Tuesday, January 31, 2012

Taking the shot: How to overcome our innate fear of losing

Is too much tennis barely enough?  I have been pigging out on the Australian Open over the last couple of weeks, watching elite sportspeople do battle, pitting their physical and mental strength against that of their opponents. What stuck me was how the fear of losing can be more powerful than the will to win; and that's exactly the trap most businesses fall into.  Choking.  When you play defensively waiting for someone else to make a mistake rather than taking the shot. When you are the dominant player and don't change your business model in response to changed market conditions, unravelling as competitors come in and steal your ground.  I'm thinking of you Kodak, Yellow Pages, Nokia, Microsoft, Borders... So let's dig into why and how you can overcome this paralysis.

Fear of losing
Loss aversion is the behavioural principle that I have mentioned most often in my blog articles because I believe it is one of the keys to unlocking an understanding human behaviour.  Our tendency to avoid loss rather than seek gain is one of the strongest, most primal responses that influences the actions we take because frankly, it seems safer. It's a "Better the Devil You Know" approach.  Chasing the win requires stretching into the unknown and that can be uncomfortable whereas structuring your business to hold on to what you have - circling the wagons - is much more familiar.  From small businesses to boardrooms at the big end of town, introducing price rises rather than launching new products, prioritising higher margin but end of life products rather than lower margin growth products, slavishly applying traditional marketing techniques in a new digital world, and staying with incumbent suppliers who disappoint rather than trying someone new are examples where loss aversion may have reared its head.

Overcoming loss aversion
So how can you get over this mental barrier?

Last year I read Timothy Ferris' book "The 4-Hour Work Week".  Ferris' aspirational lifestyle aside, what I found really useful about the book were the processes to overcome fear of taking the leap to a new style of career.  In other words, tips for overcoming loss aversion.

Whilst written from a career change perspective, this process can be used to overcome business fear too.
1. Define your worst nightmare
2. What steps could you take to repair the damage?
3. What are the benefits of more probable scenarios?
4. If it happened today, what would you do it get things under financial control?
5. What are you putting off out of fear
6. What is postponing action costing you financially, emotionally and physically?
7. What are you waiting for?

Another technique I have used, based on Ian Stephens' 7 Step Pathway to Mastery, is to write down;
1. what you want your future state to look like
2. 25 Benefits to you/your business of achieving this future state
3. what this means for your priorities.  Then;
4. 25 disadvantages of of not moving to the future state, and
5. What these disadvantages will mean in 5-10 years (which amplifies the downside of inaction).
And finally;
6. What the benefits will mean in 5-10 years and
7. The steps to which you will commit to achieve your future state.

At their core, both Tim and Ian's methods amplify the negative impacts of loss aversion (by doing nothing or doing the same) to such an extent that it is much less palatable than the benefits of taking action.  And that is the key to conquering loss aversion.  We are all familiar with listing the pros and cons of taking a course of action, but loss aversion teaches us we need to get more familiar with the cons of inaction if we want to be someone who steps up and takes the shot.  Happy conquering.

Image from blogs.abc.net.au

Friday, January 27, 2012

Behavioural Economics Twitter wrap-up (21-27 Jan 2012)

Behavioural and Behavioral Economics tweets 
Sat 21 Jan-Fri 27 Jan 2012
This post contains a summary of tweets noted in the past week that mentioned behavioural/behavioral economics. Where possible, re-tweets have and tweets without links been removed to condense the list.
The summary is posted weekly by People Patterns.

Congratulations to @TimHarford for his much shared "The behavioural economics of house prices: bit.ly/xNwsg8 (Or - why have they stayed so high?)" and Jeff DeChambeau for his post last week on Facebook conspiracy theories that was popular again this week. 

PS Slight formatting change to the post this week I'm afraid. Form may not live up to function!

