In our April 2016 Fuqua Faculty Conversation, Rick Larrick presents:
Nudging Better Consumer Decisions: Provide Useful Information (Not More Information)
In recent years, the new field of behavioral economics has used psychology to identify strategies (or “nudges”) that can help people make better decisions for themselves and for society. This talk will review research on a few simple strategies for providing clear information to consumers and employees.
We argue that the best way to help decision makers is not to simply give them information (picture the long credit card disclosure statements you periodically receive), but to make it usable. Our main focus has been on energy use. Every time consumers buy a new automobile in the U.S., they see a window sticker on every vehicle describing the car’s fuel economy, expressed as miles per gallon (MPG). What information would you put on an energy label to help consumers make better decisions about energy use (and the environment)?
We propose four principles for providing better information (which abbreviate to CORE):
- Do the calculations for consumers
- Translate information to personal objectives (e.g., costs, environmental impact)
- Provide relative comparisons (e.g., other products, daily goals)
- “Expand” important outcomes (e.g., costs over time)
You can read more about the research behind Professor Larrick’s ideas on the Behavioral Science and Policy Association website.
How could you use these principles to improve your business? How does this change the way you think about marketing different products?Ho Have ideas and practices to share with fellow alumni from your own experience? Join the conversation in the comments section of this page or on the Fuqua Alumni LinkedIn group.