A regular review of interesting cultural shifts & marketing developments as viewed through the collective lens of the Stancombe Research + Planning Team

Monday, November 22, 2010

Behavioural economics and reality TV

I've been looking for an excuse to blog about behavioural economics for some time now, not because I'm any expert on the subject matter, but more out of fascination and interest

Let's start off with a wikipedia definition:

"Behavioral economics and its related area of study, behavioral finance, use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market prices, returns and the resource allocation"

The basic premise behind behavioural economics is that many of our purchase decisions don't make rationale sense. For example, many people would agree that travelling across town to save $50 on a $100 dress makes more sense than travelling the same distance to save $50 on a $30,000 car. In fact, when asked why, we often have to post-rationalise why we buy things because we were probably on auto-pilot at the time. Seriously, how much thought do you put into every single item you purchase?

Marketers are starting realise that the frame work and environment in which purchase decisions are made actually have the most influence over what people buy. For example, restaurants will often have a $500 bottle of wine on the menu to make the $40 bottle seem reasonable and the $15 bottle too cheap. Additionally, previous experience at restaurants tells us that $40 is a reasonable amount to pay, so choosing the $40 bottle (for most people) becomes a simple decision. Just like the 'cake or death' example below:

Understanding how to make decisions simple for people, from my limited understanding of behavioural economics, is the aim of the game. That is, you play to peoples 'confirmation bias' (read more on wikipedia here)

Keeping this in mind, have you ever wondered why reality TV is so easy to watch? After reading this wonderful post on the Everyday Sociology Blog, about how 'Dancing with the Stars' confirms to just about every gender norm imaginable, I felt a sudden wave of realisation wash over me. Bloody Hell! Reality TV is so popular because it confirms our own perceptions of reality! Let's take a few examples:
  • Beauty and the Geek: Seeks to confirms that beautiful women are dumb
  • Masterchef: Seeks to confirm amateurs can cook at a restaurant level
  • The apprentice: Seeks to confirm business people are cut throat and agressive
  • ...and the list could go on!
Inspired, I'm now constantly trawling the web for more behavioural economic examples and implications...stay tuned.

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