Bob Thomas's talk from the UXPA 2014 Ignite session "Are you a Super Hero or a Super Villain? Using Design Psychology for Good (and Evil)." Design Psychology is a powerful tool to wield and can be used to the benefit or detriment of our users; motivating them to behave in ways that can be in their interest, or our own. Our panel of experienced professionals, each with an interest in different facets of design psychology, will choose a white hat or black hat - some taking the side of good and honest intentions, with others taking the dark side where manipulation and coercion reign. On which side will you fall?

1. 2014
Behavioral Economics:
Good and Evil Practices in
the Insurance and Financial
Industries
Bob Thomas
Director of User Experience,
Liberty Mutual Insurance
(email) robertl.thomas@libertymutual.com
(twitter) @bobthomas

2. 2014
Classical Economics:
We Are All Rational Creatures
2014
Source: CBS. This photo is used here for personal, non-commercial use.

3. 2014
Behavioral Economics:
We Are Emotional and Irrational
2014
Source: CBS. This photo is used here for personal, non-commercial use.

4. 2014
Principles of Behavioral Economics
2014
๏ Principle 1: Mental Shortcuts
๏ Principle 2: Value Assessments
๏ Principle 3: Emotional Impacts
FREE!
No Annual Fee

5. 2014
Principles of Behavioral Economics
2014
๏ Principle 1: Mental Shortcuts
Source: http://ozeanmedia.com/wp-content/uploads/2013/05/brain_shortcuts.jpg.
This image is used here for personal, non-commercial use.

6. 2014
Mental Shortcut:
Reliance on Defaults & Relative Choices
2014
๏ People rely on defaults as complexity increases

7. 2014
Mental Shortcut:
Reliance on Defaults & Relative Choices
2014
๏ To help consumers, this
life insurance estimator
includes default values

8. 2014
Mental Shortcut:
Reliance on Defaults & Relative Choices
2014
๏ Relative choice: we value products based on
comparisons with other similar products

9. 2014
Mental Shortcut:
Reliance on Defaults & Relative Choices
2014
๏ Buying insurance can be very complex
๏ Potential customers may refuse to add
coverages that may benefit them

10. 2014
Principles of Behavioral Economics
2014
๏ Principle 2: Value Assessments

11. 2014
Value Assessment:
Love of Free
2014
๏ “Free” triggers consumer reactions that
cause people to overlook underlying math

12. 2014
Value Assessment:
Love of Free
2014
๏ Most people carrying
greater than $1000 in
balances instinctively
select a card offering…
๏ 15% APR + No Annual Fee
Free = No Annual Fee
(Example: $150 in first month)
๏ vs. 10% APR + $50 Annual Fee
(Example: $100 in first month)

13. 2014
Value Assessment:
Hyperbolic Discounting
2014
๏ We buy or borrow now at the cost of
having less money in the future

14. 2014
Principles of Behavioral Economics
2014
๏ Principle 3:
Emotional Impacts

15. 2014
Emotional Impact:
Risk Aversion
2014
๏ People would rather save money “under the
mattress” than invest in the market

16. 2014
Emotional Impact:
Risk Aversion
2014
๏ Progressive Insurance offers a Coverage Checker
that highlights areas where an individual may be
buying too little (or too much) insurance

17. 2014
Emotional Impact:
Self-Control Facilitation
2014
๏ We recognize the need for self-
control but need support
๏ We are often willing to accept
downsides of third-party control to
achieve goals

18. 2014
Emotional Impact:
Self-Control Facilitation
2014
๏ Insurethebox provides low-mileage car
insurance. They give their customers a free
telematics device to keep track of mileage

19. 2014
In Summary: What Behavioral
Economics Shows Us
๏ We make financial decisions intuitively,
and we’re not very good at it
๏ It helps to understand these principles
behind our financial decisions:
1. Mental Shortcuts
2. Value Assessments
3. Emotional Impacts

20. 2014
Behavioral Economics:
Good and Evil Practices in the Insurance and Financial Industries
2014
Bob Thomas
Director of User Experience
Liberty Mutual Insurance
Email:
robertl.thomas@libertymutual.com
Twitter:
@bobthomas
Original photo source: http://3.bp.blogspot.com/-
3d5cnvWaRhw/UaYN9yTucfI/AAAAAAAAAPk/CDlSqE3DJzU/s1600/C
loseUpGuard_Blog.jpg.
This photo is used here for personal, non-commercial use.