Tag Archives: Behavioral Economics

Publications

How to unlock human potential by merging behavioral science and AI?

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Daeun Yoo and Jaewoo Joo. 2024. BI-CST: Behavioral Science-based Creativity Support Tool for Overcoming Design Fixation.. In Designing Interactive Systems Conference (DIS Companion ’24), July 01–05, 2024, IT University of Copenhagen, Denmark. ACM, New York, NY, USA, 5 pages.

Abstract

Design Fixation refers to the tendency to adhere to pre-existing ideas, which hinders innovative design solutions. This research explores the potential of LLM-powered Creativity Support Tools, the ’Behaviorally Informed Creativity Support Tool (BI-CST),’ to facilitate ideation and combat Design Fixation using ’Behavioral Science Theory.’ BI-CST assists in redefning problems and generating new ideas by presenting experimental fndings from Behavioral Sciences that challenge users’ initial concepts, thus providing a deeper understanding of real human behaviors. We will assign three groups to diferent conditions: one designing without generative AI support, one with open-ended generative AI (e.g., ChatGPT), and one using a model trained in behavioral science. We aim to compare the originality, practicality, and general quality of the designs to assess design fxation. This study addresses design fxation through an interdisciplinary approach combining design and behavioral science, aiming to expand users’ perspectives.

Keywords

creativity support tool, human AI collaboration, behavioral science, design fixation, generative AI

… Behavioral science, a sub field of psychology, aims to understand and predict people’s behaviors through scientific methods ranging from casual observation of daily life to systematic observation to minimize the effects of biases [22, 29]. Its research includes behavioral decision theory, which shows people’s heuristics and biases in judgment [9], and builds nudges that gently alter people’s decision making processes [27]. As this field targets problem-solving by understanding people’s psychology, efforts have been made to apply theories of behavioral science in the HCI field to change users’ behavior [13, 14, 19]. However, there has been limited research on incorporating behavioral science into Creativity Support to aid design processes. We assume that the scientific causal and systematic observational results about human behavior from behavioral science can serve as a ’nudge’ to assist users in gaining more diverse perspectives. (pg. 117)

… We hypothesize that participants using a non-behaviorally informed Creativity Support Tool (CST) in Condition B are likely to reinforce their existing heuristics, which could increase their design fixation. In contrast, participants in Condition C, who will be provided with behaviorally informed guidance, are expected to adopt new heuristics that help reduce their fixation on initial ideas. Specifically, we anticipate that the outputs in Condition A and Condition B will likely exhibit medium to high originality but may have low practicality. Conversely, outputs from Condition C are expected to show medium originality but high practicality, due to the application of evidence-based creative support derived from behavioral science research. (pg. 119)

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Take a deep dive into customer experience with a behavioral lens

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I recently gave a lecture at the California State University Long Beach (CSULB). Two professors at the Department of Design, Shelley Takahashi and Max Beach, invited me for their Duncan Anderson Design Lecture Series.

Through the years, the Duncan Anderson Design Lecture Series has invited top professionals to share their knowledge and experience with design students at CSULB. This coming year marks the expansion of that series to a bi-monthly event. Thanks to Cecelia Anderson-Malcolm and the Duncan Anderson Endowment, CSULB now has an ongoing design lecture series to rival those at private design schools. The CSULB Industrial Design Program is working closely with IDSA-LA, and its student chapters, to schedule an exciting line-up of speakers. Please let your chapter officers know of professionals you want to meet and hear at future events.

In this lecture, I introduced why designers have to adopt behavioral science to understand customer experience deeply. For instance, prospect theory neatly elucidates why once people have a single extraordinary experience, they can no longer revert to previously satisfactory mundane experiences. It is because the extraordinary experience can become a reference point, while the mundane experiences transform into sources of negative affect. Since loss looms larger than gain, people avoid mundane experiences.

Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263-292.

