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Digital psychology is increasingly influencing digital strategy.

I'm not going to define what digital psychology means here, though there is an academic discipline of cyber psychology.

But let's take a look at some experiements in decision theory that can be applied to marketing online.

These examples are taken from Peter Ayton, Associate Dean Research at City University London, an expert in decision theory, or why we make the choices we do. You can see the whole presentation on SlideShare.

Peter was speaking at a Reading Room event discussing the role of Digital Psychology.

Determination of value is contextual

People don’t know what they want if you ask them. They decide what they want after reviewing context. Comparative evaluation is easier.

How would you feel if you were given this ice cream? A bit disappointed?

What about this ice cream? Happier?

Below you can see the prices people said they would pay for each ice cream, both in isolation and in tandem.

Christopher Hsee is the Theodore O. Yntema Professor of Behavioral Science and Marketing at the University of Chicago Booth School of Business.

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Willingness to pay (WTP) can also be shown to differ depending on context in the experiment below using dictionaries.

The slightly torn dictionary with 20,000 entries was valued $7 higher when offered with the smaller tome.

Chris Hsee who conducted the study comments thus:

To say that an attribute is hard to evaluate…means that people do not know whether a given value on that attribute is good or bad…

See more about pricing models on the Econsultancy blog.

How you pose a question makes a difference

Shafir conducted an experiment in 1993 where he asked people:

Imagine that you serve on a jury of an only-child sole-custody case following a messy divorce. To which parent would you award sole custody of the child?

Parent A

  • Average income
  • Average health
  • Average working hours
  • Reasonable rapport with the child
  • Relatively stable social life

Parent B

  • Above average income
  • Very close relationship with the child
  • Extremely active social life
  • Lots of work-related travel
  • Minor health problems

The question is then rephrased and asked to another sample set, this time:

To which parent would you deny sole custody of the child?

Shafir determined that people are looking for preferences they can justify.

The compromise effect

This is quite a well known phenomenon. Simonson in 1989 said that:

Items can gain market share when new options are added to the market when they become the compromise or middle option in the choice set.

This is the classic idea that diners will not order the cheapest or most expensive bottle of wine.

Attraction effect

Introducing an inferior or decoy item will make a second option seem superior.

In this example from the Economist, the print subscription is the decoy. It’s more scientifically known as asymmetric dominance.

Values are influenced by reference points.

Beliefs are constructed

How happy are you with your life in general?

How many dates did you go have last month?

The answers to these questions differ, depending on the order you ask them. Ask the dating question first and the answers to the two questions are more strongly correlative (0.66 compared to 0.12) i.e. many dates, very happy.

Ben Davis

Published 14 July, 2014 by Ben Davis @ Econsultancy

Ben Davis is a senior writer at Econsultancy. He lives in Manchester. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

780 more posts from this author

Comments (5)

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Ryan Webb

Interesting post Ben - there must be room for plenty more on this topic? Plus I am sure there is significant cross over with Behavioural Economics. How would you distinguish between "Digital Psychology" and "Behavioural Economics"?

about 2 years ago

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Lisa Mayer

Christopher Hsee should get a reference that he is the Theodore O. Yntema Professor of Behavioral Science and Marketing at the U of C Booth School of Business

about 2 years ago

Ben Davis

Ben Davis, Senior Writer at EconsultancyStaff

@Lisa

Thanks. Added in.

@Ryan

TBH I think digital psychology doesn't really mean anything. You're right (I think) that this is just behavioural science.

The cyber psychology discipline is the one that relates specifically to interactions with computers, and Dr Jens Binder of Nottingham Trent is a good man to seek out. He spoke at the Reading Room event also.

about 2 years ago

Pete Austin

Pete Austin, CTO at Fresh Relevance

Takes me back to my days at Uni.

It's very important to realize that these examples - like most you'll see on psychology courses - are about simple decisions taken in isolation.

(1) In contrast, the online purchasing environment is quite open and customers will often supplement your marketing with their own research - either on competitor sites or by reading reviews.

(2) Also it's rare that people will be buying a product like a dictionary or an ice-cream for the first time. So if you try to bias the way they assess value - as in the examples - most will have many other example products to compare against, not just those you intend.

So I'd expect these tactics to be significantly less effective.

about 2 years ago

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Vivek

The products in comparison may be presented together or they can be referenced.

If you compare your product with the more popular variant then though the product is not physically present but us compared with it's perceived or preconceived value.

Thus whenever you are buying a burger you inadvertently will compare with McBurger.

Further, if you have decided to buy at the new place the the options influence your behaviour and thus the purchase.

about 2 years ago

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