Behavioral Economics
The study of psychology as it relates to the economic decision-making processes of individuals and institutions. Essential for understanding and influencing user decision-making and behavior in economic contexts.
56 topics found for:
“economic impact”
Negativity Effect
The tendency for negative information to have a greater impact on one's psychological state and processes than neutral or positive information. Important for understanding and mitigating the impact of negative information.
CoD
Cost of Delay (CoD) is a metric that quantifies the economic impact of delaying a project, feature, or task. Important for making informed decisions about project prioritization and resource allocation.
Pain Of Paying
The psychological discomfort experienced when parting with money, influenced by the payment method and context. Crucial for understanding spending behavior and designing payment systems that mitigate discomfort.
Relativity
A principle often used in behavioral economics that suggests people evaluate options based on relative comparisons rather than absolute values. Important for understanding decision-making and designing choices that highlight beneficial comparisons.
Sunk Cost Fallacy
The tendency for individuals to continue a behavior or endeavor as a result of previously invested resources (time, money, or effort) rather than future potential benefits. Important for understanding decision-making biases and designing systems that help users avoid irrational persistence.
PESTEL Analysis
A strategic framework used to analyze the external macro-environmental factors affecting an organization: Political, Economic, Social, Technological, Environmental, and Legal. Essential for strategic planning and understanding market dynamics.
Peak End Rule
A cognitive bias where people judge an experience largely based on how they felt at its peak (most intense point) and its end, rather than the total sum of the experience. Crucial for designing memorable and satisfying user experiences.
80/20 Rule
A principle stating that 80% of effects come from 20% of causes, often used to prioritize tasks and identify key areas of focus. Essential for prioritizing tasks and focusing efforts on the most impactful areas.
Reference Dependence
A cognitive bias where individuals evaluate outcomes relative to a reference point rather than on an absolute scale. Essential for understanding decision-making and consumer behavior.
Brand Equity
The value a brand adds to a product or service beyond the functional benefits, encompassing factors like brand awareness, perceived quality, and customer loyalty. Crucial for understanding the long-term value of a brand and its impact on business success.
Myopic Loss Aversion
A cognitive bias where individuals tend to avoid risks when they perceive potential losses more acutely than potential gains. Important for understanding decision-making behavior in users and designing systems that mitigate risk aversion.
Gambler’s Fallacy
A cognitive bias where individuals believe that past random events affect the probabilities of future random events. Important for designers to understand user decision-making biases related to randomness.
Subadditivity Effect
A cognitive bias where the total probability assigned to a set of events is less than the sum of the probabilities assigned to each event individually. Important for understanding how users estimate probabilities and make decisions under uncertainty.
Crowding Out Effect
The phenomenon where external incentives diminish intrinsic motivation, leading to reduced performance or engagement. Important for designing motivational strategies that do not undermine intrinsic motivation.
Behavioral Finance
The study of how psychological influences affect financial behaviors and decision-making. Essential for understanding and influencing financial decision-making and behavior.
Impact Bias
The tendency to overestimate the duration or intensity of the emotional impact of future events. Important for understanding user expectations and satisfaction.
Intertemporal Choice
The study of how people make choices about what and how much to do at various points in time, often involving trade-offs between costs and benefits occurring at different times. Crucial for designing systems that account for delayed gratification and long-term planning.
Certainty Effect
A cognitive bias where people give greater weight to outcomes that are certain compared to those that are merely probable. Important for designers to consider how users weigh certain outcomes more heavily in their decision-making.
Loss Aversion
A cognitive bias where the pain of losing is psychologically more powerful than the pleasure of gaining. Important for designing user experiences that account for and mitigate loss aversion.
WSJF
Weighted Shortest Job First (WSJF) is a prioritization method used in agile and lean methodologies to maximize value by comparing the cost of delay to the duration of tasks. Essential for effectively prioritizing work to ensure the highest value tasks are completed first.
Anchoring
Anchoring (also known as Focalism) is a cognitive bias where individuals rely heavily on the first piece of information (the "anchor") when making decisions. Crucial for understanding and mitigating initial information's impact on user decision-making processes.
Affect Heuristic
A mental shortcut where current emotions influence decisions, often bypassing logic and reasoning. Important for understanding how emotions impact user decisions, aiding in more effective design and marketing.
Incentive Theory
A theory of motivation that explains behavior as driven by a desire for rewards or incentives. Crucial for designing systems that effectively motivate and engage users.
Hot Hand Fallacy
The mistaken belief that a person who has experienced success in a random event has a higher probability of further success in additional attempts. Crucial for understanding and designing around user decision-making biases.
Herd Behavior
The tendency for individuals to mimic the actions of a larger group, often leading to conformity and groupthink. Crucial for understanding social influence and designing experiences that consider group dynamics.
STEEPLE Framework
Social, Technological, Economic, Environmental, Political, Legal, and Ethical (STEEPLE) is an analysis tool that examines the factors influencing an organization. Crucial for comprehensive strategic planning and risk management in product design.
