Applied Behavioral Economics
Offer Innovation is based on insights from modern behavioral economists, who have discovered that consumers behave in surprising and counterintuitive ways when making decisions.
The key is that consumers, driven by a variety of subconscious social, emotional, and cognitive biases, actually make decisions that are “predictably irrational,” a term coined by behavioral economist Dan Ariely. In other words, consumers make decisions based on more than just price. To understand what consumers truly want, behavioral economics needs to be taken into account and testing new offers is critical. That’s where Offer Innovation comes in.
And not just in theory. Over the past few decades, Nobel-Prize-winning behavioral economist Daniel Kahneman and others have uncovered dozens of heuristics, or “rules of thumb,” that help explain why consumers make the decisions they do. Some well-known heuristics include information framing, loss aversion, naive diversification, anchoring and affinity — and there are many more. These heuristics are built into the Offer Innovation software platform to both feed and leverage machine learning for automated offer design.
Machine learning technology can have connotations of full automation; a black box; a lack of control. But our approach is much more “Iron Man” than “Terminator.” Eversight software calculates possibilities and predicts outcomes at a massively larger scale than the human brain or spreadsheets could ever do but then informs and coaches the business user.
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