CCI fellows are constantly adding to the knowledge about customer behavior and trends. The CCI Insights Review synthesizes their research and makes it accessible to the broader marketing community for real-world application.
Posts categorized "Behavioral Economics"
We are different people in the future. You lie down at night and silently promise to breakfast on yogurt and fruit. The next morning, fork in hand, future-you is eating eggs and bacon. Perhaps you established a strict monthly budget to save for retirement. But wouldn’t current-you rather spring for a last-minute vacation with friends?
The inconsistency of preferences over time is often explained through hyperbolic discounting—an intuitively compelling idea to anyone who has ever opted for the snooze button. In short, because people favor the present over the future, long-term goals rarely stand up to daily whims. So compelling is the theory, and so elegantly descriptive of reality, that hyperbolic discounting has started to gain footing as a basic characteristic of human nature. In the words of Robert Frank, Professor of Economics at Cornell University, it is “apparently part of the hard-wiring of most animal nervous systems.”Read More
If a sales agent gets paid the same amount of money, does it really matter whether he gets paid quarterly or annually? Will different incentive schemes with a similar final payoff elicit different levels of performance? Though logic says no, new research on sales compensation found that the design of incentive schemes does matter. Agents work harder under some salary structures than they will under others. The fact is that the way in which money is paid out motivates people in different ways.Read More
Common sense would suggest the following: if you take two objects and differentiate one from the other, then, by definition, they will appear to be more different than they were before, not more similar. Common sense, of course, also once suggested that the sun orbited earth. A fascinating series of experiments out of the Yale Center for Customer Insights found that our perceptions of similarity are more complicated than common sense—and decades-old academic modeling—suggests.Read More
So often, our New Year’s resolutions start with a bang, a kind of forceful reinvention that loses momentum month by month. Better diet, more exercise, greater economy—these drift from reality to something more wishful. So it goes. Consistently making the right choices is hard work, and research out of Yale’s Center for Customer Insights helps to explain why.Read More
The last time you bought a pound of ground beef, you sacrificed more than just a few dollars out of your wallet. You also surrendered your ability to use those few dollars towards any other purchases, from a cup of coffee, to a newspaper, to a tiny fraction of a new BMW. Economists call these sacrifices “opportunity costs”.Read More
The arrival of spring has us cleaning out closets and deciding what we should keep, and what we can toss: The DVDs, clothes, and books from our loved ones. The equal (or likely larger) mound of knickknacks from charities, in thanks for a contribution, in subtle request for the next.Read More
Americans today suffer from a “time famine” – that feeling that there aren’t enough hours in the day to accomplish what we set out to do. As a sign of these busy times, twice as many Americans would prefer two weeks of vacation to two weeks of extra pay. And while there is nothing we can do to add even another minute to our days, we can change our perception of the 24 hours available to us.Read More
Economists and marketers have long assumed that potential customers rationally weigh the costs and benefits of every possible choice before deciding what to buy. Under this assumption, marketers use tidy frameworks to help identify ways to influence consumer decisions.
As it turns out, this assumption is wrong. While shopping, we don't think as much as we think we think.Read More
In an episode of the popular sitcom Seinfeld, George thinks he has purchased a car that once belonged to the actor Jon Voight. In every conversation he finds a way to drop in the name and basks in the reflected glory and people are very impressed with him and his car.Read More