Friday, March 14, 2008

Something that’s framed as a loss is really effective at changing behavior

From NPR Radio:

"Yale professors Ian Ayres, an expert in contract law, and Dean Karlan, a behavioral economist, both entered weight loss bets. And both won. They took off the weight they pledged.

With their new company,, they hope to facilitate personal commitment contracts for weight loss and other types of personal goals. If you don't live up to your end of the contract, StickK will give your money to charity or a person you designate. The service is free to registered users. The professors, ultimately, hope to make money through advertising revenues."

“What we know about incentives is that people work a lot harder to avoid losing $10 than they will work to gain $10,” explains Ayres. “So something that’s framed as a loss is really effective at changing behavior.”

Some psychologist estimates the negative effect for an average loss to be up to 2.5 the magnitude of a positive one; it will lead to an emotional deficit. I have seen this effect when my team of 11-12 years old losing a soccer game (big deal) where winning seems just a normal thing.

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