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Behavioral Diginomics

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on October 25, 2015 at 1:31:38 am

Behavioral Diginomics (or Digital Nudge)

The irrational human side of digital

book by Fabio Pereira


Options for Sub Titles:

  • Bridging the gap between Behavioral Economics and Digital
  • What Mark Zuckerberg can learn from Dan Ariely
  • The brain science behind our digital world
  • The forces behind how we behave and make decisions in a digital world
  • Applied learnings from Nudge, Sway, Click and Predictably Irrational to the Digital Revolution


Questions that the book will answer:

  • How three simple design principles from behavioral economics helped people eat more healthy food
  • How a payment web address simple design led 45% more individuals to pay online
  • Why the president of the United States ordered executive offices and agencies to use behavioral science
  • What’s different in the digital world, for good and bad, about human behaviour and what we can do about it
  • What does brain science say about stereotype and how does it impact us when we’re scrolling our facebook timeline
  • The commercial digital world around us wants our money, time, and attention, what can we do about this
  • How can I be more impactful and influential on digital platforms
  • How scientists observed 257 thousand people and what they learned about their behavior
  • How can behavioral science help people make self-beneficial choices and understand the implications of their decisions
  • How can designers use behavioral science discoveries to create digital interfaces



Chapter 1: The human side of digital

In this chapter: 

  • Current state and growth predictions for the digital revolution
  • Cutting-edge research from the fields of social psychology and behavioral economics which influence the digital world
  • Introducing the importance of bridging the gap between Behavioral Economics and Digital with real world examples 

A sneak peak:

The world has 7-8 billion people and 3 billion of them are internet users. There are 4.5 billion likes on Facebook and 5 million smartphones are sold on average everyday. I speak to my mom on Whatsapp, we're 15 thousand km apart, she lives in Brazil and I live in Australia. My most recent team of 17 people was distributed across 3 countries with 4 different timezones.


We use digital devices to make decisions everyday, what route to take when driving, which restaurant to go, what should we do on the weekend. We have these new tools and devices, yet so much of how we're influenced by them remains our pre-historic wiring, we're all humans after all. Drawing on cutting-edge research from the fields of social psychology, behavioral economics, and organizational behavior, Behavioral Diginomics reveals forces that influence everyone’s behavior...


Chapter 2: Digital nudges that help

In this chapter:  

  • What nudges can be applied to digital channels (email, phone notifications, etc) to help people make better decisions?
  • Digital nudges in real world examples, scientific experiments and we can learn from them:
    • A pop-up box which got employees to save paper by printing double-sided rather than single-sided
    • A shortened payment web address which led 45% more individuals to pay online
    • A digital signature box at the top of a form which increased data accuracy
    • Simple design techniques which promoted workplace healthy snack choices
    • Pre-populated insurance quotes which allowed users to better choose what was appropriate to their current situation


Chapter 3: The power and responsibilities of defaults

In this chapter: 

  • How defaults can be one of the most powerful nudges and some behavioral science stories around them, for example the fact that only 4.25% of Denmark people are organ donors, whereas over 99% of Austrians are due to the difference of opt-in and opt-out.
  • Real world examples of how websites and other digital channels used defaults. For example Netflix's opt-out special offer which says "Please do not email me Netflix special offers."
  • Analysis of what different types of digital defaults can and have been used.
    • Pre-selected checkboxes
    • Opt-out checkboxes, which require an action to not participate
    • Sorted dropdown values "most selected" on top
    • Search results order which completely
  • Responsibilities of defaults:
    • The importance of having protection law against certain types of defaults, for instance automatically selling product B when you are buying product A. 
    • Data privacy and what is behind a simple "Accept Terms and Conditions" click.