Tweets with Behavioural Economics mentioned (UK spelling)

morrisdave dave morris 

My first feature for @robmagazineca is on behavioural economics. Nerd out with me: ow.ly/8HTvk

TimHarford Tim Harford 

The behavioural economics of house prices: bit.ly/xNwsg8 (Or - why have they stayed so high?)

erikalwatson Erika Watson 

Thx @hsnorwich inspirational event: @webheroines behaviouraleconomics, sketchup, NFC.. Whoknew Norwich had so much creative digital talent

jlievens jean lievens 

Great Presentation: Behavioural Economics / Finance | @scoopitvia @chrishoeller bit.ly/wtDFMr

chrishoeller Chris Hoeller 

I just picked the pearltree Behavioural Economics / Finance by@Pedaviet pear.ly/Pq8T

LittleMissHeals Emma Healey 

Had a brilliant talk by @BrainJuicer today. Really got us thinking about behavioural economics. Brain is buzzing...
27 Jan

adam_batsford Adam Batsford 
@hockeymonkey15 I've got a choice of 3, behavioural, international or applied economics at Nottingham university. You not tempted?
27 Jan 

CatPBishop Catharina Bishop 

Just heard Brain Juicer talk about behavioural economics: 'we think much less than we think we think'. Thought provoking stuff!
27 Jan

assessworks AssessWorks 

South African tech company launches decision analysis application that uses the insight's of behaviouraleconomics....http://bit.ly/yS5Xov
27 Jan 

ITWebDigital ITWeb Digital 

22seven goes live cot.ag/Ac2Oab A local start-up aims to use gamification & behavioural economics to help users manage their finances
 27 Jan 

heidibeeee Heidi Brauer 

Game design, psychology of play and behavioural economics - beautiful thinking ingredients that went into creating #22seven. 22seven.com
27 Jan

Toyahara Toyohara 

Reading Kahneman & Tversky Origin of Behavioural Economicson Scribd scr.bi/yibExT #readcast
27 Jan

Jaimeaybq Jaime Loftin 

Bounded Rationality and Public Policy: A Perspective fromBehavioural Economics book downloads: Bounded Rational...bit.ly/y4TenE
27 Jan

EconCrunch Econ Crunch 

The economist as therapist: Behavioural economics and “light” paternalism by George Loewenstein: econcrunch.com/2012/01/the-ec…

FrontierEcon Frontier Economics 

Do you think customers are irrational? Financial watchdog comments on behavioural economics bit.ly/yXBu7I

bigtalkingshop Paul Roberts 

An interesting case study for behavioural economics: Could Tesco kill Clubcard? bit.ly/xwVgoA #marketresearch

tlonuqbar Mark Rogers 

The march of behavioural economics. UK watchdog says will protect ‘irrational’ investors on.ft.com/ygcgzB (requires sub)

jatinderdhami jatinderdhami 

Are we seeing the start of behavioural economics into regulation?ft.com/cms/s/0/7a681c… #FT

Guy_He Guy Hearn 

Nike Unveils FuelBand for Tracking All Physical Activitymashable.com/2012/01/19/nik… via @mashable great behaviouraleconomics in action idea

grbeaton George Beaton 

Following my tweet on business.time.com/2012/01/19/eco…, I recommend A1 list of readings on behavioural economicsfarnamstreetblog.com/2010/04/behavi…

TimHarford Tim Harford 

The behavioural economics of house prices: bit.ly/xNwsg8 (Or - why have they stayed so high?)

ACatNamedFelix Danny Gray 

You can write about anything, except cognitive biases andbehavioural economics, that's my shtick.theleafsnation.com/2012/1/24/fres…

ingridk Ingrid Koehler 

Surely the answer is surcharge and not deductiongu.com/p/35x9f/tw via @guardian Simple behavioural economics.

pririn_ 真葛原雪 Yuki Makuzuhara 

何言ってるのか聞き取れないや Prof. David Levine - IsBehavioural Economics Doomed? youtu.be/vhBfk8HgJj8

Ogminn Ogminn 

How will behavioural economics change research? | Features | Research: bit.ly/fX27cf via @AddThis

SmartCompany SmartCompany 

Converting browsers to buyers: Lessons from a food charitybit.ly/yTl5CE

Claire_McA_ Claire McAlpine 

As researchers and strategists, does learning about behaviouraleconomics change the way we think? tmblr.co/Za_PNyFEiFcL

afxnet AFX Net 

Interesting: @BrandRepublic Forget Behavioural Economic#s, now#it& ;s Ergopsychonomics says Chris Arnold bit.ly/AdlxL8