Abstract

This paper presents a critique of expected utility theory as a descriptive model of decision making under risk, and develops an alternative model, called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty. This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains and to risk seeking in choices involving sure losses. In addition, people generally discard components that are shared by all prospects under consideration. This tendency, called the isolation effect, leads to inconsistent preferences when the same choice is presented in different forms. An alternative theory of choice is developed, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights. The value function is normally concave for gains, commonly convex for losses, and is generally steeper for losses than for gains. Decision weights are generally lower than the corresponding probabilities, except in the range of low probabilities. Overweighting of low probabilities may contribute to the attractiveness of both insurance and gambling.

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Designers should borrow insights from behavioral economics

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Many design practitioners aim to enhance the beauty of an existing product or develop novel products and services. However, market does not always pay off their effort. Carefully designed products often fail to attract consumers. What should designers do to enhance sales?

One solution is to borrow insights from behavioral economics. Studies show that behavioral economics can increase the adoption rate of newly designed products because it overcomes consumer resistance.

I was once invited by Palermo University in Argentina to share findings about the commercial impact of behavioral economics in the context of design. I shared my experimental findings about three Korean companies.

(1) Samsung’s printer would sell more if its ugly version is placed next to it because joint evaluation helps consumers consider aesthetics importantly,

(2) LG’s Styler would sell more if the clock in the store presents time in analog not in digital because doing so encourages consumers to think abstractly and creatively to appreciate the value of something new, and

(3) SK Telecom’s AI speaker would be used more often if it has a human feature and viewed as a foreigner or child because people become more tolerant about the mistakes of the AI speaker.

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Behavioral Economics for Dummies

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Coming January 3rd to 6th of 2022, EBS Business Review will broadcast “Behavioral Economics for Dummies.”

The world-renowned bestseller book, Nudge, by Richard H. Thaler, winner of the 2017 Nobel Prize in Economics, is well known for its coverage of behavioral economics. The term nudge which has an idiomatic meaning of nudging with an elbow refers to guiding people’s choices through gentle intervention instead of compulsion or coercion. Different from normative economics and descriptive psychology, prescriptive behavioral economics intervenes and guides people’s choices by closing the gap between behavior and mind.

What is the hidden key of behavioral economics? You will learn its various cases which show the power that moves the world.

  • The secret of 99% adoption of organ donation (January 3rd)

As medical dramas suggest, hospitals need more organ doners. In order to solve the supply-demand problem of organ donation in Korea, a policy was implemented in 2007 which inserts a statement regarding donation into the driver’s license upon issuance or renewal. However, the survey result in 2018 showed that the actual number of those who wish to donate is only about 3%.

What about other countries? If we look into the organ donation rate in European countries in the early 2000s, Denmark had a rate of about 5%, Germany had a rate of about 12%. However, there are many other countries boasting a rate of 99%, such as Portugal and France. What is the secret behind these countries with a high donation rate? We will explore successful uses of behavioral economics that change people’s behavior.

  • Public institutions can be smarter (January 4th)
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In 2020, an experiment was conducted in US to find out how to increase the vaccination rate for the flu. As a result of sending 20 messages that encouraged people to get vaccinated, the most effective one was the combination of messages sent three days before vaccination saying “a flu vaccine is available for you” and one day before vaccination saying “a flu vaccine has been reserved for your appointment.” For those who received these messages, they made a promise to themselves to get vaccinated, resulting in an increased vaccination rate of about 5%.

Since behavioral economics brings great results with little cost, it is actively applied in many public institutions. Let’s listen to other cases of public policy which solve tough social problems.

  • When tech giants meet behavioral economics (January 5th)
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Marketing is a key area in which behavioral economics is actively applied. Various mechanisms can be used to target customers, which can lead to an increase in revenue and market share. Lyft, a ride-sharing company once conducted an experiment to encourage users to drive during peak demand times, Friday nights, instead of quiet mornings on Wednesdays.

