I have a feeling that if you asked most people how gyms make money, they’d intuitively grasp for an explanation that involves fixed schedule billing. The idea is simple. Businesses that operate under a subscription fee, like gyms, automatically withdraw the next payment each period unless the customer provides written de-authorization a certain number of days or weeks in advance. For a variety of reasons, many people will go on paying for months or years without using the service. The result is a steady profit stream for the business and a customer spending money for no value. Continue reading Behavioral Economics Black Magic: Fixed Schedule Billing
I found a postcard in our mailbox last week that was a textbook example of several behavioral economics and behavior change tactics. Its intention is to nudge people to vote more consistently, including in smaller local elections. The group sending the card, the Environmental Voter Project, urges voters to support politicians and policies for sustainability. It’s an interesting example of how some behavioral economics tactics might actually come to life in an intervention. Continue reading Nudge Me to the Ballot Box: Behavioral Economics in Action
As a frequent flyer, I know how easy it can be to get caught up in a loyalty program. You could blame it on the occasional first class upgrades, the free checked baggage, or the special elite hotline many airlines offer their most valued members . . . or you could chalk it up to a brilliant application of behavioral economics and psychology.
Behavioral economics evolved as some economists began to probe why people aren’t actually rational economic actors–why they make decisions that go against logic and their own best interests. One of the answers is that our brains operate with two systems, the hot and the cold (or, if you prefer, Systems 2 and 1). Continue reading Emotions and the Choice Funnel