Behavioral Finance
The study of how psychological influences affect financial behaviors and decision-making. Essential for understanding and influencing financial decision-making and behavior.
25 topics found for:
“financial behavior”
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.
Mental Accounting
A behavioral economics concept where people categorize and treat money differently depending on its source or intended use. Crucial for understanding financial behavior and designing systems that align with users' mental accounting practices.
Denomination Effect
A cognitive bias where people are less likely to spend large denominations of money compared to an equivalent amount in smaller denominations. Useful for designers to understand consumer behavior and design pricing strategies that consider spending biases.
Dual Self Model
A behavioral economics model that explains decision-making as a conflict between a present-oriented "doer" and a future-oriented "planner". Useful for understanding user decision-making and designing interventions that balance short-term and long-term goals.
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.
MRR
Monthly Recurring Revenue (MRR) is a metric that quantifies the predictable revenue generated each month from customers. This metric is crucial for SaaS companies to track financial health and growth.
Commitment Device
A technique or tool used to lock oneself into following through on a commitment, often by adding a cost to failing to do so. Useful for designing interventions that help users stick to their goals and commitments.
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.
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.
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.
KYC
Know Your Customer (KYC) is a process used by businesses to verify the identity of their clients and assess potential risks of illegal intentions for the business relationship. Essential for preventing fraud, money laundering, and terrorist financing, particularly in financial services, while also ensuring compliance with regulatory requirements and building trust with customers.
Discounted Utility
A concept in behavioral economics that describes how future benefits are perceived as less valuable than immediate ones. Important for understanding user preferences and designing experiences that account for time-based value perceptions.
Present Bias
A cognitive bias where individuals give stronger weight to payoffs that are closer to the present time compared to those in the future. Important for understanding user time-related decision-making and designing systems that encourage long-term thinking.
Information Aversion
The tendency to avoid information that one perceives as potentially negative or anxiety-inducing. Important for designing experiences that encourage information-seeking behavior.
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.
Expected Utility Theory
A theory in economics that models how rational individuals make decisions under risk by maximizing the expected utility of their choices. Essential for understanding decision-making under risk.
Irrational Escalation
The phenomenon where people continue a failing course of action due to the amount of resources already invested. Important for recognizing and mitigating biased decision-making.
ARPA
Average Revenue Per Account (ARPA) is a metric used to measure the average revenue generated per user or account. Crucial for understanding and optimizing revenue streams in subscription-based businesses.
Naive Allocation
A heuristic where individuals evenly distribute resources across all options, regardless of their specific needs or potential. Useful for understanding and designing around simplistic decision-making strategies.
Regressive Bias
A cognitive bias where individuals overestimate the likelihood of extreme events regressing to the mean. Crucial for understanding decision-making and judgment under uncertainty.
Illusory Correlation
The perception of a relationship between two variables when no such relationship exists. Crucial for understanding and avoiding biases in data interpretation and decision-making.
Illusion of Validity
A cognitive bias where individuals overestimate the accuracy of their judgments, especially when they have a lot of information. Important for understanding and mitigating overconfidence in user decision-making.
Captive Product Pricing
A pricing strategy where a core product is sold at a low price, but complementary products are sold at higher prices. Useful for designing pricing strategies that maximize revenue from complementary products.
KPI
Key Performance Indicators (KPIs) are quantifiable measures used to evaluate the success of an organization, employee, or project in meeting objectives for performance. Essential for tracking progress, making informed decisions, and aligning efforts with strategic goals across various business functions, including product design and development.