Behavioural economics is fascinating! Watch Sheena Iyengar: How to make choosing easier #TED on.ted.com/AF96

»pulistbook pulist books   
pulist.net/choice-behavio… #behavioural #economics #substance #abuse Choice, Behavioural Economics and Addiction

JGMcClellan Jon McClellan 

Great example of the Paradox of Choice - Acient Japanese Battle offers insight into Behavioural Economics wp.me/p1yU25-8u #in

JaideMustafa JaideMustafa 

Reading 61 pages on the intro to behavioural economics is not going down well...

TimHarford Tim Harford 

The behavioural economics of house prices: bit.ly/xNwsg8 (Or - why have they stayed so high?)

econfix Mark Johnston 

Behavioural Economics: dissatisfaction of limitless choice.wp.me/pZ5TJ-1Hw

afxnet AFX Net 

Cool: @BrandRepublic Forget Behavioural Economic#s, now #it& ;s Ergopsychonomics. Chris Arnold explains. bit.ly/AdlxL8

taraebroad Tara Broad 

interesting blog, particularly to me, as someone who has difficulty making decisions- JAPANESE BEHAVIOURAL ECONOMICS:bit.ly/x9KzNF

TrevorBlum Trevor Blum 

Paul_Ray Paul Ray 

If you like a little bit of behavioural economics, but aren't keen on the plum that is Rory Sutherland, check thisthebestbehaviour.wordpress.com

barrackballack Ashleeh 

An interesting article about Facebook timeline and behaviouraleconomics | jeffdechambeau.com/friending-fast…

KoehlerBear Brad Koehler 

RT @Foolproofer Hot Source 5.30 at NUCA Duke St next Thurs. Talks about behavioural economics, Sketchup & Web Heroinesgoo.gl/bnaXI

Foolproofer Tom Wood 

Don't forget. Hot Source 5.30 at NUCA Duke St next Thurs. Talks about behavioural economics, Sketchup & Web Heroinesgoo.gl/bnaXI

mossrowe Moss Rowe 

@zoestonee Just been learning about behavioural economicssmiley faces on receipts nudge people to give larger tips #penhaletricksters

in_context Rebecca Roderick 

Behavioural economics and the importance of context - 3Sixty Internet Ltd 3sixty.co.uk/our-thinking/b… via @3sixtyagency

stewssr Stewart Rand 

Good read. Love Cracked RT @MikePMoffatt: Surprisingly good piece on behavioural economics. From Cracked! (seriously)bit.ly/yy3a3J

MikePMoffatt Mike Moffatt 

Surprisingly good piece on behavioural economics. From Cracked! (seriously) cracked.com/blog/the-5-stu…

OptimisaRich Richard Fincham 

Online qual and behavioural economics webinar today...www3.gotomeeting.com/register/53730…

Tweets with Behavioral Economics mentioned (US spelling)


INOMICS announces a conference: Research Workshop inBehavioral Economics: on August 29, 2012 in Mainz, Germanybit.ly/xiwBjG

EconomistYasir Yasir Mazumder 

Re-watching Prof @danariely video on behavioral economics.youtube.com/watch?v=9X68dm… It is so fascinating, cant wait to read his book.

ABuschmeier Andreas Buschmeier 

via @davdittrichBehavioral Economics&Rationality:What's the status of neoclassical rationality asa normative standardow.ly/8Grf1

Sherrellutx Sherrell Haubrich 

Behavioral Economics: Politics, Law & Business: Learn aboutBehavioral Economics with iMinds insightful knowledg...amzn.to/pFOeDj

s6t2e5f Stephanie Wang 

behavioral economics -> behavioral pricing. the success of this is a very fine line. bit.ly/wtj7HR what do you think?

