The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

In today's conversation, I am joined by Dr. Dilip Soman, coauthor of Behavioral Science in the Wild. Dilip is a Canada Research Chair in Behavioural Science and Economics and serves as a Director of the Behavioural Economics in Action Research Centre at Rotman [BEAR]. His research is in the area of behavioral science and its applications to consumer well-being, marketing, and policy. He has written multiple books including The Last Mile, The Behaviorally Informed Organization, and Behavioral Science in the Wild (all of which we will discuss a bit today) and he also teaches a massive open online course called "BE101X: Behavioural Economics in Action" on EdX. That is actually how he and I first got introduced years ago when someone who was taking BE101X tagged us both on Twitter suggesting my podcast as a resource for students taking his class. We had connected a bit then but didn't end up making it the "last mile" to getting a meeting in the books (see what I did there?). So when this new book, Behavioral Science in the Wild came out, I knew it was the perfect time for us to have this first chat and it was so much fun! Listen in to hear about the pain of paying (and some interesting thoughts and research about dental work), the duration heuristic, the importance of virtual progress and supposedly irrelevant factors (SIFs) and so much more! Show Notes: [00:43] In today's conversation, I am joined by Dr. Dilip Soman, coauthor of Behavioral Science in the Wild. [03:31] Much of his early research was about how memory from pain depreciates. [05:01] Memories of factual things remain. Memories of experiences tend to depreciate.  [06:30] Melina shares a recent experience at the dentist where her hygienist said that 40% of people don’t want novocaine because they don’t like feeling numb after the appointment.  [07:40] Dilip shares a story about his neighbor getting a snow blower.  [09:35] Often people don’t want to pay more to get something done sooner. People learn in some domains that the longer the service the better. [12:10] You would think that your overall evaluation of an experience depends on the sum of all of your experiences. Sometimes experiences feel better if you feel like you are making progress as opposed to actual progress. [13:49] We are actually happier when we are driving than sitting in traffic (even if the trip takes longer).  [16:25] Waiting time is an opportunity. It is an opportunity to educate, amuse, and engage people.   [18:09] Dilip shares his background and the work that he does. He is a mechanical engineer by training. [20:10] His entire motivation for coming to academia was to understand why people think and how we can help people lead happier lives. He has tried many ways to take science to the field.  [23:06] Medical sciences actually have a science for how to implement stuff called implementation science – behavioral science should have this too.  [23:41] The first book in his series, The Behaviorally Informed Organization talks about what an organization should do to embed behavioral science.  [25:15] Behavioral Science in the Wild was written to tackle the challenge that the results are not as formidable as we would like them to be.  [26:58] SIFs are supposedly irrelevant factors, things that we think should not influence decisions but do.  [29:04] Every intervention could have multiple interpretations and pathways.  [31:11] Successfully scaling an intervention doesn’t mean that intervention has to be homogenous. You don’t have to do the same thing for everyone. Often you actually need to customize it.  [32:23] There are two sources of differences in situations that might cause the effect of our interventions to change.  [34:47] Oftentimes we explain failures by just saying it is a different context (don’t let this be your excuse and stop there).  [37:34] The moment you change the lens to try and understand the friction, you start seeing things.   [37:44] Think small. The success of big ideas gets tripped up by small things. [39:22] Sometimes it is the little stuff that trips people up.  [41:02] Sometimes the simplest solutions are the best ones.  [43:16] Melina shares her closing thoughts.  Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: Behavioral Science in the Wild, by Dilip Soman & Nina Mazar The Behaviorally Informed Organization, by Dilip Soman Nudge, by Richard Thaler & Cass Sunstein The Last Mile, by Dilip Soman Misbehaving, by Richard Thaler Connect with Dilip:  Behavioural Economics in Action at Rotman (BEAR) Dilip on LinkedIn Dilip on Twitter Top Recommended Next Episode: Do Nudges Work? with Michael Hallsworth (episode 218) Already Heard That One? Try These:  Pain of Paying (episode 240) Confirmation Bias (episode 102) Peak-End Rule (episode 97) IKEA Effect (episode 112) Surprise and Delight (episode 60) Framing (episode 16) Defaults: The "D" in NUDGES (episode 38) How To Change, an interview Dr. Katy Milkman (episode 51) Hawthorne Effect (episode 117) How to Finally Change Your Behavior (So it Sticks) (episode 81) How To Set Up Your Own Experiments (episode 63) Friction - What It Is And How To Reduce It, with Roger Dooley (episode 72) Precommitment (episode 120) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  The Duration Heuristic Virtual Progress A Megastudy of Text-Based Nudges Encouraging Patients to Get Vaccinated at an Upcoming Doctor’s Appointment Behaviourally Informed Organizations Go to basecamp.com/brainy and try Basecamp for free. No credit card required and cancel anytime.

