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Nudges and choice architecture are complex and advanced topics. During my master's program, I had an entire course on choice architecture, so I'm going to break down this foundational topic into a series. Today's behavioral economics podcast is an introduction to nudges and choice architecture. In each episode, I’ll share the concept and then give real life examples to illustrate that concept.You’re a choice architect whether you realize it or not, and honestly whether you want to be or not. So, it is best to understand the concepts. Don’t you owe it to the people you are presenting choices to? Wouldn’t you want someone in your same position to help you to make the best possible choice? This series is going to help you so much in your life and business both when you are making choices and when you are constructing them for others. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [03:29] In its most core definition, a nudge is a gentle touch or tap. [04:37] An example of nudges in a school cafeteria where rearranging the food items impacted their consumption by 25%. A prominent position can increase consumption by 25% and a less prominent position can decrease consumption by 25%. [06:55] An excerpt from Nudge which outlines the dilemma of where how to structure the food in the cafeteria: 1. Arrange the food to make the students best off, all things considered. 2. Choose the food order at random. 3. Try to arrange the food to get the kids to pick the same foods they would choose on their own. 4. Maximize the sales of the items from the suppliers that are willing to offer the largest bribes. 5. Maximize profits, period. [07:50] Option 1 has obvious appeal, yet it does seem a bit intrusive. [08:25] Option 2, arranging the food at random, could be considered fair-minded and principled. [08:55] Option 3 might seem to be an honorable attempt to avoid intrusion (but the test shows why this is flawed). [09:44] Option 4 might appeal to a corrupt person in the job (not us). [10:02] Option 5 has some appeal, especially if we think the best cafeteria is the one that makes the most money. [10:22] What would you choose? How would you choose? This, is the burden of the choice architect. Many of you are already choice architects and you might not even realize it. [11:15] There are many parallels between choice architecture and more traditional forms of architecture. A crucial parallel is that there is no such thing as a “neutral” design. [12:33] Small and apparently insignificant details can have major impacts on people’s behavior. A good rule of thumb (as you have heard me say many, many times before) is to assume that “everything matters” [13:16] A choice architect must choose a particular arrangement of the food options for lunch (or whatever choice they are facilitating) and by doing so we can influence what people eat. We can nudge. [13:39] “A nudge is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding options or significantly changing their economic incentives." [14:15] Some of the key takeaways from the paraphrased explanation are: 1. Everything matters 2. There are no neutral options 3. You cannot avoid being a choice architect – any format is influencing the choices, so it is best to be informed 4. Nudges can help simplify complex choices and help illogical humans make good choices 5. Nudges are not mandates – they need to be easily avoidable to still count as a nudge. [15:02] Choice architecture and nudges are very closely tied – but they are not the same thing. [15:12] A choice architect is someone who indirectly influences the choices of other people. The choice architecture is the mechanism you use to facilitate the choices. [15:26] A nudge is something you would use to influence the decision. [16:21] An example of the concepts using an HR department: You want to structure choices on a form to help encourage employees to contribute to their retirement account. [18:21] The first item on the list will have the most weight on the brain. It's best to put the recommendation first (a nudge). [19:28] Different wording has different results. Consider saying something like: “Experts recommend contributing 15% of your salary to a 401k, how much would you like to allocate?” (and how it differs from other verbiage) [19:49] This example includes framing, priming, and anchoring and adjustment. [23:39] For your options, you can include several positive options (which start with the word “yes”) and then one “no” option at the bottom. These nudgy options remind the user of the expert recommendations. You can also prime them to contribute at a later time. [24:21] Options on online sign-up forms. [26:56] When used subtly, nudges are very effective. [29:25] Choice architecture is used in all sorts of decisions – from retirement plans to choosing a flight for your next trip. [29:49] Proper choice architecture and nudges can increase profitability on menus, help people to save more for retirement, decrease infection rates and deaths at hospitals, increase organ donations, get more money for public parks, help people to use less energy, and more. [30:20] In this series, I will be outlining choice architecture and the different types of nudges. I will introduce the topic and then give you practical examples. [31:24] There are six categories of NUDGES: iNcentives, Understand mappings, Defaults, Give feedback, Expect error, and Structure complex choices. [33:46] Can nudges be used outside of choice architecture or can you have choice architecture without a nudge? Not really...for example, even if you don't put effort into creating a nudge, there is always a default. So, it is best to be informed and think strategically. 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. Links and Resources: Episode 33. Inside the Texas A&M Human Behavior Lab From Cashews to Nudges: The Evolution of Behavioral Economics Nudge: Improving Decisions About Health, Wealth, and Happiness Choice Architecture Episode 20. Behavioral Economics Foundations: Defaults Episode 16. Behavioral Economics Foundations: Framing Episode 18. Behavioral Economics Foundations: Priming Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 32. The Overwhelmed Brain and Its Impact on Decision Making The Most Ridiculous Loss Aversion Example