maryfeldman mary feldman 

Beyond Rational Thinking: Using Behavioral Economics to Improve Workforce Health and Organizational Outcomes:bit.ly/u68chp

anandrajaram Anand Rajaram 

Interesting "reverse" strategy on behavioral economics. Wonder how this will pan out lnkd.in/5YFHqr

inobrec Alessandro Cerboni 

Rationality and choices in economicsbehavioral and evolutionary approaches - Munich Personal RePEc fb.me/1kb5EQbhd

inobrec Alessandro Cerboni 

Rationality and choices in economicsbehavioral and evolutionary approaches - Munich Personal RePEc Archive | @scoopitbit.ly/ytu8pe

alexfiorillo Alexandra Fiorillo 

Behavioral economics in South Africa. Sounds like a Mint type of program for people to improve budgeting. bit.ly/wwpf19


INOMICS announces a course: Research Workshop and Summer School in Behavioral Economics: Application Deadline: A...bit.ly/yj4hZn

graciainglessis maria g inglessis 

what does Meg Ryan (or the lady sitting next to her in a restaurant) have to do with behavioral economics?wired.co.uk/magazine/archi…

ricardomexcan RICARDO 

The Darwin Economy | @scoopit bit.ly/yV1DIi

inobrec Alessandro Cerboni 

Behavioral economics -- an overview - a knol by Thomas Sulcer | Bounded Rationality and Beyond fb.me/LtLa32xh

Ogminn Ogminn 

Justmoney Team Justmoney 

Christo Davel telling the attendees at the #22seven some interesting stuff about behavioral economicstwitpic.com/8btk5i

Aartjan Aartjan van Erkel 

Tip obv behavioral economics RT @EricaVerdegaal: Op zoek naar eerlijke financieel adviseur? Laat erecode ondertekenenericaverdegaal.nl/publications/i…

Stonewerks joshua strauser 

Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economicsamazon.com/gp/aw/d/068485
lilymaggi Lily Ma 

Behavioral Economics and Rationality « ThinkMarkets: Most amazingly, behavioral economists tend to accept the no...bit.ly/xBglqW

pageforbooks pageforbooks 

Eating Behavior and Obesity: Behavioral Economics Strategies for Health Professionals health.pageforbooks.com/eating-behavio…...

isomorphisms Lao Tzu 

aClassicLiberal Old Whig 

What is the status of neoclassical rationality as a normative standard? ow.ly/8Grf1 @leighblue @UnlearningEcon@isomorphisms

xckenma Brian Velasquez 

Inefficient Markets: An Introduction to Behavioral Finance (Clarendon Lectures in Economics) 8211 Andrei Shleifer d..tinyurl.com/6lu

Nonicoc Niclas Berggren 

Kurs i beteendeekonomi på NYU. wp.me/pmseG-1kP

davdittrich Dennis A V Dittrich 

Behavioral Economics and Rationality: What is the status of neoclassical rationality as a normative standard? ow.ly/8Grf1

drumming Paul Schmidt 

Dan Ariely Announcing Third Book bit.ly/zDsHnU via @danariely <--Amazing author on behavioral economics. Check him out!

mrahman4 Moin Rahman 

Behavioral Economics: "The Price of your Soul"rstb.royalsocietypublishing.org/content/367/15…

hkd1frutf Bradley Bowden 

Advances in Behavioral Economics (The Roundtable Series inBehavioral Economics) 8211 Colin F. Camerer George Loewe..is.gd/Iao7dY

AVAinstituutti AVA-instituutti 

Deep Rationality. Evolutionary Psychology Meets BehavioralEconomicspsychologytoday.com/blog/sex-murde…

OrganicEcon Organic Econ 

Kahneman’s Time Interview Fails to Allay Concerns AboutBehavioral Law and Economics om.ly/BktKD

raoulbeck Raoul Beck 

Watchdog to protect ‘irrational’ investors (behavioral economics) -FT.com - UK Politics & Policy ft.com/cms/s/0/7a681c…

Axel_Nico Axel Nico 

なぜゲーミフィケーションは効果的なのか?hiromikubota.tumblr.com/post/792179177… <そこには行動経済学(behavioral economics)との関連性の深い人間の感情や習性を巧みに利用したゲームのメカニズムがあるのです> これが適用されていればどの例もOKなのかな。

