Behavioral Economics and Social Games
description
Transcript of Behavioral Economics and Social Games
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Behavioral Economics and Social Games
Behavioral Economics and Social Games
Playdom Business Intelligence Team
Dave Botkin Elena Rykhlevskaia
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Agenda• How does brain make $$ decisions• Behavioral economics principles to:• Help customers understand their preferences• Price virtual goods• Influence purchase decisions
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Your money and your brain
We all look the same in an MRI machine
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Your brain knows your decision before you know it
Nucleus accumbens Prefrontal cortex
Anterior insula
• Gain prediction
• Loss prediction • Strategic reasoning + execution
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Brain activation predicts your decision to purchase
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How do we decide?
Reason guides soul to truth Intelligent intuition
Reason vs. emotions
Reason + emotions
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Rational + Emotional = Decision
Ames room: heuristics cause a mistake
• Emotions are a decision making resource • Fast• Help with complex choices
• Emotions can misguide us• Heuristics / biases
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Helping game players make a decision
• How do you help them discover their preferences?
• How do you price virtual goods?
• How do you influence users to buy?
Know what they want
Know what they are willing to pay
Inspire immediate actionGain
prediction
Reasoning & execution
Loss prediction
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Help customers find what they want
• Efficiency• Aesthetics
Different customers value different things. E.g.:
• Financial gain/loss optimization
• Time• Revenge & competition
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Revenge and competition
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Saving time
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Efficiency seekers choose best alternatives
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Which one would you choose?
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Efficiency seeker’s city
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Decorator’s city
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Aesthetes / Decorators chose things they “like”
• Don’t know own preferences that well
• Context matters
• Rely on reference points to understand own preferences
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We do not know our preferences well
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Which sweetheart would you buy?
$32,000 $30,000
STEVE THE COMEDIAN
$32,000
MOST FUN
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Context matters• Online only - $59.00• Online + print - $125.00• Print only - $125.00
0%10%20%30%40%50%60%70%80%90%
Online Online + Print Print Only
Perc
enta
ge
Online Online+Print Print Only
Perc
ent s
ales
3 options2 options
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Financial gain/loss optimizationDeals, discounts and bundles
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Increasing perceived value• Good things cost more $$$
• Brain pleasure centers light up to pricier goods
• Expensive drugs work better
• Lower priced items assumed to be of lower value
• Good things are wanted by everyone else
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Pricing
• Coherent arbitrariness - there is no “right” price in a consumer’s mind
How much are customers willing to pay?
• Anchoring and reference – people use nearby comparison and adjustment
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How do we infer value?
$279 $429
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Anchoring
Would attend if paidWould pay to attend
59%
3%Willi
ng to
atte
nd a
po
etry
read
ing
35%
8%
Would attend for free
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Default option provides an anchor
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Conversion• Avoid choice overload
• Minimize perceived loss with respect to gain
• Use weapons of influence
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Avoid choice overload
0%
5%
10%
15%
20%
25%
30%
35%
6 Jams 24 Jams
Percentage Purchasing Jams% customers who purchased jam
jam variety offered for tasting
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What would you change in this store front to help customer decide?
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Minimize perceived loss with respect to gain• Loss aversion:
Losses are 3X more painful than gains are pleasurable
• Paid contract spoilage recovery vs. instant completion: 3x more users opt in
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Loss aversion
KEEP
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Influence ammo: Social referencing
Validation Scarcity Conformity
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Influence ammo:Reciprocity
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Recap
Know what your customers want
Know what they are willing to pay
Inspire immediate action
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Resources
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• Treat virtual goods as retail and consumer products• Reference successful retail practices outside of the social gaming space• Research psychology of consumption
• Framing and presentation• Optimize number of choices• Experiment with context• Make some options “pop”
• Techniques for suggesting a price• Anchoring, reference points• Try charging 2X more
Things to try today
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Thanks!