Today’s behavioral economics foundations episode is all about the optimism bias. I hope you’ve got your rose colored glasses, because here we go! This is one of those topics that has a name that makes it seem like you MIGHT know what it is…but you potentially don’t know for sure…and you probably don’t realize how much it impacts you and your customers every day. So, what is optimism bias? Essentially, this is our tendency to overweight the likelihood good things will happen to us, and underestimate the likelihood bad things will happen to us. This episode explores why we think this way and how understanding optimism bias can be used to improve our businesses. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes   [05:25] OPTIMISM BIAS - This is one of those topics that has a name that makes it seem like you MIGHT know what it is…but you potentially don’t know for sure…and you probably don’t realize how much it impacts you and your customers every day. [05:31] This is our tendency to overweight the likelihood good things will happen to us, and underestimate the likelihood bad things will happen to us. [06:34] It is important to note that optimism bias is not the same as being an optimist. And, if you consider yourself to be a pessimist or a realist…it doesn’t mean that you are not impacted by the optimism bias. It just might impact you a little bit differently. [07:08] Marriage is a great example of optimism bias. In spite divorce statistics, no one thinks that they are going to get divorced when they get married. [07:57] According to the CDC, 1 in every 4 deaths is due to heart disease, claiming 610,000 lives each year. Do you think the statistic will affect you? Your spouse? Parents? Close friends? Probably not. [08:36] We also think our children are uniquely talented and skilled – that they will grow up to change the world and do amazing things. [09:30] Tali Sharot said, “We are optimistic about ourselves. We are optimistic about our kids. We are optimistic about our families…but we are not so optimistic about the guy sitting next to us. And we are somewhat pessimistic about the fate of families in general and the fate of our country.” [10:08] Optimism bias means that deep down, ingrained in our DNA, we believe that we have a unique ability to do better and be better than everyone else. [10:40] Think about yourself and how you rank compared to the rest of the population in your ability to get along with others. Attractiveness? Honesty? Driving ability? Most people will rank themselves in the top quarter of the population on abilities and characteristics. (Even though that is impossible.) [13:16] Optimism bias is believing that you are uniquely going to do better than the odds. [14:01] What my social media followers said they were most interested in concerning optimism bias. [14:51] The first question is the over/under. At least 80% of us are impacted by optimism bias (but I say it hits everyone at least once in their lives). [15:36] For all the entrepreneurs listening – we are likely to be the serious optimism biasers of the world. We believe we can launch or create something no one ever has. [16:00] The “low expectations” theory - debunked. Turns out people with high expectations are happier than those with low expectations. [16:32] When someone with high expectations succeeds, they tie that back to their own abilities and traits. [16:55] When people with high expectations fail a test they think that they'll do better next time. [17:05] People with low expectations think if they fail it's because of something they are lacking. [17:26] Optimism and success are not just related – success is built on optimism. [18:06] People who use optimism and the optimism bias, who have high expectations, are happier. [18:23] However, optimism bias can cause people to make bad decisions and take bigger risk than they should. [19:21] Another way the optimism bias shows up in business is when we estimate how long something will take. [21:06] Why do we make to-do list with so many tasks that we'll never get through them? It's because our brains are anticipating the rewards after, and we are uniquely capable of getting those things done. [22:10] BIG TAKEAWAY: Let optimism bias guide your goals and dreams. Whatever those big goals are, fill them up with as much optimism bias as you can muster, because confidence will get you there. [23:22] Set corporate goals with optimism bias, but set realistic tasks for your staff. [26:16] My interview with Karla Starr, author of Can You Learn To Be Lucky? [27:28] When people treat you well you develop a stronger sense of self. (Examples from Sarah Palin and Brad Pitt.) [29:37] If you live as a confident person and think things will go well for you, (often) they will. [31:42] Formative years can instill how you believe about yourself. [33:09] Use optimism bias to your advantage to help you be lucky in life and business. [36:26] Join my Facebook live chat with Karla on February 13th - and ask your questions live! [41:16] Businesses will fall on either the light or dark side of this bias - and they need to market/message completely differently. Consider which side your business is on: light or dark? Make sure optimism bias works for you instead of against you. 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. Links and Resources: Episode 33. Behavioral Economics Foundations: Human Behavior Lab Super Bowl Commercials 2019: A Behavioral Economics Review Nicole Bandes.Virtual A Team on Instagram Virtual A TeamExploring the Causes of Comparative Optimism The Optimism Bias Episode 30. Booms and Busts Heart Disease Facts When Harry Met Sally... | "The Wagon Wheel Coffee Table" Emotional reactions to achievement outcomes: Is it really best to expect the worst? Episode 13. Adjusting Your Mindset Episode 22. The Power of Habit Understanding the Optimism Bias Next Level Coach Can You Learn to Be Lucky?: Why Some People Seem to Win More Often Than Others Karla Starr The Brainy Biz Facebook Live Events

I recently took a trip down to College Station, Texas to visit the Human Behavior Lab at Texas A&M University – which is (at the time of recording) the largest human behavior lab in the world. Today’s behavioral economics podcast gives you an inside look at what happens inside of a laboratory like this. In this episode, I interview Dr. Marco Palma to find out what really goes on and answer questions like how do they actually take these concepts from behavioral economics and study them to impact real businesses? What sort of equipment do they use? How do they know what is going on in the brain and more. I hope you enjoy this sneak peek into what really goes on behind the scenes at a Human Behavior Lab.   