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

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.

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]...

The physical representation of concepts is an important tool to use in your business. Things like colors and shapes can be recalled by our brains and associated with other non related things. This topic is really an amalgamation of other concepts, but it’s still a valuable tool to understand and use when communicating about your business. This episode gives examples of making concepts tangible, and their practical applications in business.

This topic is the last main concept from my research paper that I announced last week. I also gave tips on running experiments like: keep it small, be thoughtful, and test often. I am super excited about next week, because I’ll finally be sharing my study on on increasing savings behavior and its results.

And...speaking of exciting, the Brainy Pricing Course goes live Monday, September 9! Learn all about it and save with special discount codes below:

Pricing Course Workshop Bundle Save $100 with code BRAINY100OFF

Pricing Course Only Save $50 with code BRAINY50OFF

• [04:59] This isn't really a topic you can easily look up. It's more of an accepted premise. The physical representation of concepts is an amalgamation of various other concepts.
• [05:35] The brain works on associations.
• [07:47] Colors and shapes bring a physical presence that can be recalled easier than words. Your brain has been trained to recognize this physical representation of the concept of street signs (as explained here).
• [08:56] Logos are physical representations of the concept of a business.
• [09:27] The physical manifestation of the brand makes the business more real in your mind because there is a logo to relate to.
• [10:21] This is not exactly the same as anthropomorphism, which is when animals or objects are given human-like tendencies; it can be a similar concept because it helps you relate to the item in question.
• [10:52] Abstract concepts are everywhere in business, and they can easily cause miscommunication in conversations or messaging. Providing a physical reference point makes everything feel more real.
• [15:16] I did not want to get rid of my DVDs during a decluttering session. The reason why was because the physical, tangible, representation – the box and the item itself – was tied to my emotional center and triggered loss aversion.
• [16:06] Where could you inject physical form we're only concepts exist in your business today?
• [16:48] How Progressive took the concept of insurance and made it tangible.
• [18:41] When you take something from conceptual to tangible, it makes it easier for the brain to categorize, relate, and remember.
• [19:19] Pictures, logos, and icons make your business and its features feel real.
• [19:29] Physical representation can help remind you of associations that you have made previously or that are important to you.
• [19:56] Physical items are a constant reminder to your brain.
• [21:57] You can make physical items that remind people of your business without having your name plastered all over them, that will be subtle reminders of you and your business.
• [22:04] A strong brand is able to live through the lack of words and evoke feelings – they leave an impression even without their name.
• [23:31] What could your business do to be a constant association and reminder in the brains of your customers?
• [25:01] I share a credit union concept where the idea of using logos on items could have gone very wrong. Keep in mind that small associations matter.
• [25:53] For your business, consider the emotions you want to convey – the things you want people to think when they consider your brand. Or, when they might be most likely to need your brand. What can you provide that will help them and remind them of you?
• [27:10] You can also create visuals around what you want to do to help achieve your goals. What you surround yourself with has a HUGE impact on your approach to life, business and your success. This is priming in action.
• [27:32] I want to help you surround yourself with the right physical representation of the concepts you care about to help you be successful.

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.

In this episode of The Brainy Business podcast, Melina Palmer interviews Amy Porterfield, an esteemed author and host of the Online Marketing Made Easy podcast, who shares her journey from working with Tony Robbins to becoming a successful entrepreneur. Amy's insights on leaving a 9-to-5 job and starting a business emphasize the importance of embracing entrepreneurship for personal freedom and the ability to design a fulfilling professional life.

She advises aspiring entrepreneurs to have the courage to pursue their dreams, highlighting the initial challenges and the significance of experimentation and niche focus in the early stages of entrepreneurship. Amy's expertise in creating profitable digital courses and her emphasis on the value of an email list and scarcity marketing make this episode a must-listen for aspiring entrepreneurs seeking increased confidence and clarity in their pursuit of entrepreneurship. Her relatable experiences and actionable insights offer valuable guidance for those considering a career change and venturing into entrepreneurship.

In this episode, hear discussions about:

• Mastering the transition from a 9-to-5 job to entrepreneurship empowers you to pursue your passion and take control of your career.
• Strategically building an email list facilitates direct communication with your audience, fostering stronger connections and increasing business opportunities.
• Embracing the importance of scarcity marketing cultivates a sense of exclusivity, driving demand and urgency for your products or services.
• Focusing on a specific niche allows you to become an authority in your field, attracting a loyal customer base and standing out in a competitive market.
• Leveraging limited availability creates a sense of urgency, compelling customers to act swiftly and seize the opportunity, leading to increased sales and engagement.