They divided drivers into two groups randomly. One group was given information that their income would increase if they worked on Friday night. The other group was given information that their income would decrease if they did not work on Friday night. More people in the latter group chose to drive Friday night because people tended to avoid loss, helping Lyft mobilize the drivers’ behavior. What are the other special secrets of behavioral economics that change peoples’ choices and help companies increase profits?

  • Nudge yourself (January 6th)
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Self control is a process of paying the small pain in the present to obtain a greater gain in the future. But when the pain in the present is overwhelming to bear, people lose their motivation to control themselves. To solve this problem, we have to go beyond the present bias and go back to the past self.

Imagine that alarm wakes you up in the early morning. If you want to overcome the thought of having sleep for one more hour, you need to go back to the ‘me’ last night who set the alarm. To make a rational decision, you have to remember your own attitude of yesterday when getting up early eventually leads to a greater benefit than oversleep. We will introduce the secret of behavioral economics that makes a better ‘me’ based on deep understanding of human.

Jaewoo Joo is a field researcher who applies academic insights to solve real world problems. He received a Ph.D. in Marketing from the University of Toronto after obtaining a Bachelor degree and a Master degree from Seoul National University. Jaewoo is interested in developing customer experience by utilizing empathic design thinking and counter-intuitive behavioral economics. He is an associate professor of marketing and participating professor of experience design at Kookmin University.

References

Johnson, E. J., & Goldstein, D. (2003). Do defaults save lives? Science, 302(5649), 1338–1339.

Milkman, K. L., Patel, M. S., Gandhi, L., Graci, H. N., Gromet, D. M., Ho, H., … Duckworth, A. L. (2021). A megastudy of text-based nudges encouraging patients to get vaccinated at an upcoming doctor’s appointment. Proceedings of the National Academy of Sciences of the United States of America (Vol. 118).

Scheiber, N. (2017). How Uber uses psychological tricks to push its drivers’ buttons, The New York Times, April 2, https://www.nytimes.com/interactive/2017/04/02/technology/uber-drivers-psychological-tricks.html.

Soman, D., & Shi, M. (2003). Virtual progress: The effect of path characteristics on perceptions of progress and choice. Management Science, 49(9), 1229–1250.

Publications

I pay more because this is my game

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Li, Y., & Joo, J. (2023). The mediating effect of psychological ownership on the relationship between value co-creation and the in-app purchasing intention of mobile games players. Behavioral Sciences, 13 (3), 205.

Abstract

In previous research on in-app purchasing, one of the revenue sources for mobile games focuses on users’ unilateral relationships, such as their achievement, loyalty, and perception. However, little has been discussed about the commercial impact of the bilateral relationship. We extend discussions by examining an unprecedented issue, that is, the role of the bilateral relationships between users and mobile game companies in increasing in-app purchasing intention. We borrow from the business literature and psychology to hypothesize that when mobile game users co-create value with a mobile game company, their psychological ownership of the mobile game increases, which in turn increases their in-app purchasing intentions. To test this hypothesis, we conducted a carefully designed study by recruiting eighty-six Chinese game users. Half of the participants were exposed to an imaginary mobile game whose interface allowed them to co-create value with the mobile game company and the other half were exposed to an identical mobile game whose interface did not. We recruited participants from the two online platforms in which Chinese mobile game players gather—Weibo and WeChat Moment. Using SPSS 26, we conducted an independent samples test to test the effect of value co-creation and employed Hayes Model 4 to test whether psychological ownership mediated the relationship between value co-creation and in-app purchasing intention. We found that (1) when participants were allowed to co-create value, their in-app purchasing intentions increased, and (2) the relationship between value co-creation and in-app purchasing intention was mediated by psychological ownership. Our findings provide fresh insights for mobile game designers and marketers.

Keywords

value co-creation; psychological ownership; in-app purchasing; mobile game

Publications

How to write and when to send traffic-boosting mobile coupons?

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Chu, W., & Joo, J. (2024). Targeting effectiveness of mobile coupons: from exposure to purchase. Journal of Marketing Analytics, 12, 342-354.

