Oct 10, 2017
The announcement that Richard Thaler was awarded the Nobel Prize in economics confirms what we might already know, but are hesitant to admit – we behave irrationally.
Thaler is one of the founding fathers of behavioral economics (BE), the study of how we make decisions. It’s the opposite of everything we learned in our Econ classes. We don’t think with our head; we think with our heart and then find a way to support that with logic and reason. Economics just went from cold hard facts to mushy emotions.
Though his award is specific to choices made regarding economic decisions, like saving for retirement, the principles work the same across any business decision. BI WORLDWIDE has known that for years and applies BE principles to design effective solutions to client problems like:
Academic research shows repeatedly that putting BE principles into practice ensures stronger results. We use BE when we look at the most effective goal-setting structures, the best ways to motivate a sales force and how consumers buy. In the end it all adds up. Rational thought and emotions combine to drive decisions and behavior. It’s just that only 23% of behaviors are driven by reason and 77% are driven by emotion.
Thaler set the ground-work and his research shows how emotions trump reason. BIW works with other notable academics in the field to bring this thought-leadership to our prospects and customers. The key is to get people to change their beliefs and behaviors to produce results. Your gut may tell you it’s hard to put this into practice, and that’s exactly where BE comes into play.
Want to learn more about some BE principles we use to help companies every day? Reach out at firstname.lastname@example.org and we’ll show you how we start with BE first. And if you haven’t seen The Big Short, take the time to watch Thaler explain the “Hot-hand fallacy.” It might help next time you’re at the blackjack table.