TheIntuitInvest Jason A. Voss, CFA 

A victory for behavioral economics: UK watchdog to protect ‘irrational’ investors - FT on.ft.com/ygcgzB

Mihaela_Canja Mihaela Canja 

Daniel Kahneman on behavioral economics lnkd.in/SEmyWs


「そこには行動経済学(behavioral economics)との関連性の深い人間の感情や習性を巧みに利用したゲームのメカニズムがあるのです。」 / “なぜゲーミフィケーションは効果的なのか?(Why Gamification …” htn.to/znp4Mu

Daniel Kahneman is psychologist whose work spans cognitive psychology, behavioral economics, and well-being.youtube.com/watch?v=f7cECa…

Eusebiaper Eusebia Nevarez 

Advances in Behavioral Economics: Essays in Honor of Horst Todt: The connection of economic theory and behavior ...amzn.to/tlVUGN

Field401 Field401 
@kpelton He does behavioral economics stuff...this NYT article is a good intro: nytimes.com/2008/03/19/hea…

Reinabpi Reina Ebner 

Downloads Behavioral economics and its applications:Behavioral economics and its applications book download Ha...bit.ly/wm27vG

jonathanbingham Jonathan Bingham 

5 questions to ask as your product approaches perfection: sgp.cm/72099e

josephkibe Joseph Kibe 

Mitch Daniels clearly hasn't read Nudge, or any other research inbehavioral economics or psychology. amzn.to/xa6kuX

asgarcia Alan Garcia 

Daniel Kahneman: The riddle of experience vs. memory #TEDon.ted.com/AFhR // Great talk from the founder of behavioraleconomics.

grbeaton George Beaton 

Following my tweet on business.time.com/2012/01/19/eco…, I recommend A1 list of readings on behavioural economicsfarnamstreetblog.com/2010/04/behavi…

BiddRocket Brian Ley 

Facebook Timeline and Behavioral Economics?jeffdechambeau.com/friending-fast…

paediax Diana Tsai 

behavioral economics, cheating, and the stock market--enjoyed this ted.com/talks/lang/en/…

JenHaley Jen Haley 

New app pays you to exercise: bit.ly/wwUfIf Great example ofbehavioral #economics!

 moiracathleen moiracathleen 

Great article on Behavioral Economics by @leighblueknowingandmaking.com/2011/11/does-n… We really do need to start talking about this more.


Management Science's Special Issue on Behavioral Economicsand Finance, part 1 of 2. ow.ly/8EmLU #orj

Anibalqpb Anibal Lebouef 

Financial Economics: A Concise Introduction to Classical andBehavioral Finance e-book downloads: Financial Econ...bit.ly/yOVwoc

WorthPoint WorthPoint 

Popular on WorthPoint: Rinker on Collectibles: How BehavioralEconomics Effect Our Purchases ow.ly/8Dfu7

aurdale Erik Aurdal 

Dan Ariely med ny bok 5. Juni. Fantastisk forfatter som skriver om temaer innenfor behavioral economicswp.me/p5oiR-H8 via@danariely

Jamaloabr Jamal Corr 

Downloads Advances in behavioral economics: Advances inbehavioral economics book download Colin F. Camerer, Geo...bit.ly/yiTryn

neuroeco neuroeco 

最新号の Management Science は、行動経済学・行動ファイナンス(Behavioral Economics and Finance)の特集号! → Management Science mansci.journal.informs.org/content/current

ricardomexcan RICARDO 

How to Buy a Car . . . Using Game Theory! | Think Tank | Big Think | @scoopit bit.ly/As7Scj

Conferenceboard The Conference Board 

Behavioral economics and social media are coming together in new and compelling ways in employer health programs.ow.ly/8DEjR

thebehaviourist Neeraj Sharma 

Where is behavioral economics headed in the world of marketing?shar.es/f0oKt

Ogminn Ogminn 

Behavioral Economics Reading Listfarnamstreetblog.com/2010/04/behavi… via @farnamstreet

peoplepatterns Bri Williams 

Converting browsers to buyers with tips from behavioraleconomics and a charity bit.ly/z39cch #behaveco