Today’s episode is all about the pain of paying. This episode originally aired as number 59 in August of 2019. It was formed from a paper I had found and researched before I started doing interviews on the show. I had never met or really considered connecting with the author of the main paper I reference in the episode, Ofer Zellermayer (this paper was his doctoral dissertation). In addition to having an episode on this, I included a full chapter on the pain of paying in my first book, What Your Customer Wants and Can't Tell You which came out in May 2021.  Well, funny enough, in October of that same year, he reached out to me! He said that he had gone to search something related to his paper and found the podcast episode so he dropped everything to listen! He approved of it (phew!) and reached out to connect, which is such an awesome thing. I’m always amazed at the power of the podcast and all the relationships and connections that have come from it over the years. Remember what I said last week in episode 238 about reciprocity? Business is a long game, give freely and you will be amazed at how great things can be.  Anyway, you may be wondering why I chose this episode for today’s refresh. For one, with the holidays upon us and just finishing up Black Friday, Small Business Saturday, and Cyber Monday here in the states, it felt like a great time to talk about the pain of paying. Buying things can feel like physical pain, and it is important to know that, but not go too over the top to compensate for it. Deals and discounts abound this time of year, and people buy differently when they are shopping for gifts. It is all interesting stuff to keep in mind as you consider your own buying this holiday, and any sales you may be running for your business. It felt like the perfect time to refresh this episode for you. Show Notes: [00:38] Today’s episode is all about the pain of paying. [02:57] Buying things can feel like physical pain, and it is important to know that, but not go too over the top to compensate for it. Deals and discounts abound this time of year, and people buy differently when they are shopping for gifts. [04:21] Buying things isn’t all fun and games and the process of paying for things can actually cause pain for many people.  [06:14] Everyone experiences some level of pain of payment in various scenarios and those conditions tend to be pretty universal. Context is incredibly important when it comes to the pain felt making a payment.  [07:09] Melina shares the reasons and continuums that impact the pain felt in a payment. [09:30] The brain loves a story. This story can impact the pain felt by paying. [12:28] Price is not about price. Everything that comes before the price matters much more than the price itself.  [13:57] When the pain of paying is too much, people who don’t buy things that they need or want because it is too difficult to give up money are called tightwads. Those who spend too much too easily and do not feel an appropriate amount of pain before or during the spending process are called spendthrifts.  [16:58] Being a tightwad is different than being frugal. Frugality is rooted in joy when saying money.  [19:16] 60% of people are unconflicted, 25% are tightwads, and 15% are spendthrifts. Your biggest challenge is overcoming the 25% who are tightwads.  [20:08] Tightwads are most sensitive to framing adjustments so that is where you can make a difference. Tightwads can have a difficult time paying for things with cash so make it easy to pay with a credit card. [22:17] The pain was found to have less of an impact when buying what is considered virtue products than vice products. It is important to know what category your product falls into when you are looking at how to frame your message.  [23:46] One of the big issues for spendthrifts is that they do not account for or intuitively understand the opportunity cost at the moment when they are getting ready to buy or they want to buy things.  [25:52] Everyone will feel some sort of pain when paying. It is your job as the person selling to figure out what the buyer needs, what would benefit them the most, and then present it to them in a way that will have the last pain felt so they can actually enjoy spending the money.  [27:39] For your business, think about how people interpret what they are getting. If it was not their choice are there some other areas where you can help them feel like they did make a choice so there is less pain felt in the experience?   [31:26] When the pain of paying isn’t felt as much it doesn’t impact the experience as negatively.  [33:51] In some ways, you are making the loss and pain much more prevalent, reducing usage by consumers, and impacting the overall experience.   [35:29] The payment that is triggering pain doesn’t have to be from money, it can be time as well.  [37:36] When consumption and payment are coupled together, you experience pain as you consume, it has a certain level of pain and joy associated. When you uncouple them, you experience each item separately which can increase each unless you implement them properly.  [40:03] The pain of payment can be removed when the payment is taken care of before consumption.  [42:12] “Strong buffering and hence reduced the pain of paying occurs when the consumer can directly connect the costs in terms of money with the benefits in terms of product or service. The ability to associate costs and benefits is just as important in physical pain.” [44:26] The pain of paying was potentially completely eliminated when it was given as a gift. [45:06] Melina’s closing thoughts [45:26] The fact that we think about gifts differently than something we need — and that we want to spend LESS on the things we functionally NEED is so interesting. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and Support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: What Your Customer Wants and Can’t Tell You, by Melina Palmer How Customers Think, by Gerald Zaltman Alchemy, by Rory Sutherland Engaged, by Amy Bucher Marketing to Mindstrates, by Will Leach Top Recommended Next Episode: Get Your D.O.S.E. of Brain Chemicals (episode 123) Already Heard That One? Try These:  Framing (episode 16) Priming (episode 18) What is Value? (episode 234) Mental Accounting: How To Make Your Money Math Work For You (episode 56) Partitioning How to Raise Your Prices (episode 77) The Truth About Pricing (episode 5) Focusing Illusion (episode 89) Decision Fatigue (episode 132) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  https://www.researchgate.net/publication/280711796_The_Pain_of_Paying The Red and the Black: Mental Accounting of Savings and Debt The Pain of Paying Tightwads and Spendthrifts: An Interdisciplinary Review

