The hottest Behavioral Economics Substack posts right now

And their main takeaways
Category
Top Finance Topics

Markets as Error Correction Processes

Knowledge Problem • 196 implied HN points • 01 Feb 24
💼 Business Economics Markets Institutions Behavioral Economics Entrepreneurship
  1. Markets are error correction processes that help us adapt to changing conditions and create value.
  2. Individual adjustments in response to price signals lead to error correction in markets.
  3. Through adaptation, decentralized coordination, knowledge ecosystems, and error correction, markets enable us to achieve more and flourish compared to other social institutional frameworks.

Understanding Mental Accounting How Our Minds Influence Financial Decisions

Mental Models • 42 implied HN points • 26 Jul 23
💰 Finance Behavioral Economics Financial Decisions Cognitive Biases
  1. Mental accounting involves dividing finances into separate 'mental accounts' based on different criteria.
  2. Psychological factors like framing effects and sunk cost fallacy contribute to mental accounting.
  3. Mental accounting impacts budgeting, debt management, and investment decisions, influencing overall financial well-being.

Why do people hate redesigns?

UX Psychology • 178 implied HN points • 28 Oct 21
🕹 Technology UX Design Psychology User Research Behavioral Economics Cognitive Bias
  1. Users often hate redesigns due to familiarity bias, where they prefer the familiar even if the change is beneficial, and the endowment effect which makes them value what they already have more.
  2. Psychology plays a significant role in user reactions to redesigns, as habits are hard to change, leading to user dissatisfaction with altered interfaces.
  3. To improve user experience with redesigns, allowing opt-ins for changes can give users control, conducting thorough user research helps address pain-points, and making small, incremental changes can ease user adaptation.
Get a weekly roundup of the best Substack posts, by hacker news affinity:

Week 30 - 🎣 The Hook Model: How to Create Addictive Products 🚀

The Product Channel By Sid Saladi • 30 implied HN points • 12 Mar 23
💼 Business Product Development Psychology Marketing Behavioral Economics Entrepreneurship
  1. The Hook Model is a four-step process that helps create habit-forming products.
  2. The Hook Model consists of Trigger, Action, Variable Reward, and Investment stages.
  3. Understanding the Hook Model can provide a competitive advantage by creating products that build customer loyalty.

Assessing altruism

Model Thinking • 19 implied HN points • 09 Jul 23
🔬 Science Behavioral Economics Altruism Child development Economic Theory
  1. Intergenerational altruism in the Barro-Becker model may need to be as low as 0.09 for a stable solution, which seems paradoxical considering the proportion of a parent's and child's consumption.
  2. Potential explanations for this paradox include scale economies in household production, children being viewed as 'utility monsters,' and parents seeing children as a prestige good.
  3. The discrepancy in altruism values between parents and consequences may imply that individuals are not consequentialists and may prioritize existing utility over potential future utility.

Guiding Choices in UX: The Role and Ethics of Nudging

UX Psychology • 1 HN point • 01 Mar 24
🕹 Technology UX Design Behavioral Economics Psychology Ethics User Experience
  1. Nudging is a technique based on behavioral economics that gently guides people towards beneficial choices while allowing freedom of choice.
  2. Nudges leverage cognitive biases and mental shortcuts to influence behavior positively and enhance the user experience in various contexts.
  3. Using nudges in UX requires caution to avoid pitfalls like over-reliance on defaults, ethical concerns, undermining trust, and unintended consequences.

1 simple habit to be more persuasive

Stream of Consciousness • 1 HN point • 23 Feb 24
💼 Business Marketing Behavioral Economics Sales Persuasion
  1. Offering only one option reduces the perceived value of that option. Comparing it to alternatives makes it more appealing.
  2. When presenting a product, service, or idea, always contrast it with other options to enhance its desirability.
  3. The decoy effect showcases how introducing a less desirable third option can shift preferences towards a more expensive choice, highlighting the power of comparison.

Not Another Bias!

Optimally Irrational • 1 HN point • 26 May 23
🔬 Science Behavioral Economics Game Theory
  1. There is a renewed interest in understanding the adaptive explanations for human behavior, rather than labeling every cognitive bias as a flaw.
  2. The rationality wars have highlighted different perspectives on human decision-making, emphasizing heuristics and adaptive processes.
  3. Advancements in cognitive neuroscience and economic theory are shedding new light on biases, showing them as potential solutions to informational constraints.