Show Notes [04:11] The lab has sensors that helps them understand human behavior and what drives the emotions. [04:34] We are heavily influenced by our emotions, and in some cases, don't even realize it. [04:59] Some of the equipment they use includes facial expression readers which can correlate movements in the face with emotions. [05:19] They also have the capability of looking directly into your brain. They can measure stress signals like respiration and heart rates. [05:38] They are trying to understand and measure the motivations behind behavioral economics. [06:03] They also want to test results in the real world. [06:15] The virtual room is a mock grocery store which allows for testing with real products. [07:00] Experiments are conducted in a controlled laboratory environment and in the real world to understand the complexities. [07:27] They use eye-tracking hardware created by Tobii. They can also combine this with an EEG device and have all the hardware in a very small backpack so the subject is mobile. [08:18] The global leader that makes it easy to synchronize multiple devices at the same time is iMotions. [09:19] These new tools have really advanced the pace of discoveries that they can make. [10:02] They're interested in emulating what drives attention. When they know what people are paying attention to the message can be created in a way that will be noticed. [11:18] This is also useful for judging the effectiveness of a website and product placement in a store or display. [11:54]  Everything matters. Often small things that we don't think will matter can make a huge impact. [13:15] We are often guilty of making messages that are overly complex. We want the message to be perceived as simply as possible and to clearly communicate the benefits. [13:56] Menu optimization includes maximizing benefits and minimizing cost. Anchoring can be used for pricing on menus. Work done with eye tracking shows how people actually search for information. These clues can tell you where to place your anchors. [16:16] We use rapid eye movements and digest a lot of information in a very fast manner. [18:00] These devices can track 600 data points per second. Collecting data allows us to make inferences about behavior. [20:15] The foundation of what they do in the lab comes back to establishing causality. [21:52] They control for every detail to establish causality. [22:25] In 2019, they are interested in looking at self control. [22:52] By February 1st, 80% of Americans will have given up on their goals. [23:22] Small changes are much more sustainable than large drastic changes. [23:57] They are also going to look at cheating and lying. They are looking at what drives people to cheat for themselves and for other people. [24:41] What drives the behavior based on the assumption that large corporations or the government aren't being hurt by cheating? [24:52] They are also going to look at what drives people to be more generous. They're going to look at drivers for giving. Also at things like matching funds and fundraising campaigns. [26:15] They are also looking into competition and what drives high-achieving individuals. [27:23] They are trying to find ways to promote competition particularly for women. [29:12] Dr. Palma also wants to mention all of the work that they are doing with food. The way we interact with food is paramount to everything that we do. [29:46] Part of the obesity epidemic in this country has been driven by the access to food. They are trying to find a way to help people make better choices without telling them what to do. [30:14] It's interesting to understand the way that our brains are wired and how we can change that. [30:31] Our survival depended on finding sugar, because it meant that we were able to store calories. The reward pattern for ingesting sugar is the same as the reward pattern for taking drugs. [31:43] We owe it to ourselves and to society to recognize how we can overcome these phenomenons. [32:49] It's important to place this research into the hands of entrepreneurs who are doing important work. [33:58] We can now predict brain activity with 84% accuracy about whether someone will buy something or not. This shows the power of research. [34:36] My current and potential clients who are interested in doing a study to make their brand messaging more effective can work in tandem with myself and the Human Behavior Lab. Interested? Send me an email - melina@thebrainybusiness.com. 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. Links and Resources: The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life Human Behavior Lab Website Human Behavior Lab on Facebook Human Behavior Lab on Instagram @HBLtamu on Twitter Self-control: Knowledge or perishable resource? iMotions on Facebook iMotions Biometric Research Tobii Website The Brainy Business on YouTube The Brainy Business on Instagram The Brainy Business on Facebook Episode 29. Resolutions and Keeping Commitments Episode 5. The Truth About Pricing Melina@TheBrainyBusiness.com

What happens when our brains get overwhelmed? What is the impact on decision making? Today’s behavioral economics podcast is going to focus on these foundational topics. Businesses always ask people to take some sort of action (buy this, click here, download that). It’s a good idea to be careful not to overwhelm your potential customer. An overwhelmed brain will move on and file your business in the “maybe I’ll look at this later” pile. A real life business example of taking care not to overwhelm a potential customer (or in this case listener) is these show notes. I take extra time and expense to have everything laid out in an easy to understand way with all of the related links and studies available for you. That way you can relax and enjoy the show, and if you ever want to learn more or check out the links, you know they will be here waiting for you. I also give more real life and business examples of overwhelm and how it affects the brain and your business. CLICK THE IMAGE FOR YOUR FREE DOWNLOAD! Show Notes [03:32] OVERWHELMED BRAIN [03:46] I have extensive show notes for every episode, because I want to make it as easy as possible for you to relax, listen to the podcast and still have the resources available (so you don’t have to fill up your brain with the one thing you are trying to remember). [04:57] This is the same reason my strategy sessions are done on Zoom and recorded. I want my clients to be able to be in the moment. [05:50] This is another testament to NUDGES and expecting error. I do not expect that someone will remember every little tidbit they want to from every conversation we have. [06:07] There are two errors here – 1) the inability to remember what was discussed because there is a lot and 2) the inability to really focus in the moment because the conscious brain can only devote so much. [06:32] To combat both of those things, I have show notes and videos to help relieve some of that pressure. [07:14] CHOCOLATE CAKE STUDY [07:45] Participants in a study were asked to memorize a two-digit or a seven-digit number. Participants with the two-digit number were more likely to choose a healthy snack when offered. Those with the seven-digit number? They were more likely to choose chocolate cake. [08:34] Our subconscious brains can process 11 million bits of information per second. Our conscious brain can only do about 40 bits. [08:43] When your conscious brain is focusing on something, it tunes everything else out. [09:01] With your conscious brain occupied, the subconscious is tasked with taking the wheel. It is now running the show. [09:17] Our brains are fueled by rewards like dopamine. [10:23] Just think of all the times your conscious brain is able to get overwhelmed. [10:36] One subconscious rule of thumb is to ignore