Starlauiz Starla Buhr 

Experimental and behavioral economics e-book downloads: Experimental and behavioral economics book download J. M...bit.ly/ArcPbF

jonathanbingham Jonathan Bingham 

My new blog offers some thoughts on how behavioral economicsconnects to product innovation:perfectionparadox.org/2012/01/perfec…

Aleaseloz Alease Chilton 

Conflict and Cooperation: Institutional and Behavioral Economics: Allan Schmid’s innovative text, Conflict and C... amzn.to/sdfmyQ

em_i_lis EmilyG 

Pizza night, behavioral economics, another gloomy daybit.ly/A98mp9

Routledge_BMA Routledge BMA 

#FREEACCESS to the most downloaded articles on the Financial Crises, Behavioral Finance, Transport Economics & more!bit.ly/Av58Kc

uskbot うすけbot 

行動経済学は絶望的か? - 本書Is Behavioral EconomicsDoomed?(『行動経済学は絶望的か?』)は、Open Book Publishersから刊行予定ということで、まだ正式には出版されていない。しか ow.ly/1gSciG

blosurf ブログ配達犬 

アゴラ 行動経済学は絶望的か?: 本書Is Behavioral EconomicsDoomed?(『行動経済学は絶望的か?』)は、Open Book Publishersから刊行予定ということで、まだ正式には出版はされて... j.mp/xCDset

Sachaazt Sacha Lakatos 

Reframing Health Behavior Change with Behavioral Economics:Behavioral economics is a rapidly developing area of...amzn.to/uNzG8W

WorthPoint WorthPoint 

Rinker on Collectibles: How Behavioral Economics Effect Our Purchases ow.ly/8zANp

KeithaMenear Britt Kennard 

Behavioral Economics: Politics, Law & Business: Learn aboutBehavioral Economics with iMinds insightful knowledg...amzn.to/pFOeDj

financeecon financial economics 

Behavioral Relationships, Equilibrium Conditions, Accounting Identities...: it turns out in economics to be rem... bit.ly/AsMAln

Olliekgv Ollie Bartley 

Advances in Behavioral Economics: Essays in Honor of Horst Todt: The connection of economic theory and behavior ...amzn.to/tlVUGN

KathrineInvest Kathrine Matthews 

Overconfident investing is bad: There's a field of economic research — behavioral economics — where psychology p... bit.ly/zOnHrn

ePrussakov Geno Prussakov 

Growing increasingly fond of neuromarketing & behavioraleconomics, I've just created this list: twitter.com/ePrussakov/neu…(whom have I missed?)

Sherryzbi Sherry Lyons 

Conflict and Cooperation: Institutional and Behavioral Economics: Allan Schmid’s innovative text, Conflict and C... amzn.to/rIPn6k

northresearch Neal Cole 

Marketers & Behavioral Economics - The Social Revolution! via@johnxkenny @jbell99 yhoo.it/zZ0j7F” #mrx #psychology #cro

BradAMurphy Brad Murphy 

Behavioral economics is being leveraged by software apps in very interesting ways to change personal behavior. bit.ly/wY4i5B

eluzocax Brodsky Boyd 

Wirtschaftspsychologie: Behavioral EconomicsBehavioralFinance, Arbeitswelt (Springers Kurzlehrbücher der Wirt...amzn.to/wUMTak

Jaimeeagb Jaimee Mangione 

The behavioral economics of foreign exchange markets:amzn.to/s1Rh4

Walton_Complex Walton Complex
Come to "Experiments with Behavioral Economics" Wednesday, February 1 from 7:00 pm to 10:00 pm. UO Economics...fb.me/ype648oa

MarketTools MarketTools, Inc. 

What is behavioral economics and how is it used in market research? ow.ly/8ANKo #MRX

JPEnsell J Ensell 

@danariely on how wanting to write a cookbook, broughtbehavioral economics to the masses inc.com/jeff-haden/the…

TandF_Economics Routledge Economics 

Happy Friday! FREE ACCESS to top articles on the Financial Crises, Behavioral Finance, Transport #Economics & morebit.ly/Av58Kc

SentientInsight SentientDecisionSci 

Using behavioral economics to strengthen brand preference:ow.ly/8z0Fp