Renos Vakis. eMBeD unit. The World Bank
Behavioral psychology to improve decision making
We are human beings and, as so, we are social.
How do we make decisions?
- Automatic thinking
- Social thinking
- Mental models
What do decision makers do:
- Contextual definition of problems.
- Map behaviours.
- Solution, evidence, iteration.
Main problems in decision-making:
- Bias of confirmation: when the individual seeks or interprets new evidence as confirmation of their beliefs or theories already conceived.
- Bias of confidence: when subjective confidence of someone over their own judgement is higher thant the objective precision.
- Framing and aversion to losses: we tend to take more risks in the “losses” frame rather than on the “gains” frame. We prefer not losing rather than gaining.
Case study: paying taxes in Poland
(Some) people do not pay taxes.
- Reasons: architecture is complex, mental effort to understand how paying taxes work, bad perception of what happens with taxpayers money (e.g. corruption), etc.
- Possible solutions: improve electronic procedures, etc.
Experiment in Poland: sending letters to “remind” tax evaders that they should pay. Letters work, but they work better the harder the tone of the letter.
Case study: water saving in South-Africa
Water consumption invoices included explanations on pricing and the different price thresholds. Especially poor people was responsive to such information, but not as much richer one. Then other information was included: how one behaved according to the average citizen and publicly acknowledging those more efficient in saving water. Then rich people also were responsive and saved water.
Mapping behaviors
Diagnosing bottlenecks:
- Decisions
- Actions
- Mindsets
- Information
- Context
Map a given process, identifying all the behaviors —especially decisions and actions— and see how they are conditioned or determined by information, beliefs, procedures and tasks, social norms, etc. This should help us to accurately find out the potential decision or action bottlenecks: steps where one may or may not make a decision or do an action depending on several factors. If these are properly identified and characterised, we can act upon those factors to improve the likelihood of decisions to be made and actions to be carried out.
Group decisions and mindsets
Social conformity
| Independent behavior | Interdependent behavior | |
| Empiric | Customs It is what I want to do. |
Descriptive norms Everyone does it. |
| Normative | Moral norms It is the correct thing to do. |
Social norms It is what everybody expects from me. |
Messages can be shaped in a way that refer to different kinds of norms and thus have different effects on people. Besides, social norms and mental models are strong conditioners (even determinants) of behavior and it is crucial to take them into account when designing and executing public policies.
Fixed mindset —belief that certain things cannot be changed, or that one is born with some skills that cannot be changed— vs. growth mindset— things can be changed, one’s own skills can be improved. We have to foster growth mindsets.
Solutions
The EAST framework: easy, attractive, social, timely.
Strategies to address biases:
- Decision judges.
- Cooling period.
- Behavioral worksheet.
- 1-2-4: assess the decision individually, discuss with colleague, discuss in group.
- Decontextualize and recontextualize.
- Considering the opposite.
- Mindsets and mind aligning.
- Frames, pliers and padlocks: aversion to risk, incentives, committments.
- User experience.