things that are too complicated. [12:53] Dan Ariely provides a great example of this in his book, The Upside of Irrationality, where giving people an opportunity for a large bonus (5 months salary) severely lessened their ability to perform on somewhat easy tasks. [13:18] The amazing computers in our heads are very easy to bog down. [13:50] POVERTY AND COGNITIVE ABILITY [13:58] Studies have found that those in poverty have reduced cognitive abilities. [14:54] This definitely gets at the core of why it can be hard to break a pattern when you are in it. [15:03] SNOWBALL VERSUS BATTERY [15:15] If your brain is overwhelmed…you will probably reach the point of fatigue much faster than you would if you were in a relaxed state. [16:20] POST COMPLETION ERROR [17:47] I travel quite a bit, but when I am packing for important trips, I tend to do a lot of running through lists in my head, “iPad – check, good shoes – check, toothbrush – check” you know what I mean. This creates an overwhelmed brain. [18:50] Why do we sometimes forget to bring our purse or wallet to work? Or drive away without putting the lid back on the gas tank? This is called post-completion error, and it happens when we complete some or most of a task, and our brain marks the whole thing as “done.” [20:23] Your brain holds more weight and importance on things you write down, so having a physical list you can check off can help really mark it as complete in your brain. [20:39] I am going to have a sticky note method to help nudge me about the laundry (so I don’t leave damp clothes in the wash all day and have a funky smelling family!) [21:20] Three questions: How could you help yourself in your work and personal life by relieving some of the overwhelm from your conscious brain? How can you be a resource to your customers to help them relieve some of their overwhelm? How often are you overwhelming your current or potential customers? Here is a 5-step way to avoid overwhelm... [23:53] 1. Write things down – this is like my checklist for packing. [24:52] 2. Do one thing at a time – multitasking is a myth and a path to productive procrastination. [27:38] 3. Make it a pattern (habit) – if there are things you need to do consistently and don’t want to have plagued by overwhelm, turn them into habits. [29:28] 4. Which brings me to the next point…have a goal – hopefully you have already set your 1 to 3 goals for the year after listening to the resolutions episode. [32:41] 5. The final tip is to incorporate constant check ins and breathing points – both for yourself and with customers. Download your free worksheet to help you work through these five steps for yourself and with customers. 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. Links and Resources: Episode 31. Mirror Neurons Guru’Guay on Instagram Guru'Guay on Facebook Heart and Mind in Conflict: the Interplay of Affect and Cognition in Consumer Decision Making Episode 21. Behavioral Economics Foundations: Habits Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell The Upside of Irrationality: The Unexpected Benefits of Defying Logic Poverty Impedes Cognitive Function Episode 29. Resolutions and Keeping Commitments How Writing To-Do Lists Helps Your Brain (Whether Or Not You Finish Them) Fierce Conversations: Achieving Success at Work and in Life One Conversation at a Time Episode 23. Behavioral Economics Foundations: Reciprocity The Brainy Business on Facebook

Dive into the intriguing world of mirror neurons and discover their vital role in empathy and observational learning. Learn how these neurons were accidentally uncovered through a monkey's reaction to an ice cream cone. Explore their influence on emotional responses and how they shape our social interactions. This fascinating discovery not only deepens our understanding of human behavior but also offers innovative strategies for enhancing business marketing and emotional connections with customers.

This behavioral economics podcast is about the psychology behind economic booms and busts. The first big bubble on record happened almost 400 years ago and there have been countless since then…so why haven’t we learned to avoid them? Why do we keep falling into the same traps over and over again? This is where the “behavioral” part of behavioral economics comes into play. This episode is relevant today because of the current status of the stock market, which had a tumultuous 2018 to say the least, as well as the recent rise and fall of cryptocurrency.  In this episode, I will cover optimism bias, overconfidence, herd mentality, time discounting, and emotions like envy and excitement. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:04] TULIP EXAMPLE - One of the earliest known bubbles happened in the late 1630s when Tulipmania struck Holland. [04:43] WHAT CAUSES BUBBLES - When excessive demand for an item drives the price up so it is far above the intrinsic value, it forms a bubble. [05:11] When the general population realizes that the prices are over inflated, everyone tries to get out at once causing a crash. [05:42] BEANIE BABIES - the beanie baby bubble took place about 20 years ago. [05:56] The genius strategy of retiring beanie babies, creating scarcity and increasing their value dramatically happened more by accident than anything else. [07:15] Ty changed the framing message by telling buyers that Lovie the lamb had been retired not that it was a supply issue. [07:30] Disappointed buyers were suddenly delighted at the prospect that Lovie might be worth more than what they originally paid. [07:42] Warner then begin intentionally retiring Beanie Babies. [08:56] Four women in Chicago who saw the potential of buying retired Beanie Babies actually started the craze. [09:16] As excitement caught on, Beanie Baby prices began to rise. [09:55] The entire bubble lasted five years. [11:30] Just like the Tulips, it all came crashing down. A retirement was announced in 1999 and prices remained stable. A release of 24 new beanies on that same day was overwhelming to investors and sales began to decline. [13:23] The first concept in the brain that contributes to forming bubbles is our bias toward optimism. A bias toward optimism is what makes people underestimate the chances that we will be in a car accident or get diagnosed with cancer relative to other people. [14:08] On the flip side, we may say that winning the lottery is a one in a million shot…but we still think WE have a good chance of winning. [15:01] We have a hard time not imagining what it would be like and our optimism bias tells us “that could be me!” which combines with perceived ownership and makes you feel like it is worth the small risk to play. This is the concept of availability, which was the topic of episode 15. [15:43] The anticipation releases dopamine and gets your brain excited about the opportunities. This creates a quick feedback loop, which gets people caught up in the hype of the bubble. [16:12] OVERCONFIDENCE - Consider something people say “can never fail” as a red flag. [17:27] HERD MENTALITY - We also get swept up in the hype because of our herd mentality, which was the focus of episode 19. [18:21] When an animal is part of a herd, it is best to simply follow everyone else. [19:16] Do your own research, don’t get swept up in the hype of others in the herd. [20:03] Our brains believe “it is better to be conventionally wrong than unconventionally right.” [22:33] Once something hits the mainstream and “everyone knows” it is a hot buy…it is probably past the point where you should have bought in. [24:01] TIME DISCOUNTING - We are programmed to see the immediate benefits and risks, and disproportionately weight them against future benefits and risks. [26:16] Value fluctuates, and it is easy to feel as if you “had” the money and dream about all the things you could do with it, but in many cases that is simply on paper. [27:56] Because our brains claim ownership over things very quickly, it is difficult to not get emotionally invested in the highs and the lows. [28:27] EMOTIONS - With bubbles, booms and busts, we let our emotions get the better of us and we quickly become our own worst enemies. [29:55] WHAT TO DO - If someone comes to you with an investment that seems too good to be true, it probably is. Consider going against the herd and finding new opportunities. [30:19] Self-confirmation bias is where we have a tendency to confirm our own beliefs. 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. Links and Resources: What Causes Economic Bubbles? - Prateek Singh Episode 14. Behavioral Economics Foundations: Scarcity Episode 18. Behavioral Economics Foundations: Priming Episode 16. Behavioral Economics Foundations: Framing How the Beanie Baby Craze Was Concocted — Then Crashed Family Ruined By $100K Beanie Babies 'Investment' The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute Exploring the Causes of Comparative Optimism Episode 12. Behavioral Economics Foundations: Relativity Lifetime Risk of Developing or Dying From Cancer It's Math: Why You Should Never Play The Lottery Episode 15: Behavioral Economics Foundations: Availability How the Bitcoin Bubble Will Pop 5 Contributing Factors in Housing Market Crash Episode 19. Behavioral Economics Foundations: Herding Obvious Investments Are Often the Worst Possible Choices Episode 29. Resolutions and Keeping Commitments Dow Jones - 100 Year Historical Chart Don’t Be Your Own Worst Enemy When Investing The Dark Side of the '90s Beanie Baby Craze Stock Market Crash of 1929

I would like to wish you all a Happy New Year! This is the first behavioral economics podcast episode of 2019. Like so many of you, December is a time of reflection for me, and planning for the year ahead. I do like the “fresh start” that comes with a new year, new quarter, new month, new client or new project…but what happens when the newness wears off? Why is it so hard to keep our resolutions even when we have the best of intentions? That is what this episode is all about. I am going to dig into 5 ways we have all been approaching resolutions wrong, and give you the strategy you need to change that in 2019 once and for all. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:38] What do you think about resolutions? Personally, I have never been a big fan. [08:18] I have never enjoyed investing time in things that will fail. The subconscious brain makes 99% of your decisions. It makes those decisions based on proven rules of thumb which it has found to work over your lifetime or our genetic evolution as a species. [08:44] When you say you want to change something you can have the best of intentions, but there’s a reason resolutions are easier said than done. [09:28] Our brains are constantly looking for rewards and many of the things that we find rewarding are the things that we want to change. [10:32] TIME DISCOUNTING - I call this the “Monday effect.” Have you ever said you would start something “on Monday”? Then…in what seems like minutes instead of hours…the alarm goes off. Where did the motivation go? Why do you feel like a completely different person today than you did last night? [13:07] Maybe tomorrow is a better day to start. Then tomorrow never really comes either. This is time discounting. [13:31] Studies have found that when you talk or think about your future self…the brain lights up as if it were talking about a completely different person! [14:20] “Future you” is actually a different person than you. [14:37] The problem comes when I wake up on Monday morning and it is time to face the music. “Oh, you mean I need to do that stuff?” [15:02] Time discounting compounds with overconfidence and optimism to make a perfect storm against change. We overestimate how good we will be at something. We also underestimate how long it will take to accomplish something. And overestimate how our outcomes will be compared to other people's outcomes. [15:50] Making your future self “real” to you so that you see yourself in the commitment can make a difference. [16:21] People saved more for retirement if they were shown a picture of themselves that looked like they had aged 10 or 20 years. [16:55] 1. When you are making the commitments, ask yourself if the plan is realistic. Think about this in terms of yourself right now. [17:19] 2. When you feel like you want to hit the proverbial snooze button (and you will) remember the commitment you made and why it is important. [17:43] 3. When making your commitment, make it something you can turn into an “I don’t” statement. [18:20] ANTICIPATED REGRET/COUNTERFACTUAL THINKING [18:25] Anticipation of regret is a huge reason people delay taking an action. [19:11] One reason regret is so powerful is because of counterfactual thinking. This is easier known as “what if” or “if only” thinking. [20:28] Your brain will combine the best features of unselected (and heavily evaluated) items into a “super choice” (which doesn’t really exist) to make you feel even worse. In this example, your brain creates a super safe, awesomely stylish car that you “could have had if only you hadn’t picked the stupid good deal” car. [20:41] Our brains want the immediate gains and benefits of “now” instead of waiting for something that is good for us in the future. [21:32] To make your resolutions stick, watch out for anticipated regret and all the times you start to think about “what ifs” and “if only’s” that aren’t leading to your goal. [21:52] Before you pick your resolution, be sure it is something you really want and are willing to make a change for. Think about why it matters and come to terms with the things you are going to give up in order to get it. [22:33] WILLPOWER (BATTERY VERSUS SNOWBALL) [22:40] There has been debate over the years as to how willpower and self control are created and maintained over time. [23:05] New research out of Texas A&M University’s Human Behavior Lab has found that it is