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Behaviouronomics

Behaviouronomics: A Few Data Biases

July 19, 2020

Paras Chopra, an Indian tech entrepreneur, runs a successful (bootstrapped and profitable) SaaS company with annual revenue of 20+ million dollars. Recently he shared his experience related to one of his products. He wrote —

In June, we ran a test on our homepage and while I was looking at conversion rate by segments, I noticed that users from Windows had a 400% higher signup rate for VWO free trial as compared to users using Mac OS X.

Now, that’s baffling and our team spent a good deal of time trying to understand why was that happening. Someone in marketing hypothesized that perhaps Mac OS X users have a better design aesthetic and our homepage wasn’t appealing to them. Was it true?

However, the first conclusions are often wrong, especially when you’re dealing with complex systems.

Consider the case of a stock market investor who goes to a newly opened Mall and sees a long queue in front of a fast-food chain. Being curious, he finds that the fast-food chain is owned by a quick-service restaurant brand that has issued new stocks in a recent IPO.
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Behaviouronomics: How to Actually Change Your Mind

June 30, 2020

In February this year, when it became clear that Covid19 was not just another seasonal flu to lose steam on its own and people started stocking masks, the world health organization (WHO) declared that masks were required only for health workers. Very soon WHO changed their opinion and said that those who were sick and had symptoms should don the mask and others don’t need the mask. And within a few weeks, WHO changed their statement again, recommending that everyone should wear masks.

This frequently changing stance invited a lot of flak from the people. Some even accused WHO of consciously misleading people to safeguard the interest of certain special people.

In our culture, we hold people accountable for being consistent in their opinions and actions. Especially from politicians, corporate executives and other leading figures.
[Read more…] about Behaviouronomics: How to Actually Change Your Mind

Behaviouronomics: Memory Bias

May 25, 2020

On October 12, 1980 Steve Titus, a restaurant manager in Seattle, was pulled over by a police officer. Titus was on his way home with his girlfriend.

The officer informed him that his car resembled a car that was driven earlier in the evening by a man who raped a female hitchhiker. So they took Titus’ picture and put it in a photo lineup which was later shown to the victim. She pointed to Titus’ photo and said, “That one’s the closest.”

Based on this, Titus was put on trial. In the court, the rape victim confirmed, “I’m absolutely positive that’s the man.” That was enough to convict him. The judge pronounced him guilty and sent him to prison.
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Behaviouronomics: Exponential Myopia

April 25, 2020

On March 24, in his address to the nation, when our Prime Minister Mr. Narendra Modi announced the 21-day nationwide lockdown, he drew the country’s attention to an alarming fact about the spread of coronavirus.

He informed us that it took more than two months for the number of coronavirus cases to go from zero to one lakh. But it took two weeks for the next one lakh cases. And then the subsequent one lakh cases came in less than one week.
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Behaviouronomics: Map Vs Territory

March 15, 2020

The puzzles underlying the fine-grained matrix of human behaviour is unfathomable. As you dig deeper, new surprises are waiting for you. I have been a student of behavioural economics for almost a decade but every time I think of myself as an old hand on the subject, I am reminded of my folly.

Cognitive errors are not like other errors which are usually a result of misplaced knowledge. Knowledge doesn’t cure a psychological bias. A cognitive bias is a systematic error in how we think, as opposed to a random error or one that’s merely caused by our ignorance.
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