Regret Aversion
A tendency to avoid making decisions that might lead to regret, influencing risk-taking and decision-making behaviors. Crucial for understanding decision-making processes and designing systems that minimize regret.
Framing
The way information is presented to users, which can significantly influence their decisions and perceptions. Important for designing messages and interfaces that guide user choices effectively.
Focusing Effect
A cognitive bias where people place too much importance on one aspect of an event, causing errors in judgment. Important for understanding decision-making and designing interfaces that provide balanced information.
Pseudocertainty Effect
A cognitive bias where people perceive an outcome as certain while it is actually uncertain, based on how information is presented. Crucial for understanding and mitigating biased user decision-making.
Nudging
The act of designing and implementing subtle interventions to influence behavior in a predictable way. Crucial for guiding user behavior effectively without limiting freedom of choice.
Category Size Bias
A cognitive bias where people judge the likelihood of an event based on the size of its category rather than its actual probability. Crucial for designers to understand how category size influences user perception and decision-making processes.
Affective Forecasting
The process of predicting how one will feel in the future, which often involves biases and inaccuracies. Important for understanding user behavior and decision-making, aiding in the design of better user experiences.
Instrumental Value
The worth of something based on its ability to help achieve a desired end or goal. Useful for understanding and prioritizing design elements that contribute to user goals.
Zero-Risk Bias
A cognitive bias where people prefer the option that seems to eliminate risk entirely, even if another option offers a greater overall benefit. Important for understanding decision-making and designing risk communication for users.
Worse-Than-Average Effect
A cognitive bias where individuals underestimate their own abilities and performance relative to others, believing they are worse than average. Important for understanding self-perception biases among designers and designing systems that support accurate self-assessment.
Viability Risk
The risk that the product will not be financially or strategically sustainable for the business, potentially leading to a lack of support or profitability. Essential for ensuring that the product aligns with business goals and can be maintained and supported long-term.
Status Quo Bias
A cognitive bias that leads individuals to prefer things to remain the same rather than change, often resisting new options or changes. Crucial for understanding resistance to change and designing strategies to overcome it among users.
Sludge
Any process or administrative barrier that unnecessarily complicates transactions and creates friction, discouraging beneficial behaviors. Important for identifying and eliminating unnecessary obstacles that hinder user experiences.
Restraint Bias
A cognitive bias where individuals overestimate their ability to control impulsive behavior, leading to overexposure to temptations. Important for designing systems that help users manage self-control and avoid overexposure to temptations.
Reciprocity
A social norm of responding to a positive action with another positive action, fostering mutual benefit and cooperation. Important for designing user experiences and systems that encourage positive reciprocal interactions.
Fast and Frugal Heuristics
Decision-making strategies that use simple heuristics to make quick, efficient, and satisfactory choices with limited information. Important for designing user experiences that support quick and efficient decision-making.
Projection Bias
The tendency to overestimate how much our future preferences and behaviors will align with our current preferences and behaviors. Important for understanding user behavior and designing experiences that account for changes over time.
Familiarity Bias
A cognitive bias where people prefer familiar things over unfamiliar ones, even if the unfamiliar options are objectively better. Useful for designing interfaces and products that leverage familiar elements to enhance user comfort.
Extension Neglect
A cognitive bias where people ignore the relevance of sample size in making judgments, often leading to erroneous conclusions. Crucial for designers to account for appropriate sample sizes in research and analysis.
Decision Utility
The value or satisfaction derived from a decision, influencing the choices people make. Crucial for understanding user preferences and designing experiences that maximize satisfaction.
Paradox of Choice
The phenomenon where having too many options leads to anxiety and difficulty making a decision, reducing overall satisfaction. Important for designing user experiences that balance choice and simplicity to enhance satisfaction.
Cold States
Emotional states where individuals are calm and rational, often contrasted with hot states where emotions run high. Important for understanding decision-making processes and designing experiences that accommodate both states.
Overconfidence Effect
A cognitive bias where a person's subjective confidence in their judgments is greater than their objective accuracy. Crucial for understanding user decision-making and designing systems that account for overconfidence.
Overchoice
The phenomenon where having too many options leads to decision-making paralysis and decreased satisfaction. Crucial for understanding and designing user interfaces that avoid overwhelming users with choices.
Moral Suasion
The act of persuading individuals or organizations to act in a certain way based on moral arguments or appeals. Useful for designing persuasive communications and ethical influence strategies.
LTV
Lifetime Value (LTV) is a metric that estimates the total revenue a business can expect from a single customer account throughout their relationship. Crucial for informing customer acquisition strategies, retention efforts, and overall business planning by providing insights into long-term customer profitability.
Ambiguity Effect
A cognitive bias where decision-making is affected by the lack of information or uncertainty. Important for understanding and mitigating user decision-making biases due to uncertainty or lack of information.
Intention Action Gap
The discrepancy between what people intend to do and what they actually do. Crucial for designing interventions that bridge the gap between user intentions and actions.
Innovation Theory
The study of how new ideas, products, and processes are developed and brought to market. Essential for fostering creativity and ensuring the continuous improvement and relevance of products.