actually BOTH – a battery and a snowball. [26:59] When you try to commit to too much and come in too hard and too fast, you are setting yourself up to fail. [27:27] Setting yourself up with too many goals and tasks is also a recipe for failure. You can’t focus on so many things at once. [27:48] What is the one thing that will change your business next year, and how can you put all your effort toward meeting that one goal? [28:40] Advice from Warren Buffett: Write down your top 25 goals for your life and business. Circle the top 5 most important goals. What happens to 6-25? They become your “avoid at all costs” list. [30:30] Not having a clear focus and narrowing down your purpose is why we lack self-control and have a hard time making changes. [31:18] You have to learn to say no. You need to make sacrifices. It will be hard, but it will be worth it if you pick the right things to focus on. [31:29] SMALL STEPS AND NUDGES [31:44] You only get to move one step at a time. All change – from weight loss to massive business success – comes one small step at a time. [32:06] If you make your list of 25 and narrow it down to a top 5, I am telling you to bring that down to a top 1 to 3 MAX for your resolution or big business goal for 2019. [35:42] You will not have a flawless path, there is trial and error. You may expect a snowball and get a battery. [36:10] Expecting error (part of Richard Thaler’s acronym NUDGES) is why the car dings at you when you forget to put on your seatbelt. [36:41] Make a list of all the spots where you might be likely to slip for those top three goals you have set – your 2019 resolutions. [37:54] If you have a resolution around more effective networking, set goals before you go for how many connections you are going to make - and schedule time in advance to follow up. [38:20] BE THOUGHTFUL [38:47] If you focus on something, and everyone else knows it is important to you, if it is the thing you live and breathe and are 100% of the time, you will move forward. [39:30] You need to limit the focus and think about the small steps you can take to BE thoughtful about this one thing (or three things). [41:06] How can you help your customers have more realistic goals they can achieve and feel good about? [41:51] Does your lead magnet speak to these goals people will focus on and give them an immediate win? 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. Links and Resources: Episode 23. Behavioral Economics Foundations: Reciprocity Episode 16. Behavioral Economics Foundations: Framing Episode 21. Behavioral Economics Foundations: Habits Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Business Coach for Women Episode 3. Do Lead Magnets Work and Do You Need One? Sales Maven Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 5. The Truth About Pricing Episode 2. The Top 5 Wording Mistakes Businesses Make Episode 1. Unlocking the Secrets of the Brain The Brainy Business on Facebook @thebrainybiz on Twitter The Brainy Biz on Instagram The Brainy Business YouTube Episode 15: Behavioral Economics Foundations: Availability Impulsivity and Cigarette Smoking: Delay Discounting in Current, Never, and Ex-Smokers Time Discounting and Time Preference: A Critical Review Golden Eggs and Hyperbolic Discounting Simpler: The Future of Government Exploring the "planning Fallacy": Why People Underestimate Their Task Completion Times The Trouble With Overconfidence Exploring the Causes of Comparative Optimism Episode 13. Adjusting Your Mindset The Functional Theory of Counterfactual Thinking Regret Aversion and False Reference Points in Residential Real Estate Self-control: Knowledge or Perishable Resource? Human Behavior Lab Texas A&M Human Behavior Laboratory Now Open for Business Research on How Self-control Works Could Help You Stick With New Year’s Resolutions Heart and Mind in Conflict: the Interplay of Affect and Cognition in Consumer Decision Making This Story About Warren Buffett and His Long-time Pilot Is an Important Lesson About What Separates Extraordinarily Successful People from Everyone Else Nudge: Improving Decisions About Health, Wealth, and Happiness Blissfully Healthy - Coach Emmie Perez

This behavioral economics podcast episode is the final installment of my series on the five senses. We’ve already talked about sight, smell, taste and hearing. Today, we dig into the sense of touch. Touch is one of the topics that I’m the most excited to share with you. Touch is directly connected to buying behavior in a way that is fascinating to behold. We value things more once we have touched them, and the triad of the endowment effect, perceived ownership and loss aversion are triggered directly by touch, which I will get into during the episode. I talk about how touch works and share scientific studies and real life examples that will help illustrate how this fascinating sense can be incorporated into your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:32] Touch is directly connected to buying behavior in a way that's fascinating to behold. [08:23] Touch is directly linked to emotional language. [09:05] We can get along without most of our other senses. It's not the same with touch. [09:59] Our sense of touch and having contact with others is important for development throughout life. [10:45] Touch is the social glue that binds us all together. [11:17] Touch is important for the development of people and societies. [12:07] Developing emotionally makes one more receptive to touch. [12:44] The wisdom of Dr. Seuss. [13:33] Our skin has many nerve endings. These nerve endings have different jobs. Fingertips have nerve endings for pressure, and that is why they can read braille. [15:27] If I asked you if water was hot or cold your answer would depend. As with the truth about pricing (where it isn’t really about the price) – it’s not about the water and its temperature, it’s about everything leading up to the touch and temperature that matters. [15:52] Nerve endings are different than emotional touch and sensation. [17:13] Emotion and touch are very closely linked, and we form bonds with the way things feel. [17:42] TEAMWORK - Human contact is important to our development throughout our lives. [18:04] Touch has been shown to impact the overall effectiveness of teams. [19:01] Waitresses who touch the arm of a patron in a platonic way (whether they are male or female) have been shown to get more tips. [19:40] Providing comforting touch is part of who we are as humans and it impacts our relationships and how we do business. [19:52] Use touch with caution and make sure you are always incorporating appropriate touch. [20:32] Whether we realize it or not, the texture of the paper an item is printed on says a lot to our subconscious about the business as a whole. [21:47] That first impression is everything and could be impacting every decision from that point forward. Invest in high quality materials that reflect your brand and message. [22:38] If