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Iran’s status quo bias

What Behavioral Science Reveals About the Iran Debate

Of all the findings in behavioral science, the most significant may be “loss aversion,” the idea that people dislike losses a lot more than they like equivalent gains. Loss aversion can create big trouble for businesses and investors. And it can badly confuse political debate — as it seems to be doing in the current discussions of the nuclear deal with Iran. (Disclosure: My wife, Samantha Power, is the U.S. ambassador to the United Nations.) Here is a simple demonstration of the power of loss aversion: When a convenience store offers shoppers a five-cent bonus for bringing their own bags, they still don’t bother. But when the store charges five cents for each plastic bag it distributes, shoppers use a lot fewer of them. The prospect of loss concentrates the mind. ….[READ]

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How Machiavellians’ brains go into overdrive

The Neuroscience of Being a Selfish Jerk

If we’re being honest, most of us have at least some selfish aims – to make money, to win a promotion at work, and so on. But importantly, we pursue these goals while at the same time conforming to basic rules of decency. For example, if somebody helps us out, we’ll reciprocate, even if doing so costs us time or cash. Yet there is a minority of people out there who don’t play by these rules. These selfish individuals consider other people as mere tools to be leveraged in the pursuit of their aims. They think nothing of betrayal or backstabbing, and they basically believe everyone else is in it for themselves too. Psychologists call these people “Machiavellians,” and there’s a questionnaire that tests for this trait (one of the so-called “dark triad” of personality traits along with narcissism and psychopathy). ….[READ]

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Is brain imaging useless?

Brain imaging research is often wrong. This researcher wants to change that.

When neuroscientists stuck a dead salmon in an fMRI machine and watched its brain light up, they knew they had a problem. It wasn’t that there was a dead fish in their expensive imaging machine; they’d put it there on purpose, after all. It was that the medical device seemed to be giving these researchers impossible results. Dead fish should not have active brains.The researchers shared their findings in 2009 as a cautionary tale: If you don’t run the proper statistical tests on your neuroscience data, you can come up with any number of implausible conclusions — even emotional reactions from a dead fish. In the 1990s, neuroscientists started using the massive, round fMRI (or functional magnetic resonance imaging) machines to peer into their subjects’ brains. ….[READ]

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Are investors myopic?

The Short-Termism Myth

In recent years, it’s become a commonplace that American companies are too obsessed with the short term. In the heyday of Bell Labs and Xerox PARC, the argument goes, corporations had long time horizons and invested heavily in the future. But now investors care only about quarterly earnings and short-term stock prices, so companies skimp on R. & D. and waste hundreds of billions propping up their stock with share buybacks. This “tyranny of accountants” has damaged both the long-term prospects of companies and the U.S. economy as a whole. The latest public figure to embrace this diagnosis is Hillary Clinton. ….[READ]

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Menu with no prices

What Would You Pay for This Meal?

How often have you bought something you felt wasn’t worth the money? What if you could set the price? What factors would influence your number? For years, behavioral scientists have studied such questions. They often look at a model called P.W.Y.W. (Pay-what-you-want, that is.) The idea may seem like a consumer’s giddiest fantasy. But a real-life extreme version of the experiment unfolding at a restaurant in Montclair, N.J., is affirming the researchers’ predictions. It has been triggering a panoply of reactions — including anxiety, delight, incredulity, guilt and, yes, rampant opportunism. Zod Arifai, a local chef, is offering customers a menu with no prices for the month of August, encouraging them to order as many dishes as they’d like at his two side-by-side restaurants. When diners signal for the check, servers ask, “How much would you like to pay?” ….[READ]

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More information less attention

Economics of Information Overload: Thoughts from Herb Simon

I tend to think of information overload as a 21st century problem, but serious folks were talking about it almost 50 years ago. In an essay published in 1971, Herbert A, Simon (who would win the Nobel prize in economics in 1978) offered the insight that “a wealth of information creates a poverty of attention.” Simon’s 1971 essay on “Designing Organizations for an Information-Rich World” appears in a volume edited by Martin Greenberger called Computers, Communications, and the Public Interest Johns Hopkin Press, 1971, pp. 37-52). Here’s the context for Simon’s remark, and a few other thoughts from his essay and his comments in the panel conversation that followed that caught my eye ….[READ]

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How to apply neurosciences to marketing

Better Customer Engagement Through Neuroscience: Speaking with Roger Dooley

A self-described serial entrepreneur, Roger Dooley knows what it takes to make a business succeed, and he believes it starts with a deep understanding of the customer. He is the author of Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing and recently spoke with us about his work. You can read Part 1 of our conversation here. In Part 2, we discussed how the latest brain research can lead to new ways to understand and engage customers. he CX Report: What is neuromarketing? Roger Dooley: Different people have various definitions for neuromarketing, but to me it means any use of our understanding of how human brains work to do a better job of marketing. ….[READ]