Prime Decision is a marketing strategy firm that uses behavioural economics. Behavioural economics studies actual human behaviour and decision-making, rather than the rational "homo economicus" model. People are bad at judging probabilities but good at frequencies. Behavioural economists have discovered many cognitive biases that influence decisions, such as framing effects, availability heuristic, and defaults. Prime Decision applies these insights to problems by developing behavioural strategies and experiments. Their approach targets specific behaviours, interrogates the problem through lenses like script, social and structure, then experiments to find effective interventions. They gave an example of reducing insurance fraud through subtle changes to the claims process designed to promote honesty.

1. 02/10/2013
Copyright © 2013 PrimeDecisionCopyright © 2013 PrimeDecision
Behavioural Economics
Natalie Horne
Strategy Director, Prime Decision
natalie.horne@prime-decision.com
prime-decision.com | @natalie_horne

2. Who is Prime Decision?
Marketing strategy with a behavioural edge

3. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
What is Behavioural Economics?

5. homo economicus

6. Optimal,
Normative
Realistic,
Descriptive

7. Get ready!

8. Which is the best option?
a. 40% chance of winning £22.50
b. 5% chance of winning £180.00
c. 65% chance of winning £15.40
d. 25% chance of winning £36.00
e. 80% chance of winning £11.25

9. a. 40% chance of winning £22.50 £9
b. 5% chance of winning £180.00 £9
c. 65% chance of winning £15.40 £10
d. 25% chance of winning £36.00 £9
e. 80% chance of winning £11.25 £9
Correct =

10. Get ready!

12. More wins
or losses?

13. More wins
or losses?
X 4
X 6

14. What did behavioural economists discover?
 We are bad at judging probabilities
 We are good at judging frequencies
+ many other patterns

15.  Primacy effect
 Defaults
 Endowment effect
 Framing
 Availability heuristic
 Social norms/approval
 Anchors
 Priming
 Commitment devices
 Hyperbolic discounting
Codifying human tendencies

16. Availability heuristic

17. Framing effects
 Web subscription $59
 Print plus web $125
 Web subscription $59
 Print only $125
 Print plus web $125
52%
increase
68%
32%
16%
0%
84%

18. Priming

19.  Primacy effect
 Defaults
 Endowment effect
 Framing
 Availability heuristic
 Social norms/approval
 Anchors
 Priming
 Commitment devices
 Hyperbolic discounting
Codifying human tendencies

20. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Applied BE

21. A creative approach
to solving problems
Behavioural science:
Strategy Tactics

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Prosecute
criminals
Raise
premiums
Typical approach:

23. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Target behaviour:
Get people to be more honest during
the claim processes

24. Depletion
Moral
reminders
Format
Proximity
Supervision

25. Experiment: Easter Bonus
I recognise that I have moral obligation to complete this task honestly.
0%
1%
2%
3%
4%
5%
6%
7%
8%
Control Opportunity Honesty
Pledge
75%
decrease in
high claims
95%
Decrease in
maximum
claims

26. Potential to scale
 What would an insurance process look like that was
designed to promote honesty?
Claims process
Marketing touch-points
Customer communications
There is a tremendous scope to apply psychological insights to reduce fraud

27. The Seven Lenses
Script
SocialStory
Sync
Sense Scenario
Structure
Our proprietary framework

28. Story:
 What do people say?
 What do they not say?
 How do they justify
their choices?
Script:
 What are the habits?
 How could these be
strengthened/ disrupted?
 Which other scripts could
be mimicked/leveraged?
Social:
 What are others doing?
 Are they aware of this?
 What form does/could
this awareness take?
Sense:
 What are the stimuli?
 How/are they perceived?
 How does this affect their
experience/choices?
Structure:
 Which choices are
presented?
 How are they framed?
 What is the rationale for
the order/defaults?
Scenario:
 Which external or
emotional/personal
factors could feature?
 Is there scope to
modify/personalise?
Sync:
 What are our own biases?
 Have we tested our
assumptions? Have we
missed alternative contexts?
Questions to ask:
Script
SocialStory
Sync
Sense Scenario
Structure

29. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Typical approach:
drive
more
traffic

30. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Target behaviour:
Get (more) people to donate (more)
during the online booking process

31. Script
SocialStory
Sync
Sense Scenario
Structure
“Just £1”

32. In summary:

33. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Define target behaviours
(measurable actions in specific contexts)
#1

34. Interrogate
(hypothesise, prioritise)
#2
Script
SocialStory
Sync
Sense Scenario
Structure

35. Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision
Experiment!
#3

36. 02/10/2013
Copyright © 2013 PrimeDecisionCopyright © 2013 PrimeDecision
Get in touch
Natalie Horne
Strategy Director
natalie.horne@prime-decision.com
prime-decision.com
@natalie_horne