Abstract

This research examines the effectiveness of traffic-boosting mobile coupons through a randomized field experiment of over half a million South Korean consumers. The research question analyzes the effectiveness of the content (six message types) and context (three days out of the week for coupon distribution) of mobile coupons on response-to-coupon, store visits, and purchase amount for a health and beauty retail chain. Big data on individual customers, gathered from a field experiment, was analyzed through bivariate probit, mediation analysis, and tobit regression. The results show that message content affects store visits, which was fully mediated through response-to-coupon. In particular, messages that “made the amount of discount salient” and “formed a personal connection” were more effective than other messages. In terms of context, messages sent during the weekdays were more effective in increasing store visit, than those sent during the weekend.

Keywords

Mobile promotion · Mobile coupon · Message content · Message context · Coupon distribution · Field experiment

Acknowledgements

We would like to express our deep gratitude to Hyojung Kim, Sul Namgoong, and Joongjae Lee at Shinhan Card for their assistance with the collection of our data.

Please see the case study in Korean language here

Publications

If people have to control themselves, avoid cuteness

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Yoon, N., Park, W., & Joo, J. (2022). Dark side of cuteness: Effect of whimsical cuteness on new product adoption. In G. Bruyns & H. Wei (Eds.), [ _ ] With Design: Reinventing Design Modes (pp. 617–633). Singapore: Springer.

Abstract

A wide range of businesses actively use cute characters such as the globally popular LINE FRIENDS characters for product design to increase consumers’ product adoption. Prior research has found that whimsical cuteness—which elicits fun and playful mental representations—can lead to higher product adoption. The effectiveness, however, has been investigated mostly in indulgent contexts. This article aims to uncover the opposite phenomenon, that is, whimsical cuteness could be detrimental for product adoption, in particular, in a non-indulgent context. In a pre-test, we measured the different types of cuteness of nine LINE FRIENDS characters, selecting one pair of characters differed only in terms of whimsical cuteness. Additionally considering product newness, the main study tested whether product adoption differed depending on the level of whimsical cuteness and product newness. The results demonstrate that participants were less likely to adopt a non-indulgent product when it was highly whimsically cute compared to less whimsically cute because the indulgence provoked by fun and playful mental representations conflicted against the restraint reinforced by a product for self-control. The adverse effect increases when the product has lower product newness whereas high product newness dampens the effect. The findings suggest that practitioners should carefully consider product nature and newness when applying whimsically cute features to product design and marketing promotions. This study has originality in that it is the first to demonstrate the adverse effect of whimsical cuteness on new product adoption and verify the moderating effect of product newness.

Keywords

Whimsical cuteness, New product adoption, Product newness, Self-control, LINE FRIENDS

The key practical significance is that a product design which makes products seem whimsically cute has potentially detrimental effects on consumers’ product adoption, especially when the products are non-indulgent. Although nudge is an interesting lens for designers (Chen et al. 2019), our finding suggests that whimsical cuteness can have counter-nudging effects (Saghai 2013; Sunstein 2017) that make consumers not to adopt self-control products, contrary to the expectation of designers and marketers. For instance, cute characters with high whimsical cuteness might in fact hinder consumers’ adoption of products for self-control such as diet foods and time and study management products. Thus, practitioners should beware of using whimsically cute characters on products related to self-control (pg. 629).

Publications

Play a video game and meet a psychiatrist

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Piao, S., & Joo, J. (2022). A Behavioral Strategy to Nudge Young Adults to Adopt In‐Person Counseling: Gamification. In G. Bruyns & H. Wei (Eds.), [ _ ] With Design: Reinventing Design Modes (pp. 1348–1363). Singapore: Springer.

