The Surprising Truth About Economic Decision-Making: Why Your Logic Might be Flawed. Masterclass Part 5: Unlocking the Psychology of Customer Experience
Regarding Customer Experiences and the behavioral sciences, there is seldom only one thing happening at a time. There are usually a lot of things happening at once. This masterclass episode, the fifth in a series of eight, explores economic biases and how they create flaws in our decision-making logic.
For example, one key bias discussed is the Sunken Cost Fallacy, where people need help to walk away from investments, leading to subsequent mistakes. Loss Aversion is another bias explored, highlighting how we feel losses more acutely than gains. This bias influences behaviors like resisting salary reductions and preferring to face a potential layoff (where one would lose all their salary) because we can’t imagine losing any part of our present income.
The Endowment Effect, stemming from Loss Aversion, emphasizes how we overvalue items we perceive as our own, leading to decisions like overpricing sentimental possessions. It’s why grad students can’t bear to part with their gift in exchange for a gift of equal value. It’s also why economist Richard Thaler, University of Chicago, can now add “Nobel-prize-winning economist” in his bio.
Ultimately, these economic biases reveal that people aren't always logical, and irrational factors often influence our decision-making processes. In this episode, we discuss why and what you can do about it in your experience design.
In this episode, you will also learn the following:
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Strategies for recognizing and navigating economic biases in customer experience management.
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Examples of how these biases manifest in everyday situations, such as purchasing decisions and salary negotiations.
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The importance of understanding irrational decision-making in designing effective customer experiences.
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Practical steps for leveraging insights from economic biases to enhance customer interactions and outcomes.
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