How to incorporate behavioural insights at the macro level

More Kirk than Spock

Cab drivers have good days and bad days, depending on the weather or special events such as a convention. If they were rational, they would work hardest on the good days (to maximise their take) but give up early when fares are few and far between. In fact, they do the opposite. It seems they have a mental target for their desired daily income and they work long enough to reach it, even though that means working longer on slow days and going home early when fares are plentiful. Human beings are not always logical. We treat windfall gains differently from our monthly salary. We value things that we already own more highly than equivalent things we could easily buy. Our responses to questions depends very much on how the issue is framed: we think surcharges on credit-card payments are unfair, but believe a discount for paying with cash is reasonable. ….[READ]

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