Abstract

Mental illness has always been an important issue for young adults. Moreover, initiatives resulting from the outbreak of COVID‐19 have had an even greater impact on the mental health of young adults. This study sought to examine the effect of gamification on whether young adults adopt in‐person counseling. One hundred twenty young adults (42 males and 78 females) with an average age of 29 years participated in our experiment. In the experiment, a 2 (Gamification: no vs. yes) × 2 (Vividness: low vs. high) between‐subjects design was employed. In the “yes” gamification condition, participants decided whether or not to read introductory material about in‐person counseling, and also whether or not to adopt in‐person counseling in the future. The results of the study show that: (1) gamification increased adoption, (2) participants’ perception of subjective usability of in‐person counseling mediated the effect of gamification to adoption, and (3) vividness of presentation moderated subjective usability. Our study demonstrated that gamification nudges young adults to adopt in‐person counseling while subjective usability mediates the relationship, and vividness moderates the relationship between gamification and subjective usability. Our findings provide counselors fresh insights into motivating people to access counseling services.

Keywords

Gamification, Adoption, Usability, Vividness, Counselling

“… gamification has the primary purpose of promoting human motivation and performance in a particular activity. The importance of gamification has been thoroughly discussed theoretically and practically in an increasing number of research studies for health professions education (Van Nuland et al. 2015; Verkuyl et al. 2017;Buttetal. 2018). Ourexperimental study found that gamification does have a positive effect on people adopting in-person counselling” (pg. 1360).

Publications

Bundling smart products better by considering consumers’ goals

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Abstract

Contemporary electronic manufacturers struggle with how to develop attractive bundles by combining their existing smart products. In the present work, we propose Goal Based Bundling (GBB) by drawing on the academic research of goal systems theory (Kruglanski et al., 2018) and shed light on two previously ignored aspects of bundling strategy: service and glue product. We applied our GBB to a collaborative project with Samsung Electronics, whose goal was to develop new product bundles for kids by combining multiple smart home products. We constructed a framework of Samsung Electronics’ smart products and then visualized it on its sales website. A UI design conveying the value of smart products bundle was developed based on GBB structure. We discuss the process and the result of our project to provide insights into the product managers who combine existing smart products to develop a bundle.

Keywords

Product bundle; Smart products; Goal systems theory; Service; Glue product; Samsung Electronics

“Although bundling tactics are frequently called upon in business, marketing research on product bundles is surprisingly sparse (Russell et al., 1999). This paper represents an attempt to identify bundling smart products by borrowing the key concepts from the Goal Systems Theory (Kruglanski et al., 2018). We posit that constructing a products bundle following a hierarchical goal structure overcomes the limitation of combining categorically dissimilar products. Moreover, it addresses an important role of service in smart product bundling.” (pg. 2898)

Publications

How could we encourage young people to meet psychiatrists?

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Piao, S., & Joo, J. (2022). A behavioral strategy to nudge young adults to adopt in-person counseling: Gamification. Behavioral Sciences, 12(2), 40.

Abstract

Mental illness has always been an important issue for young adults. Moreover, initiatives resulting from the outbreak of COVID‐19 have had an even greater impact on the mental health of young adults. This study sought to examine the effect of gamification on whether young adults adopt in‐person counseling. One hundred twenty young adults (42 males and 78 females) with an average age of 29 years participated in our experiment. In the experiment, a 2 (Gamification: no vs. yes) × 2 (Vividness: low vs. high) between‐subjects design was employed. In the “yes” gamification condition, participants decided whether or not to read introductory material about in‐person counseling, and also whether or not to adopt in‐person counseling in the future. The results of the study show that: (1) gamification increased adoption, (2) participants’ perception of subjective usability of in‐person counseling mediated the effect of gamification to adoption, and (3) vividness of presentation moderated subjective usability. Our study demonstrated that gamification nudges young adults to adopt in‐person counseling while subjective usability mediates the relationship, and vividness moderates the relationship between gamification and subjective usability. Our findings provide counselors fresh insights into motivating people to access counseling services.

Keywords

gamification; adoption; usability; vividness; counseling; nudge