Chapter 4: User research is more than just surveys

In this chapter: 

  • How behavioral economists found out that only asking how people would behave was not enough
  • Stories from the digital world where only asking questions was not enough:
    • 184 reports that people said were needed. Only 6 fulfils 95% of all the use cases
    • In 2010 the media and users said they would "share", but now the "sharing economy" is dead. 
    • Having users sign up for an digital service does not mean they will be active. For example while running through its seed funding a company had 42,000 people signed up, though fewer than 10,000 were active. Signing up does not necessarily mean being an active user. 
  • What else beyond surveys can be used to understand human behavior?
    • User research - watch users in action
    • Digital controlled experiments - run A/B tests with users and learn from that
    • "Go to the library" - use existing knowledge as a base building block and learn on top of it 

A sneak peak: 

“If I’d asked my customers what they wanted, they’d have asked for faster horses” - Henry Ford knew that asking a question was not enough. Every behavioral economist in the world also knows that. Not because they "guess", but because they setup experiments and ask people how they believe they would behave in certain situations, then collect the answers. However, when they expose those same individuals to those same situations, their observed behavior is extremely differently from what they had predicted for themselves. 


Digital surveys are a powerful tool to seek understanding of human behavior. Almost everyday I receive a few of them in my email inbox. I'm a consultant, so part of my job is to visit different clients and help them solve their organisational problems. One of my clients had a system which generated 184 reports. This system had been developed using 15 year old technology, it was hard to maintain, there were not many employees around who knew how it worked anymore. The client decided to migrate the system to a new technology. There's usually a huge cost involved when re-writing these systems in new technologies, so prioritising which features are the most important ones saves these clients tons of money. My client's challenge at that time was to understand out of the 184 reports, which ones were the most used ones. So they decided to ask people through a survey. The results showed that almost all of the reports were needed, people were afraid of losing them so they said "Yes, I need this report, don't take it away from me", not in these exact same words, though. Someone who completely believed that people can predict their behavior and that they tell you the exact truth of the facts would have spent millions of dollars migrating all the 184 reports, however, this client decided to observe the repot usage. The result, not to my surprise, was that out of 184 reports, only 6 of them solved 95% of all the users' needs, only 6. Through observation this client saved millions of dollars because they knew exactly what were the most important features of their system. They knew exactly where to spend their money. Through observation, not only by asking questions. 


Chapter 5: Humans who sell, buy and become loyal

In this chapter: 

  • Digital Retail: Which discoveries from behavioral economics can be applied to digital retail.
    • You touch, you own it - A recent study shows that consumers who touch a product on a touchscreen device are more likely to buy it than if they are using a desktop computer with a mouse. Physical touch and touchscreen touch bring endowment effect. Another experiment shows that washing your hands decreases endowment. 
    • Endowment and Customer Loyalty - Stories of companies which innovate using social science discoveries. For example, Loyal3, coined as the Uber of Wall Street, is a company which uses endowment effect to increase customer loyalty by giving customers and employees shares, which transforms them into passionate fans, a much more meaningful and valuable relationship to have with customers. 


Chapter 6: Scrolling, Fast and Slow

In this chapter: 

  • Introduction to dual process theory, our 2 brains - fast and slow, automatic and reflective


Chapter 7: The Social Science of Agile Teams

In this chapter: 

  • "The Best-Kept Management Secret On The Planet: Agile" (Forbes)
  • What is Agile?
  • Why Agile works and what social science is behind its practices
    • Team goals, deadlines and student syndrome
    • Motivation and communication
    • Ownership and endowment effect
  • Distributed teams. What are the human implications for teams that don't work face to face

Chapter objective: 

People behavior is one of the centerpieces of Agile. Cognitive Psychology and Behavioral Economics have helped us achieve a better understanding of some human seemingly idiosyncratic behaviors, for example, the decoy effect on the decision-making process. Agile teams are constantly making decisions, for instance, while prioritising, estimating stories or choosing the size of an iteration. This chapter will compare behavioral economics controlled experiments to Agile. The anticipated result should be an increased awareness of the reasoning behind some Agile values, principles and practices which, as a consequence, should improve the way we apply them as agile adopters and practitioners.


Chapter 8: Big Data, Big Experiments, Big Learnings

In this chapter: 

  • Initial overview of how usually social experiments in labs work:
    • usually tens or hundreds of participants are involved
    • process: recruitment, preparation, experimentation and results analysis.
  • The story of a study which used big data to observe 257,000 passengers on 1,966 flights and how all data allowed a researcher to simulate thousands of studies.  





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