00:00:00 - Introduction Melina introduces Amy Porterfield, author of Two Weeks Notice and host of the Online Marketing Made Easy podcast, and shares her excitement about having Amy as a guest on the show. 00:04:05 - Amy's Background and Transition to Entrepreneurship Amy shares her transition from working for Tony Robbins to becoming an entrepreneur. She highlights the challenges she faced in her first two years of business and emphasizes the importance of finding the courage to quit a 9-5 job. 00:07:02 - Upsides of Entrepreneurship Amy discusses the freedom and opportunities that come with entrepreneurship. She encourages individuals to pursue entrepreneurship if they feel unhappy in their current job, emphasizing the freedom and control that it offers. 00:10:11 - Evolution of Business Model Amy talks about the evolution of her business model, highlighting the importance of experimentation and finding what works. She emphasizes the need to pivot and make changes based on what feels right and resonates with the entrepreneur. 00:13:24 - Overcoming Trivial Obstacles Melina and Amy discuss the concept of Bike Shedding and Parkinson's Law of Triviality, emphasizing the tendency to procrastinate on trivial tasks. They encourage entrepreneurs to focus on the most important aspects of their business and avoid getting stuck on minor details. 00:14:19 - Avoiding Common Business Mistakes Amy advises against spending too much time on non-essential tasks such as perfecting a website or business card. She emphasizes the importance of making decisions and taking action to move forward in business. 00:15:23 - Overcoming Analysis Paralysis Amy highlights how spending excessive time on decisions like website templates is a way to stay safe, but it ultimately keeps individuals stuck. Taking action and making decisions is crucial for progress. 00:16:40 - Importance of Website Content Amy stresses the significance of key website pages, such as the about page and creating weekly original content. She advises against comparing one's early business stages to established businesses and emphasizes the need for consistency in content creation. 00:18:28 - Building an Email List Amy discusses the value of an email list, emphasizing its control and reliability compared to social media. She underscores the importance of promoting freebies and nurturing the email list as a priority in business growth. 00:26:29 - Consistency in Business Strategy Amy shares her successful strategy of launching the same product repeatedly until it performs exceptionally well. She highlights the importance of familiarity and repetition in marketing for success. 00:27:36 - The Evolution of Digital Course Academy Amy discusses the evolution of her product, Digital Course Academy, and how she has been launching it since 2019, with each launch getting better and bigger. She emphasizes the importance of improving marketing and program quality over time. 00:28:31 - Building Brand and Growing Email List Amy explains how launching the same...

A few weeks ago, I had the honor of being a speaker at Greenbook’s IIEX Behavior Conference, an amazing event that brings people together from around the world to talk about behavior and insights and so much more. My piece of this event was doing a live podcast interview with Dr. Ingrid Nieuwenhuis for the session called When Machine Learning Meets Neuroscience.

A couple of weeks ago, Sam Albert joined me to discuss AI and its role in behavioral science, and this conversation with Ingrid was so fantastic and really building on that. I was delighted when the team at Greenbook said I could share this conversation here with you on The Brainy Business. This is the exact audio from that conference, and if you want to see it in video form, it will be shared via my free global community, the BE Thoughtful Revolution when the episode airs.

• [00:06] In today’s episode I’m thrilled to introduce you to Dr. Ingrid Nieuwenhuis, head of science at Alpha.One.
• [00:56] My piece at Greenbook’s IIEX Behavior Conference was a live podcast interview with Dr. Ingrid Nieuwenhuis for the session called When Machine Learning Meets Neuroscience.
• [03:21] Ingrid shares about herself, her background in neuroscience, and what she does as head of science at Alpha.One. She is trained as a neuroscientist.
• [05:03] After a whole academic career, she joined a start-up company where she used similar techniques to measure consumers’ responses. Then she moved to New York and worked with the marketing department at Facebook. After ten years, she moved back to the Netherlands and joined Alpha.One.
• [07:49] Ingrid has done amazing work over her career.
• [09:12] Expoze.io is a technique based on deep learning.
• [09:54] Deep neural networks are networks that are based on the brain layers and instead of having to tell the network what the rules are. If you have a lot of data the network can figure out the rules itself. To train this network you need a lot of labeled data.
• [11:16] When you have this big data set where you have all this labeled data, you can actually get the network to create a heat map that is very similar to reality.
• [14:14] Branding is very important. In the long term, to build value you have to build your brand.
• [15:14] Building a brand and being able to communicate your brand in your packaging and ads is so essential for successful marketing and branding in general.
• [17:43] We are so wired for social interaction that our eyes are unconsciously drawn to faces and are attracted to them.
• [18:43] With small changes, you can really change how something is drawing attention.
• [19:48] They are currently building a product that is measuring brand value. They are focusing on getting measurements on brands.
• [21:34] Contrast is going to draw our attention.
• [23:02] There is always a balance between the story you want to tell, the emotion you want to create, and how you want to draw people in.
• [24:00] If your story has to build up and there is no brand in the first few seconds it is almost a wasted impression.
• [26:20] Really good creative agencies are able to integrate a brand into a story in a way that isn’t intrusive and the brand can really be the hero in the story.
• [28:25] You have to really work to create multi-disciplinary teams.
• [29:41] Statistics is an area that is so important and not always present in companies. So much of what we are currently doing is big data.
• [30:37] Be open to multi-disciplinary teams and realize that it helps. When you take the time, really good things automatically emerge and it becomes very fulfilling and rewarding for everyone.
• [32:38] There is so much we can learn from each other if we are just open to it.
• [32:55] Having a diverse team is really important in making sure you can think about as much as possible before you launch.
• [33:25] Often you need the input from all the areas to actually get it right.
• [34:18] Melina shares her closing thoughts.
• [35:35] Melina’s award-winning first book, What Your Customer Wants and Can’t Tell You is available on Amazon, Bookshop, Barnes & Noble, Book Depository, and Booktopia.

