102. Critical Thinking: How Cognitive Biases Influence Consumers Online

12 important takeaways from this talk:

00:00:18 A cognitive bias is ‘a pattern of deviation in judgment where humans reason about a situation in an illogical fashion.’

00:01:41 The anchoring effect is the idea that when our brains encounter a new situation, they use all information available to make the best judgements they can.

On your purchase page, the order in which you place your prices (ascending order versus descending order) has an influence on which option customers choose. Starting with your highest-priced option first makes your subsequent offers seem more reasonable by comparison.

00:03:43 Fear of missing out is a common sales tool whereby our perceived value and desire of an object increases when we believe that the opportunity to possess the object may disappear.

A jacket at ‘50% off this week only!’ is more likely to lead to a sale than a jacket at ‘50% off.’

00:05:17 The halo effect is the idea that an object with positive qualities in one aspect can unconsciously be transferred to other aspects of the object. (Example: websites with Paypal and ‘secure’ bank logos appear legitimate and trustworthy by extension of those very logos.)

PickCrew lets money-strapped businesses “work with the best designers and developers without breaking the bank.” Their site features various industry-leading companies with the claim “Awesome folks our members have worked with” (as of 6 May, 2015). This misleading claim does not mean that these industry-leading companies have hired crew, it only means that at least one of the ‘certified’ people who have at one time or another opened an account with Crew has worked with one of these companies at one point in their life; perhaps before they actually signed up to work with Crew.

00:07:20 Loss aversion is the tendency for humans to prefer avoiding loss than acquiring gains.

The above emotional ‘Stop losing money to failed charges’ call to action (bottom right of photo) is intended to suggest that that lost money will be saved just by switching to us.

00:08:48 The Bandwagon Effect, or peer pressure, is the idea that you are influenced into doing something because ‘everyone else is doing it.’ That so many people are doing it, using it, or subscribing to it is ‘proof’ that is is valuable and that you should join them.

That 5,094 companies signed up for Basecamp the week prior is no guarantee of its worth or usefulness.

The opposite effect – the snob effect or the hipster effect also holds true. Once something begins becoming very popular, certain demographics of people instinctively begin abandoning it.

Dribbble’s exclusive invite-only launch attracted the attention of many designers as people fought and begged to get an invite.

00:11:00 Survivorship bias is the false conclusion that because something is obvious and visible must mean it is more important than other things, due to their lack of visibility; that successes are more important than failures.

00:16:26 Sunk costs are money already spent which cannot recovered, and the more time and money invested into something, the most value it is perceived to have. But often times the money you’ve invested in the past is irrelevant the the money you will invest in the future. Likewise, the more you invest in something, the more difficult it becomes for you to give up, admit defeat, and live with your losses.

Games such as Farmville push you to invest time and money to advance, and little by little the game becomes less about fun and more about obligation of winning, because you’ve already invested so much you can’t just walk away.

00:18:18 The number precision effect is the idea that items priced of 97€ sell more than the same item priced at 100€.

The precise number lends more credibility to their claim simply because it isn’t rounded to the nearest whole number.

00:19:25 The Ikea effect is the idea that people place a disproportionately high value on things when they are involved in it’s creation or design, such as assembling your own furniture.

Moo business cards let you design your own business cards from scratch. 50 minutes later, after you’ve created your ‘perfect’ business card, thats when they hit you with the price. Coupled with the sunk cost effect, it is likely that those who use this widget will purchase the business card they created.

00: 20:34 The Zero Price Effect is notes that humans like free stuff. Smart companies thus always include a free package in their business model.

The ‘Ultimate Landing Page’ !!!!!!!!!

With a popup window if the person resists the sale and tries to leave:

00:24:06 You can now go out into the world and make the ‘perfectly’ annoying landing page filled with psychological tricks and tactics proven to increase conversion rate, or you can now realize that people see through your little tricks and that your trucks are hurting your brand.

[EDITOR’S NOTE: For more information on defending yourself against these psychological tricks, check out DarkPatterns.org.]