Welcome to the new face of the blog for the Institute of Decision Making. Our global team of contributors will now bring you regular commentary on news, musings and points of view from the intersection of the business of marketing and the science of behavior.
We’re a passionate team, always curious about deepening our understanding of how and why people make the choices they do and using these insights into human behavior to help solve marketing problems. Many of these insights are derived from emerging research in three areas – Behavioral Economics, Neuroeconomics and Evolutionary Psychology.
The insights from Behavioral Economics are particularly valuable to marketers. The original research in this field has demonstrated that when people make an economic choice, their behavior doesn’t conform to the rational self-interest predicted by economists and is actually driven by hardwired cognitive processes or biases. Psychologists Kahneman and Tversky won the Nobel Prize for Economics in 2002 for their work in the area, but the real value of Behavioral Economics to advertising and marketing is not what it tells us about economics, but what it reveals about human nature and behavior.
On the other hand, Neuroeconomics seeks to identify the neural activity associated with different economic choices or tasks, such as considering outcomes or just the simple reactions to various stimuli. Most of the neuroeconomists we have worked with acknowledge that understanding how different areas of the brain shape our decisions is still in its early stages. But some exciting work in this field gives tantalizing glimpses into how branding and marketing work at a neural level.
If Behavioral Economics reveals what drives our choices, and Neuroeconomics reveals how our brain processes choice, then Evolutionary Psychology is providing the framework to help us understand why we make the choices we do. The biases shown by Behavioral Economics and the neural activity shown by Neuroeconomics are the product of five million years of our ancestors getting enough decisions right for us to be here today. An evolutionary psychologist would argue that our ancestors’ decisions worked because they aligned with their evolutionary goals – and that these goals still drive our decisions today.Businesses and brands can reach their full potential only if they are chosen more often than their competitors. At the Institute of Decision Making, we believe that understanding the what, how and why of choice is a good foundation for ensuring that this happens.