In today's conversation, I am joined by Luke Freeman, who is the executive director of Giving What We Can, an organization dedicated to creating a culture where people are inspired to give to the world’s most effective charities. Giving What We Can was one of the first organizations in the world focused on effective altruism: the project of using evidence and reason to figure out how to best help others, and taking action on that basis. I specifically asked Luke to be on the show today to discuss behavioral science concepts and how they line up with nonprofits. Sometimes, concepts perform exactly as they would in a traditional customer/company relationship when there is money being exchanged…but in other cases, research has found this isn't the case. When people are volunteering or donating some tactics that would show you are grateful or appreciative of a customer (like giving a gift) may backfire and feel…off. Knowing this is a time of year when people who work in nonprofits or volunteer on boards are gearing up for year-end asks or doing strategic planning for next year and people may be thinking of their annual donations, it seemed like the perfect time for this episode to help everyone be more effective with their support of others now and into the future. Show Notes: [00:45] In today's conversation, I am joined by Luke Freeman, who is the executive director of Giving What We Can. [03:08] Luke shares his background and the work that he does. His background is in marketing and he has recently moved to the nonprofit sector. [05:14] When Giving What We Can was looking for an executive director, it was a perfect opportunity to do work that was really important to him.  [06:18] Typically, when people are giving to charity they are giving to something right in front of them or things that they have had some experience with.  [07:39] When people think about charity effectiveness generally the two things that they think of are overheads or administrative costs and impact.  [09:48] The first bar is trying to get people to look outside of themselves and try to improve the lives of others. Once you are there then you narrow in on where you can make the most impact.  [12:27] We can take time to think about what we care about, whose life/lives we are looking to impact, and what is going to be the best use of money to help.   [13:16] We often look at neglectivness because popular problems are often getting a lot of resources already. A lot of stuff is neglected because it fits in the prevention space. [14:44] People are often willing to give right away out of pity or guilt, but that isn’t sustainable giving.   [16:32] Sometimes behavioral science concepts that work in traditional buying relationships don’t necessarily go the same way when looking at nonprofits and charities.  [18:45] Donors want to feel confident in their donations. Showing other humans giving and why they give is also quite motivating.  [22:29] If your company gets the right story it can really work for the company in terms of their own sales as well. People prefer that there be a logical story that is told of why that charity makes sense for the company they are partnering with.  [24:55] With any brand messaging when you can be specific and narrow the story down or follow the story of someone it has a bigger impact. [27:33] Donation matching is also popular but there isn’t a lot of strong evidence of its effect.   [28:52] Recurring donations make more sense for many donors and are much more sustainable.   [30:30] The door in the face technique and artificial surveillance cues don’t tend to be as effective with donations. Explanation about context from Melina and why this might be happening – don’t generalize results!  [33:25] Recognizing volunteer contributions and having a more human connection can be very helpful for keeping and increasing volunteers. Volunteering strategies are going to be very specific to the organization's context.  [35:00] Some volunteer opportunities are also donor nurturing programs in disguise (in a good way). It showcases the work that the charity does and even if they cost more to run, they are worth it because they create new donors.  [37:51] Don’t give people reasons not to do the thing you want them to do. Also, after the fact appreciate it.   [39:10] If you do nothing else this month, what does Luke recommend? You really need to get in the head of your user and in this case that is a donor. Your existing donor base is the biggest asset you have.  [40:15] People really care that they are able to help others and they want their money to go as far as possible. A game of “hot or not” with Luke’s rapid-fire tips. [43:41] Melina shares her closing thoughts.  [43:51] I love the idea of being more thoughtful before supporting the most popular organization you might see or hear about the most. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: The Speed of Trust, by Stephen M.R. Covey Influence, by Robert Cialdini Predictably Irrational, by Dan Ariely You Have More Influence Than You Think, by Vanessa Bohns How Minds Change, by David McRaney Connect with Luke:  Giving What We Can Website Luke on LinkedIn Luke on Twitter Giving What We Can on Twitter Top Recommended Next Episode: Reciprocity: The Amazing Power of Giving (episode 238) Already Heard That One? Try These:  What is Value? (episode 234) Precommitment (episode 120) Availability Bias (episode 15) Framing (episode 16) Time Discounting (episode 51) Biases Toward Novelty and Stories (episode 54) Reciprocity (episode 23) Loss Aversion (episode 9) Social Proof (episode 87) The Speed and Economics of Trust, an Interview with Stephen M.R. Covey (episode 148) Dr. Robert Cialdini and the (Now!) 7 Principles of Persuasion (episode 157) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  Member Motivations: Why people pledged to give 10% of their income to effective charities Marketing Messages Trial for GWWC Giving Guide Campaign Can money buy happiness? A review of new data What Works to Increase Charitable Donations? A Meta-Review with Meta-Meta-Analysis

Today’s episode is all about reciprocity, one of my very favorite concepts and approaches to life and business. For me, it is natural to give first and I enjoy being generous. I don’t recall the specific names of the love languages, but nurturing relationships is something that matters a lot to me (or whatever they call it) and would definitely be one of mine.  I have seen time and time again how this comes back so much bigger when you give first and don’t just do it to get stuff in return.  Life and business are a long game. It is so much better to be giving and generous up front and know that things will work out and take care of you eventually. This is also why I had last week’s refreshed episode about the brainy benefits of gratitude and why I always talk about reciprocity around the holidays and why this episode, which originally aired as number 23 of the podcast, was an obvious choice for me to refresh for you today. This is also leading into Friday’s brand new episode which will look at nonprofits and how generosity and giving and behavioral economics are the same and different when we step outside the typical customer/company relationship and into charitable giving. Now…let’s dig in on reciprocity (which is much more than just free gifts). Show Notes: [00:39] Today’s episode is all about reciprocity, one of my very favorite concepts and approaches to life and business. [01:21] Life and business are a long game. It is so much better to be giving and generous up front and know that things will work out and take care of you eventually. [02:49] Reciprocity is what happens when someone gives you something (whether you want it or not, whether you value it or not) and you feel obligated to give them something in return.  [04:03] Melina shares one of her favorite examples of reciprocity from The Big Bang Theory.   [05:44] Our brains tend to overvalue the gifts we are given and compensate in a way that exceeds the value of the original gift.  [08:42] The gift of kindness and a little effort goes a long way.  [09:20] Reciprocity presents itself in many ways but there are three categories: the free gift, the small ask on the path to something bigger, and the big ask to get something more realistic.   [09:44] The free gift is a little something that is given freely and helps make you a little more endearing in the eyes of the recipient.   [12:37] Another way to give out free gifts is with samples.   [15:17] Reciprocity and free gifts are often used when asking for donations. [17:44] Other examples of free gifts are sales or discounts.   [19:05] Discounts will often cost you more so use them sparingly and with a lot of strategy.  [22:16] Be of service to other people; reciprocity is a key reason why.    [22:55] The next category of reciprocity is a small ask to get something bigger.   [25:56] What is the gift you can give that can encourage businesses to donate later? What you want to do is ask for them to perform a small and simple task they are unlikely to refuse. Then when you come back for a donation they are more likely to say yes.  [28:47] Getting someone to say yes once to something small increases the likelihood that they will say yes again.   [30:06] In the last category you start with a big, ridiculous, or even unreasonable ask to make the thing you actually want to ask for seem more reasonable and appealing by comparison.  [30:57] Melina shares about a study on a university campus asking for volunteers.  [34:38] If you are going to use the big-then-small tactic it should be the same person both times and you should do them really close together. One obvious place to use this tactic is in negotiations of any kind.  [36:06] Melina shares a story about setting rates and pricing.  [39:02] Melina’s closing thoughts Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and Support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: Influence, by Robert Cialdini Stumbling on Happiness, by Dan Gilbert What Your Customer Wants and Can’t Tell You, by Melina Palmer Happier Hour, by Cassie Holmes You’re Invited, by Jon Levy Top Recommended Next Episode: Gratitude or Happiness: Which Comes First? (episode 236) Already Heard That One? Try These:  Framing (episode 16) Priming (episode 18) How to Set, Achieve & Exceed Brainy Goals (episode 70) How to Have Difficult Conversations About Race & Inequality: Interview with Kwame Christian (episode 107) Anchoring & Adjustment  (episode 11) Relativity (episode 12) Dr. Robert Cialdini and the (Now!) 7 Principles of Persuasion (episode 157) Do Lead Magnets Work and Do You Need One? (episode 3) How To Revisit & Update Your Lead Magnets, Freebies & Opt-Ins (episode 103) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  The power of yard signs II: Escalation of commitment Compliance Without Pressure: the Foot-in-the-door Technique Need to Set Rates? Find Your “Resentment Number” Reciprocal Concessions Procedure for Inducing Compliance:The Door-in-the-Face Technique A Fresh Wave of Marketing: An Intentional Approach to Marketing for Visionary CEOsSweetening the Till: The Use of Candy to Increase Restaurant Tipping Poll Reveals Who Are the Best, Worst Tippers

In today's conversation, I am joined by Dr. Douglas Kenrick and David Lundberg-Kenrick to talk about their new book, Solving Modern Problems with a Stone-Age Brain. As you will hear about in the episode, they are a father and son team with very different backgrounds, so it is incredibly interesting to see how they came together to write this really incredibly interesting book. I became acquainted with Doug and Dave through Bob Cialdini, who emailed me saying that this team from ASU had a new book out that he found to be fascinating and thought I would too. That was, of course, enough endorsement for me, and after some due diligence, I quickly confirmed that this was a book that was a great fit for the podcast. Doug and Dave have stories of a young Bob Cialdini as well as "Danny Kahneman" in their book as they share examples of how our brains have adapted (or not) while the world around us has changed dramatically and how that matters to all of us in life, and of course in business. You don’t want to miss this!  Show Notes: [00:46] In today's conversation, I am joined by Dr. Douglas Kenrick and David Lundberg-Kenrick to talk about their new book, Solving Modern Problems with a Stone-Age Brain.  [03:06] Dave and Doug share their backgrounds and how they found themselves writing a book together. Dave’s background is in film production. [04:20] Doug is a social psychologist.  [05:59] Social motives are actually primary. We have basic needs like hunger and thirst and as we get a little older we start to become concerned with protecting ourselves.  [07:58] Organisms are designed to reproduce. So human beings go through the same basic phases as other animals. You develop your body, develop your social relationships, and then you find mates.  [10:25] The seven motives are basic resources (food and shelter), self-protection, affiliations or friendship, gaining status, finding and choosing a mate, maintaining romantic relationships, and kin care.  [12:04] There are some places in which our ancestral motives serve us well and there are others in which they serve us really badly.  [14:20] Melina recommends Guns, Germs and Steel by Jared Diamond and  Evolutionary Ideas by Sam Tatam (previous guest on The Brainy Business).  [16:06] Stimulus control is incredibly important and you can control your environment to support what you want to do.  [18:00] You should never strive for perfection because you are always going to feel disappointed. It is really hard for us to balance all seven motives.  [21:11] We can only prioritize 1-2 of the motives at any given time.  [23:34] We can take small steps and do a little in each of these categories and when we do them they tend to make us feel healthier.  [25:25] Their book-writing process was to go for a walk in the morning and talk about the ideas they were going to write that day. After working and writing alone during the day when they took an evening walk they almost always came up with solutions to the problems they had found in the morning.  [28:05] They really enjoyed the process and learned a lot.  [29:58] Figuring out ways to present things in a way that is ethical is really important too.  [32:22] There is something really interesting about ideas that come from dialogue.  [33:11] What about applying this in business? Start by asking how your business can fill the seven fundamental motives for your customers and employees. [35:07] The thing you might think your brand is about might not actually be the only way to convey your message. Think about what your brand conveys and what you really want it to convey.  [37:48] You can ask yourself, “How can this job satisfy my motives?” You will do better on the job if you walk in and regularly consider, “How can I satisfy the motives of my co-workers and bosses?”  [39:38] Public compliments are one of the best things leaders and coworkers can do and it is a really effective thing.  [40:59] Learning people’s names is one of the classic ways to give a little bit of affiliation and status.  [43:45] Work-life balance is a big thing for both finding, keeping a mate, and parenting.  [45:04] Stick to lifting people up and always giving them more status. Give them more autonomy and time also.  [48:40] Human beings are designed to not be selfish, but to help other people. The best thing you can do for yourself is to help others.  [50:49] Melina shares her closing thoughts.  [51:24] Often, a simple reframing of your message can make all the difference in the world, and understanding the things that will motivate our stone-age minds to act -- even in this modern world -- is so, so useful in finding messaging that sticks. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: Solving Modern Problems With a Stone-Age Brain, by David Lundberg-Kenrick and Douglas Kenrick Influence, by Robert Cialdini Guns, Germs, and Steel, by Jared Diamond Evolutionary Ideas, by Sam Tatam What Your Customer Wants and Can’t Tell You, by Melina Palmer Connect with Tessa:  Dave on LinkedIn Doug on LinkedIn Dave on Twitter Doug on Twitter Top Recommended Next Episode: Dr. Robert Cialdini and the (Now!) 7 Principles of Persuasion (episode 157) Already Heard That One? Try These:  Anchoring & Adjustment (episode 11) Evolutionary Ideas with Sam Tatam, Ogilvy’s Global Head of Behavioural Science (episode 204) Precommitment (episode 120) The Overwhelmed Brain & Its Impact on Decision Making (episode 32) Time Discounting (episode 51) Framing (episode 16) Priming (episode 18) Peloton: A Behavioral Economics Analysis (episode 86) Herding (episode 19) Unity (episode 216) Social Proof (episode 87) Apple Card: A Behavioral Economics Analysis (episode 42) Do Lead Magnets Work and Do You Need One? (episode 3) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  Solving Modern Problems Website Maslow's Hierarchy of Needs Pick Three Zombified Podcast

