Behavioural Economics

Behavioural Economics is the study of the effect that emotions and psychology have on economic decisions.

According to Dan Ariely, a professor and expert in the subject, behavioural economics are interested in the choices that people make and how incentives affect them. It has been argued that human beings are more rational than emotional, but this theory proves that some decisions can be made relying highly on emotions and the environment.

How is this relevant to marketing?

Marketers can learn better ways to approach their audience by studying behavioural economics. As studied by Dan Ariely, expectations can affect the consumers experience, this is why it is important to highlight the benefits of a product but not exaggerate because it can have a bad consequence. He also found that people place a higher value on their own possessions than the same objects owned by someone else, this can be applied through customization, where the product is neutral but the customer can make it his own.

Another interesting finding is that time is of the essence, consumers must be reached at the right moment during the decision making process, because once the decision is made it is harder to sway it in another direction.

If you are interested in learning more about Dan Ariely´s findings or behavioural economics, the following links can be useful:

Duke University, Dan Ariely: http://www.fuqua.duke.edu/faculty_research/faculty_directory/ariely/

Dan Ariely: http://danariely.com/