you want to show you are out of the box there are many options – I have gotten wooden and metal business cards and they definitely say something about the person who gives them to me. [22:54] Think about everything that is physically touched. They all say something about your brand. [23:54] Merely touching an item greatly increases the ownership over that item. [24:29] Our brains want us to reach out and touch things. [25:28] Smart companies know that touch increases purchases. [25:58] Far too many stores neglect the power of the dressing room with poorly-lit, messy dressing rooms. [26:34] A personal shopper is a very easy way to experience the clothing and decide what you like. People would buy more if every store experience was like this. [28:04] Advice from What Not to Wear. Color, pattern, texture, and shine should be incorporated into every outfit. [28:21] Texture matters because we can see what something might feel like with our eyes. This creates visual interest and appeal. [29:51] Similar to the paper you print things on, texture and the power of touch are actually a big influence on how people perceive you…even if they will never touch your outfit. [30:24] We can emotionally “feel” something with our eyes, and it helps us to make decisions about the person in front of us. [30:39] The feel of a piece makes a big impact on purchase behavior. [31:28] Think about your packaging also. [31:54] The power of touch without touch - the benefits of envisioning yourself touching an object or an image of an object. [33:31] Well-chosen words can make your brain trigger its texture centers so you are responding as if you were touching it – triggering perceived ownership, loss aversion, and an increased likelihood of buying. [33:48] The truth of the matter is this – touch – whether it is actually happening in your hands or simply in your mind, impacts sales. [35:24] BRAND - Brands need to think about the way they make people feel and how that ties in with their overall experience. [36:00] The materials you choose for everything you do – from physical products to chairs in the lobby and business cards, postcards and letterhead all impact the perception (and likelihood of buying). [36:58] All the senses are impacting our lives much more than we realize. 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. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 23. Behavioral Economics Foundations: Reciprocity Episode 2. The Top 5 Wording Mistakes Businesses Make Episode 5. The Truth About Pricing Episode 9. Behavioral Economics Foundations: Loss Aversion The Science of Touching and Feeling | David Linden | TEDxUNC Grinch's Heart Grows Sense of Touch Episode 12. Behavioral Economics Foundations: Relativity New Study: When NBA Players Touch Teammates More, They and Their Teams Play Better Tactile Communication, Cooperation, and Performance: An Ethological Study of the NBA The Effect of Mere Touch on Perceived Ownership Episode 21. Behavioral Economics Foundations: Habits Visual Perception of Texture of Textiles The Effect of Mere Touch on Perceived Ownership

We have already covered the sense of sight, smell, and taste. Today’s behavioral economics podcast is all about the sense of hearing and sound. As a vocalist, avid music lover and podcaster, sound and the sense of hearing is very near and dear my heart. I talk about the basics of hearing and how the brain interprets signals from the ear. Then we move on to sounds, and the signals that sounds can send to our brains. Similar to the sense of smell, sound can have a huge impact on what the brain perceives. I share some fun studies and articles that involve music, pop culture, branding, and I even play some some branding sounds for you to guess. As always, everything ties back to how you can use sounds to make your business more appealing to your target market. CLICK THE IMAGE FOR YOUR FREE DOWNLOAD! Show Notes [04:48] Sound is basically just air. It hits the outside of our ears, which help to determine where a sound is coming from as sound waves bounce off of them. [05:00] The ear canal then works like an amplifier on the way to the eardrum. [05:12] The eardrum works like a physical drum by turning the air that hits it into a physical vibration which pass along to the tiny bones of the inner ear. [05:28] This causes the fluid of the inner ear to slosh around, stimulating tiny “hairs’ in the ear which move molecules around and send signals to the brain to be interpreted as sound. [05:43] This is also what controls equilibrium and allows you to stand up and know the difference between what’s up and down. [06:12] The cochlea translates sounds into electrical pulses and sends them to our brain. [07:09] Vibration of sound waves is at the core of sound and what we hear. [07:49] Your body takes in a stimulus that needs to be interpreted by the brain to actually mean anything to you. [08:27] Hearing has a similar ability to distract and take over everything the same way that smell does. [08:49] A good smell can flag your brain in a positive way, and a bad smell can do the opposite. [09:48] Sound has a similar impact on our ability to perform. [11:48] Music is amazing and powerful. [12:30] Every culture on Earth has been found to have some type of musical component. [13:18] We truly are uniquely able to understand and create music and it impacts more than just our ears. [13:41] Studies have shown that our bodies physically react to music in amazing ways. A quick tempo in a song will make our hearts beat faster. [14:03] The body actually changes when music is played, which is pretty amazing. If you want to get pumped up before an important call – choose a great song. [14:37] The easiest way to turn any sound into music is to repeat it. [15:20] Our brains love repetition. Familiarity is favored and music is all about repeating. [15:51] Music impacts our brains differently than words and it can actually help people to heal. [16:49] Studies have shown that restaurants playing faster music can turn more clientele than those who play slower music. [17:39] Understanding how you make money can make it easy to pull the right levers. [18:51] Studies have shown that stores need to carefully select music that matches the brand to encourage shoppers to stay in a store longer. [19:18] Locations that played music that was a better fit increased time in a store by 22 minutes! [19:51] The emotion of the music can impact the way the consumer feels about the brand they are interacting with. [20:42] Everything leading up to the sale or conversation or price or item being sold matters more than the price or item itself. Everything matters. [21:13] JINGLES: Sounds have a strong connection to memory, emotion and behavior and jingles associate brands into our brains in a different way than images or words alone. [24:02] Sounds make or break movies. They say if you are ever watching a movie and get too scared to put it on mute. It completely changes the experience. [25:28] People truly can hear whether you're smiling or not (even if they can’t see you), and it makes a difference with how they interact with you. [26:17] The study I have linked to found that the way a number is sounded out can impact the way the price is perceived – as being big or small – more than the mere number does alone. They did this by testing out the way words are formed – vowels and consonants to determine what is a “big” sound versus a small sound. [28:05] This study found that “bigger” associations in the phonetics translated to a bigger price in the brain. 