reduced the proportion of over-claiming (cheating) made on a simple insurance form by 15%.
How? Simply by moving the standard ‘I promise that the information I am providing is true’ declaration from the end of the form, to the beginning. This made the honesty requirement more salient 9 – and made no difference to the costs or benefits of the crime.
This is one example of how social psychology, the discipline that looks at social interactions (i.e. how people behave in the real world as social beings) has given us insights into how external factors affect our behaviour. This gives us a better model of understanding how people make decisions – in particular that our behaviour is subject to many behavioural biases, and mental short-cuts, to help us navigate the world around us.
The genius of the work of Kahneman and Tversky (and others) was to start testing and codifying some of these biases – coining the term ‘heuristics’ to cover some of the most prevalent decision-making short-cuts – and then to devise a coherent model to explain why these heuristics lead us to often make non-rational, counter-intuitive or erroneous decisions.
In short, they told us how humans actually behave. And businesses are run for, by, and with humans – for the time being at least.
Social norms and social proof
Have you ever been in an unfamiliar place and been looking to find somewhere good to eat? Imagine you see two restaurants – both look reasonable, clean places, with good menus serving food you like.
One is busy, bustling and full of happy, laughing customers. The other has a sad-looking man in the window, eating alone. Which do you choose?
Most of us would choose the former. This is an example of how social proof (our behavioural bias to look to others like us to validate our behaviour) and social norms (our perception of what most other people like us are doing) are powerful influences on our behaviour. If something is popular with our ‘in-group’, we desire it more. Even though, in this case, the second restaurant would serve us quicker and possibly give us better service, since they might be more grateful for the custom.
There is an evolutionary logic to this, as with most behavioural biases. Seeing others like us behaving in a certain way shows that it is a safe, validated and rewarding course of action. The restaurant must be good if all those other people are using it, right?
Most people are familiar with colloquial versions of this effect, like peer pressure and herd mentality, and the restaurant trade uses the effect better than most. A TripAdvisor certificate at the door showing a 5-star rating is leveraging social proof.10
Simply showing something is popular can influence behaviour. In 2010, Facebook deployed an ‘I Voted’ button (below) showing how many users had voted as part of a campaign to encourage turnout in the US Congressional election. Versions of the button, or no button at all, were shown to 61m people in a joint study by the University of California in San Diego and Facebook data scientists. They used voting records to determine the button’s impact on real-world voting. It turns out the button’s call to action increased the total vote count by 340,000 votes.
But more interestingly, the version of the button which showed whether the individual user’s friends (i.e. people they actually knew) had voted was four times more effective than the version with just the ‘I Voted’ button and the total number. This demonstrates that to get the best out of social proof we need to consider who the most important influences are (in social psychology terms, defining the in-group).
Source: Nature (www.nature.com/articles/489212a)
Care needs to be taken that highlighting bad behaviour doesn’t have an unintended consequence of making it seem normal – known as negative social proof. For example, highlighting the amount of alcohol drunk by students on a university campus had the effect of increasing the perceived norm amongst students, leading to the average student drinking more.11 It’s not hard to see examples of this misapplication – a GP surgery putting up a sign saying that 200 people missed their appointments last month will likely increase the number of missed appointments next month, not decrease.
The solution is to use positive framing (e.g. 99% of our patients attend their appointments) or highlight the ‘injunctive’ norm (what people should do), rather than the ‘descriptive’ norm (what they actually do). Road signs say that the speed limit is 30mph – they don’t tell you that most people actually drive at 35.
So next time you go to a quiet restaurant and are encouraged by a waiter to sit in the window (so others can see you) – you have experienced social proof in action.
Two systems of thinking – designing for Homer
These heuristics and biases are important because we use them to help us make the thousands of decisions required every day.
“Many people are overconfident, prone to put too much faith in their intuitions,” wrote Kahneman. “They apparently find cognitive effort at least mildly unpleasant and avoid it as much as possible.”12
In short: we think less than we think we think. As Thaler and Sunstein put it, we are often less like Spock, and more like Homer Simpson.
Kahneman popularised the term ‘system 1’, or ‘fast’ thinking, to explain these instinctive, emotionally driven, less-conscious decision-making processes. Our more rational, ‘slow’ decision-making – which adheres more closely to the Spock view of behaviour – he called ‘system 2’. Subsequently, behavioural scientists have identified the circumstances when we are in system-1 mode when making decisions, and (to date) over 200 different heuristics and biases that come into play.
The importance of this is twofold: one, we have chronically under-estimated just how much of our decision-making is of this instinctive type, with some estimates indicating that it accounts for between 90–95% of our daily behaviour; two, that only by understanding these heuristics and biases can we effectively explain, influence and change behaviour.
We are more like Homer Simpson than we care to realise or admit. These behavioural biases are hugely important in determining how we behave, and perform an important function – not least because of our increasingly complicated lives, where we are often over-burdened with information and stimuli. Over the course of this book, we will see examples of how understanding biases can help us successfully address behavioural challenges.
This melding of psychological and economic thinking about behaviour, which became known as the discipline of behavioural economics, is the closest thing we have to a unifying theory of decision-making. In 2002, it earned Kahneman, a psychologist, the Nobel prize for economics.13
This work has shown that when considering influencing behaviour in business it is important to