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...

In episode 381 of The Brainy Business podcast, Melina Palmer interviews Dr. Therese Huston, a cognitive scientist and author of Let's Talk: Make Effective Feedback Your Superpower. Therese's expertise in cognitive psychology and her personal experiences with feedback inspired her to provide insights into giving effective feedback in various contexts. She shares stories emphasizing the power dynamics and emotional impact of feedback, highlighting the need for thoughtfulness and empathy in delivering feedback.

The episode delves into the importance of specific feedback, regular evaluation, and the positive impact feedback can have on employee development. Therese's discussion on the three types of feedback that employees need—appreciation, coaching, and evaluation—provides a valuable framework for managers and leaders to improve employee growth and performance. Her emphasis on the significance of being specific about feedback type and offering regular evaluation aligns with the audience's goal of enhancing workplace feedback practices. The episode offers practical advice and actionable strategies, making it essential listening for managers and leaders seeking to improve their feedback delivery skills.

In this episode:

• Learn to deliver effective feedback for enhanced employee growth and performance.
• Understand the types of feedback crucial for driving employee development and success.
• Discover the significance of specific feedback in fostering employee improvement and motivation.
• Master the art of siding with individuals during feedback sessions for impactful communication.
• Explore the power of asking questions as a tool for guiding employees toward growth and proficiency.

00:00:00 - Introduction Dr. Therese Huston is introduced as a cognitive scientist and author of Let's Talk. She shares her background and experience as a writer and cognitive scientist, as well as her interest in giving effective feedback. 00:03:08 - The Importance of Good Feedback Therese shares a pivotal moment in her career where she received poorly delivered feedback, leading to her interest in helping others give better feedback. She highlights the impact of feedback on the receiver and the power dynamic between the giver and receiver of feedback. 00:10:25 - Impact of Framing and Setup Melina shares a personal story about receiving a vague and anxiety-inducing message from her boss, highlighting the importance of the framing and setup of feedback conversations. The discussion emphasizes the impact of small thoughtful gestures in feedback delivery. 00:12:29 - Types of Feedback Therese discusses the three types of feedback: appreciation, coaching, and evaluation, as outlined by Stone and Heen in their book Thanks for the Feedback. Each type of feedback is explained, focusing on the different purposes and challenges associated with giving each type. 00:14:03 - Evaluative Feedback The conversation delves into evaluative feedback, the least often given type of feedback, and its importance in letting employees know where they stand in terms of performance and impact. The challenges and significance of delivering evaluative feedback are highlighted. 00:14:30 - Employee Feedback Needs Therese discusses the three types of feedback employees need: appreciation, coaching, and evaluation. She emphasizes the importance of being specific about the type of feedback required. 00:16:39 - Asking for Feedback Therese provides advice on how managers can gauge the type of feedback employees want, suggesting open-ended questions and scheduling dedicated feedback sessions. 00:21:02 - Importance of Feedback Therese highlights the positive impact of giving employees feedback on where they stand relative to expectations, leading to career mentoring and a sense of reassurance. 00:24:40 - Me vs. We Strengths Therese introduces the concept of "me strengths" and "we strengths," emphasizing the importance of acknowledging both types of strengths in employees and providing opportunities for them to utilize these strengths. 00:27:00 - Acknowledging Impact Therese underlines the significance of acknowledging employees' "we strengths" and the impact they have on the team's performance, encouraging supervisors to provide support and recognition for these strengths. 00:27:37 - Recognizing Strengths Therese and Melina discuss the importance of acknowledging and recognizing both "me strengths" and "we strengths" in a team. They emphasize the value of asking team members about their strengths and how it can lead to a more empowered and supportive work environment. 00:28:21 - Uncovering Hidden Strengths Therese shares the idea of uncovering hidden "me strengths" in team members and how these strengths can potentially turn into "we strengths." She gives an example of someone who excels in persuading others, which is both a personal strength and a team strength. 00:31:08 - Siding wi...