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. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 26. Behavioral Economics Foundations: The Sense of Taste How Do We Hear? Hearing & Balance: Crash Course A&P #17 Episode 5. The Truth About Pricing Episode 6. How To Sell From The Stage Episode 7. Change Management (It’s Still Not About The Cookie) Episode 8. What is Value? Beats by Dre goes ‘Above the Noise’ with Olympic athletes in latest campaign Beats by Dre x Colin Kaepernick Hear What You Want Commercial Explained Ed Sheeran - Shape Of You - Loop Pedal Version Atmospherics as a Marketing Tool The Effects of Background Music on Consumer Responses in a High-end Supermarket The Impact of Music on Consumers' Reactions to Waiting for Services Episode 18. Behavioral Economics Foundations: Priming 10 Iconic Horror Theme Songs Are Emotionally Different with a Major Key Change Mrs Doubtfire Recut as a Horror Movie The Shining (happy version) Small Sounds, Big Deals: Phonetic Symbolism Effects in Pricing

Today marks the halfway point in our series on the five senses – we have already talked about sight and smell…and today we are digging into taste. Smell and taste are closely linked so be sure and listen to last week's episode about the sense of smell. Both taste and smell use chemical receptors to the brain, and are our more primitive senses. Smell is directly tied to the emotional center of the brain and also closely bonded to our memories. Taste is not as strong in that department, but it still has more of a link than some of the other senses. In this episode, I talk about parts of the sense of smell that are closely tied to taste. We dig into mirror neurons for the first time. In case you don't know, I explain what anosmia is and tie everything into ways to increase and improve your business. Show Notes [09:25] Smell and taste are closely linked together. Both use chemical receptors in the brain and are more primitive senses. [09:50] Taste and smell are closely linked (unless you have anosmia a condition where someone loses their sense of smell). [11:02] People who lose their sense of smell also lose the majority of their sense of taste. Why? Because taste is actually 80% smell! [11:53] Your olfactory bulbs are bringing in the molecules that help you distinguish between all those scents to help you have a better sense of what you are tasting (and tying that to memories and emotions). [12:41] Our tongue’s 10,000 taste buds can basically distinguish between a few categories of flavors – salty, sweet, sour, bitter and umami (which is sort of a savory flavor). [13:11] The tongue’s taste receptors basically know if something is salty or sweet, but can’t tell the difference between the flavor of a tortilla chip or a pickle. The nose is required for that. [13:36] We can actually taste all flavors at any area on the tongue (and some of the rest of our mouth as well). [13:48] Taste is actually strongest around the edge of your tongue. [13:59] “Spicy” is not a taste - it is a pain receptor. [14:23] The little bumps you can SEE on your tongue are NOT your tastebuds! Those are called fungiform papillae and the taste buds are down between those bumps. [15:02] The tongue absorbs molecules from the foods we eat and sends a signal to the brain, which then determines what category it falls into. [16:25] MIRROR NEURONS These are basically what allow us to “feel” what others feel. [17:21] The story of how scientists accidentally discovered mirror neurons in a lab in 1991. [18:56] MIRROR NEURONS AND BRANDING [19:44] Cleaning products used to have the face of Mr. Yuck on them. [20:44] Using food and the sense of taste can quickly backfire on you because of mirror neurons. [22:06] If you ARE selling food – good news! You can trigger mirror neurons all the time and use them to your advantage. [22:28] Studies have shown that taste relies on all the other senses to create a full experience. [22:39] Sight is important. If you have ever watched a tasting challenge on the food network you know that being able to see the food makes a difference. The expectation of what is coming to them impacts the taste. [24:07] Some studies have shown that taste tests for orange juice varied based on color alone. [24:28] Think about eating a potato chip, or celery or popcorn. If you can’t hear the sound of chewing it – that satisfactory crunch – does it impact your perception of taste? You bet it does! [25:33] Touch includes the feel in your hands as well as texture and temperature. These all impact taste. [26:15] When it comes to taste – all the senses are involved because of the way they are processed in the brain. [26:31] Our brains get what they expect. [27:26] Don’t judge a book by its cover? Unfortunately, we do every day – which is one more reason brands matter. [30:37] We know taste is greatly impacted by all the senses. [31:32] When it comes to advertising the taste of something – incorporate all the senses if you can. [34:01] The words you choose, images, smells, flavors, sounds, and everything else matters. [34:52] Everything leading up to the interactions with your brand matters more than what you are selling, the price – and the taste if you have one. [35:11] So always, always be strategic and thoughtful in everything you do. 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. Links and Resources: Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 25. Behavioral Economics Foundations: The Sense of Smell Filene Laura Peterson on Instagram Copy That Pops Allison Melody on Instagram Food Heals Podcast on Instagram Business Bros Podcast on Instagram @BusinessBrosPod on Twitter 64: Unlock the Mystery: Behavioral Economics with Melina Palmer Bogdan Rosu Podcast with Melina Palmer of The Brainy Business Taste & Smell: Crash Course A&P #16 What is Taste? How does our sense of taste work? Confusing Tastes and Smells: How Odours can Influence the Perception of Sweet and Sour Tastes The Buying Brain: Secrets for Selling to the Subconscious Mind The Effects of Advertising Copy on Sensory Thoughts and Perceived Taste Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions Coke Won the Cola Wars Because Great Taste Takes More Than a Single Sip Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Episode 5. The Truth About Pricing Episode 18. Behavioral Economics Foundations: Priming