Today’s episode is all about the brainy benefits of gratitude. At the end of the year, I always like to do episodes about reciprocity, gratefulness, happiness, and planning…and this year is no different. One thing that is new this year, is that we have two episodes a week including our Tuesday refreshes so this episode from November 2019 on the brainy benefits of gratitude gets another day in the sun. I really enjoy this episode as it looks at the difference between happiness and gratitude and how they might not work the way we think they should (which you will of course learn all about in the episode today).  Here’s something to think about as we start the episode: Do you have to get what you want to be happy? Is synthesized (or manufactured) happiness the same as natural happiness? What is best for your overall psyche and those around you? Keep that in mind as you listen, and share your thoughts with me on social media! Show Notes: [00:39] Today’s episode is all about the brainy benefits of gratitude. [01:55] Gratefulness and reciprocity have an important thing in common, a tie that can bond them together which is a feeling of happiness and joy. Doing things for others or giving things away can make you feel happier.  [04:09] Our brains systematically misjudge what will make us happy.  [05:36] Dan Gilbert tells about how people don’t know what will make them happy. One of the most important things the human brain does is allow to synthesize the future, imagine what is to come, and predict how we should act for the best possible outcome.  [06:29] Natural happiness is a product of getting exactly what you want.  [06:41] Synthetic happiness is what we get when we don’t get what we wanted. Synthetic happiness, not getting what you want but still being happy about where you are is just as enduring and every bit as real to the brain as if you got exactly what you wanted or thought you wanted.  [09:36] A fascinating example using Monet paintings to show how our preferences change. You can be grateful, appreciate things, and have them make you happier even if you don’t remember going through the process before.  [10:09] We think we will be happier if we have more options or choices but there is such a thing as too much choice. Freedom to choose is the opposite of happiness.  [11:20] Those who were stuck and had no room for deliberation after the fact were much happier than those that had the option to ruminate. Those who were stuck had no reason to ruminate and counterfactualize and were considerably happier. [13:00] Not getting what you want can make you just as happy or happier than if you had gotten what you set out for. Synthesized happiness is the same as natural happiness. Lots of choices and opportunities to ruminate are a recipe for unhappiness.  [14:23] Gratefulness goes first.  [15:07] The benefits of gratitude filtering can impact all areas of your life in a positive way. When you are filtering for gratitude you are resetting the way your subconscious is looking at the world around you.  [16:50] It is important to write gratitude by hand when you can. Writing things by hand has tons of benefits.  [17:41] One reason writing by hand does all these things is because it forces you to slow down and be thoughtful. Your brain pays more attention to things you write down.  [18:38] Gratitude can also improve relationships. Sharing the good makes it easier to share the bad allowing for growth and progress together.  [20:08] It is time to filter for gratitude and start writing what you are grateful for. [20:12] Melina’s closing thoughts Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and Support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: Stumbling on Happiness, by Dan Gilbert The Paradox of Choice, by Barry Schwartz The Happier Hour, by Cassie Holmers Tiny Habits, by BJ Fogg Good Habits, Bad Habits, by Wendy Wood Top Recommended Next Episode: Paradox of Choice: Why More is Less (episode 171) Already Heard That One? Try These:  Reciprocity (episode 23) Get Your D.O.S.E. of Brain Chemicals (episode 123) The Littery - Interview with CEO Michael Manniche (episode 75) Counterfactual Thinking (episode 68) Prefactual Thinking (episode 71) Expect Error: The "E" in NUDGES (episode 39) Priming (episode 18) How to Set, Achieve & Exceed Brainy Goals (episode 70) The Power of Habit (episode 22) Framing (episode 16) Confirmation Bias (episode 102) Focusing Illusion (episode 89) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  The Surprising Science of Happiness Dan Gilbert TED2004 What Does It Take To Be Grateful? In Praise of Gratitude 5 Reasons Writing by Hand Is Good for the Brain and for Well-Being Three Ways That Handwriting With A Pen Positively Affects Your Brain 9 Incredible Ways Writing By Hand Benefits Our Bodies And Brains How Arianna Huffington, Tony Robbins and Oprah Winfrey Use Gratitude as a Strategy for Success

In today's conversation, I am joined by Dr. Tessa Misiaszek, coauthor of Branding That Means Business. Tessa is an instructor with Harvard Professional Development Programs, as well as a Professor at Hult International Business School. She brings extensive experience developing human capital strategies to improve business communications. Previously she served as CEO of Empathetics, Inc. – a company that developed empathic communications training for healthcare professionals, and she is currently the Head of Research for Korn Ferry. She is also one of the hosts of The Happy At Work Podcast, which I was honored to be a guest on recently discussing my book, What Your Employees Need and Can't Tell You. Today, Tessa is here discussing her new book, Branding that Means Business, which she co-authored with Matt Johnson, who was on the show two weeks ago talking about the customer side of branding. Today, Tessa and I look a little more on the employee side of things and how much that matters for brands. Listen in to learn more. Show Notes: [00:43] In today's conversation, I am joined by Dr. Tessa Misiaszek, coauthor of Branding That Means Business. [02:41] Tessa shares about herself and the work she does.  [04:06] Tessa met Matt in England and they had an argument about empathy. [06:06] Her debate with Matt was if empathy had a scaling issue and if empathy can deplete you as a person.  [08:13] Tips for working with a co-author? If you go into business or create a start-up with a partner it is like a marriage. If it goes bad, it can go really bad. You want to make sure you have the right partner at the onset.  [11:04] Today we are going to talk about the internal functioning of marketing, branding, and culture.  [11:45] The function of marketing is value creation.      [13:45] A brand is not marketing. A brand is an asset to your marketing strategy. [16:17] Authenticity needs to tie through everything and the outward messaging to customers matters.   [18:41] At the end of the day it is the transparency that builds trust and once consumers have trust that you are doing what you say you are they are more likely to be loyal and forgiving if something happens.  [22:05] The more empathy you can have for the way that your consumers live their lives and think about how your product and service are integrated into the way they live their lives that will allow you to build a more authentic brand connected to them.  [23:42] Brand is really the great differentiator today.   [26:42] Empathizing with the customers is crucial.  [29:00] As a brand you can’t be all things to all people so don’t try to be.  [29:49] Companies are only as good as the people that run them. Being able to really connect that purpose to the employee organization and culture that you develop within the company is very important.   [31:50] Mission and values are just the beginning. Next, you have to think about the infrastructure and operations.  [33:54] Zappos worked on creating and building a culture that really engaged the employees and then delivered on that and drive everything about the company.  [35:28] Melina shares Zappos' ten core values. Tessa recommends that start-ups start with five unique authentic values. [37:14] If we all say we have the best service then nobody has the best service unless you are really living that. It is not enough to just say it, you have to show it.  [40:09] Values are not just words on a board. You have to think about how these values will evolve over time. To stay true to that as a company you have to continue to innovate based on those values.  [42:50] There should be an inventory once a year of company values.   [44:35] Tessa’s podcast Happy At Work talks about organizational culture, employee engagement, and how to create a positive workplace environment.   [45:09] Melina shares her closing thoughts.  [46:03] Your brand promise may not be the same as your core values...and even if you don't have something written out anywhere (yet) or aren't really living those days in and day out (yet) consider this an opportunity to look at those and see how you can be doing better. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: Branding That Means Business, by Matt Johnson and Tessa Misiaszek Blindsight, by Matt Johnson and Prince Ghuman What Your Employees Need and Can’t Tell You, by Melina Palmer The Speed of Trust, by Stephen M.R. Covey Delivering Happiness, by Tony Hsieh Connect with Tessa:  Tessa on LinkedIn Tessa on Twitter The Happy At Work Podcast Top Recommended Next Episode: Branding That Means Business with Matt Johnson (episode 231) Already Heard That One? Try These:  Neuroscience and Psychology in the Business World, An Interview with Matt Johnson  (episode 160) Why We Like the Things We Like, with Prince Ghuman, coauthor of Blindsight (episode 172) Introducing Kwame Christian and How to Use the Compassionate Curiosity Framework for Difficult Conversations (episode 107) What is Value? (episode 234) How to create a brainy brand (episode 230) That Time I Went Viral… with Dr. Daniel Crosby (episode 212) Reciprocity (episode 23) The Speed and Economics of Trust, an Interview with Stephen M.R. Covey (episode 148) IKEA Effect (episode 112) The Power of Us with Dr. Dominic Packer (episode 178) Bikeshedding (episode 99) Time Discounting (episode 51) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  Korn Ferry Empathy Company Zappos 10 Core Values Embracing Change: Melina’s Episode on The Happy At Work Podcast Automatic Effects of Brand Exposure on Motivated Behavior: How Apple Makes You “Think Different”

Today’s episode is all about value — what it is, what it isn’t, and why it matters for businesses. Value is something you hear about a lot, but it isn’t necessarily something that we intuitively get or what drives our motivation to buy things. In today’s episode, (which originally aired as number 8 of the podcast way back in August 2018), I get into the difference between value, price, worth, and cost and how they all matter in business.  I chose this episode for you today for a couple of reasons. First, Leigh Caldwell, the guest on last Friday’s episode, wrote a book called The Psychology of Price, which of course, brings value to the table. Whenever we talk about price, value is a key aspect. Also, in the episode this coming Friday, featuring Tessa Misiaszek, coauthor of Branding That Means Business, she will talk a lot about value vs. values, and what they mean in an organization and for its employees. That got me thinking about this episode.  It is one I really love but don’t end up talking about all that much, so it felt like it would be fun to bring it back to the forefront for a little moment in the sun. As you listen today, think about the value you create in your work. Of course, there is the obvious in your products and services, but also think about the less obvious side of value for your employees and teams working within your business. And tune in to learn some crazy stories of what people are willing to pay for things – from kidney stones to grilled cheese sandwiches… Show Notes: [00:38] Today’s episode is all about value — what it is, what it isn’t, and why it matters for businesses. [02:41] What are your values as a company, and how is that different from the value you create? How can your values be informing value? And how does that tie into worth — both of the organization and the self-worth of everyone that is involved with the company? [03:51] People tend to use the words value, price, and worth interchangeably, but they are not the same thing. They work together but they are actually quite different.  [05:08] Price is what someone is willing to pay for a good or service.   [06:12] Worth is the expected selling price of something. Things have worth even if they don’t have a selling price.  [08:59] Value is the usefulness or desirability of a good or service, how much you love it, or what it is worth to you. Value is not a number, it is based on how much you love it. Value is subjective and personal.  [11:11] Often items we value can be replaced, but we don’t usually value them the same even though it is worth the same.   [12:35] Getting people to be realistic about their worth, price, and value is very important when you are trying to convince them to sell an item, especially one as sentimental as a home.  [14:28] Herding, value, perceived ownership, and loss aversion work together in things like bidding wars. When you add scarcity into the mix…watch out!  [16:00] Your brain might say, “If others are willing to pay for it now, it will likely rise in value over time and there might never be another one…I better jump on this and buy before it goes really crazy!”  [18:41] The herd will catch on and people assume the value that was paid is a new value.  [21:28] Brands are what give companies value. Brands give you loyal followers which creates herds.   [22:21] Brands are a big reason why it is not about the price or the item itself. Brands bring value to companies.  [24:33] Our brains get what they expect. If they are set up to believe something is amazing, they will often interpret the thing as amazing.   [27:15] It is important to establish value and make people feel like your product or service is worth paying for.  [28:08] Exclusivity is the celebrity factor and it has a large impact on value and price.  [29:53] How much did the owner's explanation and framing of the making of the sandwich and the high-quality ingredients have to do with the perceived value? He was confident in his explanation and said the price without hesitation which is also key to establishing value and justifying the price. [32:54] Stories are memorable. Stories make brands. [36:21] Our brains are trained to believe what they learned first until proven otherwise. Our brains believe what they are told and hold those things as facts – especially when it sounds really convincing or appealing.  [38:46] No matter what you are selling, brand value matters. In business, establishing brand value is the key to loyal customers who are willing to pay premium prices. People get more value when they pay more.  [40:12] Price and perceived value are linked in the human brain. A higher price means it must be better and have more value.  [41:56] Value is subjective. Value is in our heads. Value changes. Value can be created and built up. To get the herd to accept the value, you only need a few passionate people who are willing to pay what you (or they!) think the item is worth.    [42:45] Melina’s closing thoughts Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and Support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: The Psychology of Price, by Leigh Caldwell Predictably Irrational, by Dan Ariely Branding That Means Business, by Matt Johnson and Tessa Misiaszek The Behavioral Investor, by Daniel Crosby What Your Customer Wants and Can’t Tell You, by Melina Palmer Top Recommended Next Episode: Endowment Effect (episode 139) Already Heard That One? Try These:  Herding (episode 19) Loss Aversion (episode 9) The Truth About Pricing (episode 5) Branding That Means Business with Matt Johnson (episode 231) Wait…There’s a System 3? featuring Leigh Caldwell (episode 233) Familiarity Bias (episode 149) Status Quo Bias (episode 142) Change Management: It’s Still Not About the Cookie (episode 226) How to Create a Brainy Brand (episode 230) Scarcity (episode 14) The Power of Story, with Michelle Auerbach Our Bias for Novelty and Story Anchoring & Adjustment Relativity  That Time I Went Viral… with Dr. Daniel Crosby (episode 212) Framing (episode 16) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  Cost vs Price vs Worth vs Value This Simple Framework Can Help You Sell More of Anything Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias Human Herding: How People are Like Guppies Brother, Can You Spare An Organ? Basquiat painting smashes record with $110m sale People Try World’s Most Expensive Grilled Cheese How Your Brain Keeps You Believing Crap That Isn’t True

In today's conversation, I am joined by Leigh Caldwell, the founding partner of Irrational Agency. He is a behavioral economist and pricing expert with more than 10 years of experience in applying behavioral science commercially. He is the creator of the System 3 Methodology (which we will talk about a lot in today's episode) as well as being the author of The Psychology of Price, and a frequent speaker at academic and industry conferences. That is actually how Leigh and I met in person -- while we were both speaking at IIEX Europe in Amsterdam this past summer. We had been connected on LinkedIn prior to that, and it was so great to chat in person a bit, and then follow up after for a virtual coffee, which of course led to this episode. My conversations with Leigh really got me thinking about what I believe, what I'm familiar with, and what it might mean to open up and consider how...things might not be exactly as they seem. So, what I encourage you to do as you listen to today's episode, especially if you have been familiar with behavioral economics and behavioral science for a long time, is to be open to this idea. Be open to something that goes against what you believe to be true and wonder, "What might that look like?" I think if you allow it to be, this is one of those ideas and episodes that will really stick with you for a long time -- and I love that! Show Notes: [00:39] In today's conversation, I am joined by Leigh Caldwell, the founding partner of Irrational Agency.  [03:02] Leigh shares his background and more about who he is. He describes himself as a mathematician above anything else.  [04:29] He realized there was something in the world about how people were buying and it wasn’t logical or rational.   [06:20] There were two directions he went after learning about behavioral science. One was pricing because he felt there was a gap in the market with helping businesses set their pricing.   [08:15] Second was that world of what is going on inside the head and what our imagination is made of. This really fascinated him.  [09:27] When it comes to pricing, first understand the value that you are providing as perceived by the customers. Then look at the alternative routes to solve the same problem and how much those cost.  [11:43] What is it worth to the customer to solve this problem and how can you capture as much as possible of that value?   [14:49] You are not your ideal client or customer, so how much you would pay for the thing is not how much the person who needs your services would pay. You often undervalue it.  [16:26] One thing that attracted Leigh to economics was the idea of being able to use math to model human behavior.  [19:12] When you are using a linear path to predict something complex, you are going to end up in a difficult spot.   [21:44] We have to be building, growing, and changing as the field of behavioral science is moving forward.   [24:19] System 1 thinking is fast, automatic, and unconscious - things that really are a gut reaction. System 2, the deliberate mind, is meant to be logical and calculating.  [25:05] There is another kind of thinking that is not captured by either one, and that is the thinking we typically do when we are daydreaming or watching a movie. It is the activity of imagination.   [27:12] Leigh calls this other type of thinking System 3.    [29:25] Melina reads the story from a paper he wrote to help us better understand System 3. In the story, what we are experiencing doesn’t have the logic of System 2 and it is not a learned reaction in System 1.  [31:34] We as humans can generate imaginary emotions and imaginary sensory feelings.   [34:20] If you want to understand people’s real experiences, you have to allow them to bring in all of the accidental influences that occur in real life and the different places that their minds can wander to.  [36:02] There can be real value in how the imaginative process can be useful to brands.  [38:11] Choices are important, but narratives are just as important.   [40:48] By uncovering the existing connections in people’s heads we can show brands how to tap into those stories and play their own part in that customer’s narrative.  [43:07] By uncovering how people really perceived their client’s product they were able to help them tell the right story in their marketing that was consistent with the story that the people already had and wanted.  [44:45] You have to understand who you are talking to and what it is you want them to do.  [47:41] People need to find ways and the right stories to help them through this challenging period, but brands also need to be able to find how they can play a part in customers' stories even in these challenging times.  [48:35] Melina shares her closing thoughts. [49:30] I don't know if there is a System 3 for sure, and what the field might adapt to in the coming years, but it is so cool to realize that we are on the forefront of something amazing. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: The Psychology of Price, by Leigh Caldwell Branding That Means Business, by Matt Johnson and Tessa Misiaszek Blindsight, by Matt Johnson and Prince Ghuman Nudge, by Richard Thaler & Cass Sunstein Predictably Irrational, by Dan Ariely Connect with Leigh:  Leigh’s Website Leigh on Twitter Leigh on LinkedIn Top Recommended Next Episode: Leveraging the Power of Prefactual Thinking (episode 232) Already Heard That One? Try These:  Status Quo Bias (episode 142) Questionstorming at KIND/Mars with Beatrix Daros (episode 215) Nudging for Good at Walmart with Sarah Wilson (episode 206) Behavioral Bartending with Maker's Mark, featuring Greta Harper (episode 207) Anthropology, Market Research & Behavioral Economics with Priscilla McKinney (episode 196) Anchoring & Adjustment  (episode 11) Relativity (episode 12) The Truth About Pricing (episode 5) Neuroscience and Psychology in the Business World, An Interview with Matt Johnson  (episode 160) Employee Engagement and Branding, with Tessa Misiaszek (episode 235) What is Value? (episode 8) Time Discounting (episode 51) Do Nudges Work? with Michael Hallsworth (episode 218) Counterfactual Thinking  (episode 68) Disney (episode 144) The Power of Story, an Interview with Dr. Michelle Auerbach (episode 145) The Power of Metaphors for Brands with Olson Zaltman’s Malcolm and Hannibal Brooks (episode 181) Defaults: The "D" in NUDGES (episode 38) Priming (episode 18) Confirmation Bias (episode 102) Familiarity Bias (episode 149) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter

Today’s episode is all about prefactual thinking. Prefactual thinking is closely related to counterfactual thinking, which was episode 68 of the podcast, and this episode originally aired as number 71. In its simplest form, counterfactual thinking is our “what ifs” and “if onlys” where we look back and wonder what might have been if only something had been different. This can be from outside factors or things within ourselves that might have changed an outcome, and our brains are really good at coming up with idealized scenarios where things would have been amazing and perfect “if only” this one thing had been different.  Prefactual thinking is when we do something very similar but are looking into the future. Why did I hand pick this episode for you to listen to and reflect upon today? This coming Friday, my guest in episode 233 is Leigh Caldwell. He will talk about why he believes there is actually a System 3. You’ve heard me talk about System 1 and 2 (or rather, the subconscious and conscious processing of the brain...our elephant and rider) and Leigh says there is something else in there that should be its own category altogether. It has to do with imagining and thinking into the future, so it felt like a good idea for you to have a nice refresher on prefactual thinking today so you are all set and ready to be thinking about this possible System 3 question on Friday. So, as you listen today, think about the possibilities and what might come, and be ready to reflect on this when you tune in for episode 233. (And, if you haven’t already, now is a great time to subscribe to the podcast to be sure you don’t miss it!) Show Notes: [00:38] Today’s episode is all about prefactual thinking. Prefactual thinking is closely related to counterfactual thinking. [01:25] While counterfactual thinking is looking back at how things in the past might have been different “if only”...prefactual does something similar, but looking into the future. [03:39] Goals are so important. As the year is ending you are looking back at what you did, and what you could have done, and also looking forward to what you can do in the future.   [04:33] Counterfactuals are looking back at something that has already happened and essentially undoing it in some way in your mind. Prefactuals are when you look to the future and think about what could be.   [05:54] When you think about what could happen or how you might succeed in the future, studies show you can actually have great benefits in all sorts of tasks.    [07:06] Your brain is driven by its desire to get these chemicals and there are different rewards with each.  [08:15] The treat for the brain is in the build-up, the prefactual, so it wants to think through scenarios over and over and it isn’t always wired to do this in a positive way unless you put in some interventions.    [09:26] Melina shares a real-world email example.  [12:05] There are countless examples because our brains dwell on stuff all the time – they are wired for it. And they don’t happen in isolation; it is easy to jump from counterfactual to prefactual and back again.  [13:18] To use prefactuals for positive behavior change you want to look at the “if / then” and future outcome action ties.   [14:04] The specifics give your brain something to process and remember in the future.  [16:12] After she received an email letting her know about the error, Melina was able to take some time to think about what could happen (prefactual) and because she didn’t dwell too much on what might have been (counterfactual) she could take steps to make it better.   [17:38] One key to using counterfactuals and prefactuals for your benefit is to look for the learning opportunity. [20:56] Knowing the true impact is really important before you send anything out. Your brain is going to blow anything out of proportion with the tools it has in its arsenal.  [22:25] Breathe, assess, question, action, and reflection.  [23:19] Studies have found that people perform better on a task after doing prefactual thinking even if they have no prior experience. This is why role playing and visualization techniques are so important.  [25:34] Moving out of the negative counterfactuals and prefactuals into the positive space is such a useful and versatile skill for everyone.   [26:35] There is always something to learn and always a way through to the other side. You will get there faster and easier if you structure your counterfactuals and prefactuals to the positive.   [26:49] Melina’s closing thoughts Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  I hope you love everything recommended via The Brainy Business! Everything was independently reviewed and selected by me, Melina Palmer. So you know, as an Amazon Associate I earn from qualifying purchases. That means if you decide to shop from the links on this page (via Amazon or others), The Brainy Business may collect a share of sales or other compensation. Let’s connect: Melina@TheBrainyBusiness.com The Brainy Business® on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brainy Business on LinkedIn Melina on LinkedIn The Brainy Business on Youtube Join the BE Thoughtful Revolution – our free behavioral economics community, and keep the conversation going! Learn and Support The Brainy Business: Check out and get your copies of Melina’s Books.  Get the Books Mentioned on (or related to) this Episode: The Psychology of Price, by Leigh Caldwell Get it Done, by Ayelet Fishbach How to Change, by Katy Milkman Thinking, Fast and Slow, by Daniel Kahneman Nudge, by Richard Thaler & Cass Sunstein Top Recommended Next Episode: Counterfactual Thinking  (episode 68) Already Heard That One? Try These:  Get Your D.O.S.E. of Brain Chemicals (ep 123) Expect Error: The "E" in NUDGES (ep 39) The Overwhelmed Brain & Its Impact on Decision Making (ep 32) Peak-End Rule (ep 97) Priming (ep 18) How to Set, Achieve & Exceed Brainy Goals (ep 70) The Power of Habit (ep 22) Availability Bias (ep 15) Framing (ep 16) How To Set Up Your Own Experiments (ep 63) The Top 5 Wording Mistakes Businesses Make (ep 2) Other Important Links:  Brainy Bites - Melina’s LinkedIn Newsletter  How to Break the Negative Cycle of 'What If' Thinking Correction: Improving Physical Task Performance with Counterfactual and Prefactual Thinking When Thinking It Means Doing It: Prefactual Thought In Self-handicapping Behavior Fixing Your Brain: A Guide to Balancing Neurotransmitters