r/BehavioralEconomics • • 3h ago

Ideas & Concepts Reward design

1 Upvotes

The mistake log got cleaner after people learned to keep mistakes out of it. A worker reported a near miss and was publicly humiliated. Later, a colleague found a similar problem, fixed it quietly, and told nobody. The supervisor saw fewer reports. The team lost a chance to understand the recurring fault.

The log counted what people reported. A penalty for reporting could reduce that number without reducing the mistakes. The supervisor would need another way to check for recurring faults before calling the cleaner log an improvement.


r/BehavioralEconomics • • 16h ago

Survey 69% of drivers say they'd drive 5 extra minutes to save 5 cents a gallon. On a 15-gallon tank, that's 75 cents Spoiler

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10 Upvotes

That one survey result helps explain the price wars on gas station signs. Because so many drivers chase a few cents, stations compete hard on fuel and earn more inside, where food is 28.5% of in-store sales but 38.9% of gross profit. There's also an asymmetry drivers notice: prices rise like rockets and fall like feathers.

Is chasing a nickel a gallon a bias, or a rational habit once it becomes automatic?

I made a video about it for my channel


r/BehavioralEconomics • • 5h ago

Ideas & Concepts Avoidance and relief

1 Upvotes

Saying yes ended the argument. The same request came back the following week. She'd disliked the plan, but refusing meant another long dispute. Agreeing had made the room relax. Later, she was still angry about what she'd agreed to.

When an action removes something unpleasant, that relief can make the action more likely to recur. This is negative reinforcement. Ending the pressure might reinforce her agreement. Power and circumstances matter as well; changing the pattern may require support or a change in conditions. Refusing had a cost in this relationship too. A better way of saying no would only help if she had enough safety and practical room to use it.


r/BehavioralEconomics • • 7h ago

Ideas & Concepts Interleaving

1 Upvotes

--- He could use every formula except when nobody told him which one to use. Separate worksheets had made each topic feel mastered. The exam mixed them. He now had to identify the problem before solving it, a decision the chapter headings had quietly been making for him. He could ask which feature pointed to a formula, then check whether he'd chosen well.

Interleaving mixes problem types, which can require choosing between methods. Studies find benefits in some settings even when practice feels harder. Focused instruction may be needed first. The mixture needs to train a distinction the eventual task calls for.


r/BehavioralEconomics • • 1d ago

Ideas & Concepts Spacing

1 Upvotes

She could recite the poem on Monday and barely begin it on Saturday. Reading it smoothly each morning had hidden the problem. For the next performance, she tried recalling a stanza before opening the page. She corrected a missed line and returned to it sooner; a stanza she recalled easily could wait longer.

Spacing studies find that retention depends on both the gap between study sessions and the time until the final test. Making the gap longer doesn't keep improving the result indefinitely. Material and performance affect which interval works best, so her Saturday recall mattered when choosing when to return to a stanza.


r/BehavioralEconomics • • 1d ago

Ideas & Concepts Checking the evidence between an argument's steps

1 Upvotes

The proposal made sense on the slides and fell apart without them. 'Tickets rose forty percent, so service worsened and we need two hires,' she said in rehearsal. Orders had doubled. She couldn't explain how ticket count established service quality, or how either figure established two additional jobs. Those were the two bridges the arrows had supplied.

Tickets per order had fallen, but the total work might still have increased. Waiting times and problem severity would help assess service; work hours and available capacity would help assess staffing. She needed evidence for both steps before asking for two hires.

Recalling an explanation means producing it without the supplied cues. That can expose gaps and help later recall. It doesn't check the argument for you: someone can explain a bad inference fluently.


r/BehavioralEconomics • • 1d ago

Ideas & Concepts Retrieval practice

0 Upvotes

She knew the chapter until she closed the book. Every sentence had looked familiar. Asked to explain the argument on an empty page, she produced three disconnected phrases. While reading, she hadn't noticed those gaps.

She needed to reopen the book, compare the explanation and fix the missing pieces. A tick or a cross alone wouldn't explain them. Trying again later could show what she still remembered and understood.

In Roediger and Karpicke's prose-recall experiments, repeated study worked better on an immediate test. An earlier recall test worked better two days or a week later. Looking fluent while the page is open and remembering it later are different things.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Expected outcomes

1 Upvotes

His rent was due on Monday. On Friday, he could finish a small, guaranteed job or chase a project with a much larger fee. The second offered better earnings on average. If he didn't get it, though, he couldn't cover the bill.

Savings or someone willing to help could make that risk easier to take. Without them, the smaller job paid for something he needed now. Expected earnings average the possible outcomes. A high average can include an outcome you can't afford. Expected utility takes account of how the outcomes matter to you, and practical constraints can also favour a different choice. The timing of his bill matters as well as the possible fee.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Expected outcomes

0 Upvotes

Her second-shop forecast assumed strong sales. Then she added a slow first year and rising costs. In her rough model, each sale contributed $6 after variable costs, and monthly fixed costs were $6,000. A thousand sales covered those fixed costs. Eight hundred left a $1,200 gap. Her $3,600 buffer covered three such months.

She needed a better estimate of sales, a smaller commitment or enough cash to survive a longer shortfall. The break-even calculation assumes those costs and the $6 contribution stay valid, and leaves out startup costs. It shows what happens at 800 sales. It can't tell her how likely 800 sales are; that estimate needs evidence.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Competing objectives

1 Upvotes

The salary had a number. Being ten minutes from her parents didn't. A promotion required moving away. Instead of weighting 'family' as one spreadsheet row, she listed what she currently did: shopping, paperwork and being available at short notice. Shopping could be replaced. Availability still needed a willing person nearby. Her parents also had preferences about who that person would be.

A multi-objective model compares the options it is given. Adding a specific care arrangement can change those options, their costs and what is feasible. The model still can't decide whose needs or consent to leave out.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Testing a date parser's assumptions

1 Upvotes

On a quiet project, she tried a different date library. It took longer than using the familiar one. Her old helper silently read '03/04' as March 4; the alternative asked her to specify the format. That gave her a useful question to test: whose month and whose day came first? She could also keep the old tool and supply the format explicitly, especially under a deadline. Learning what it assumed didn't require replacing it. Exploration trades some time now for information that may help later. Here, an ambiguous date and a test of its interpretation make the possible benefit concrete.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Planning fallacy

1 Upvotes

The three-day website took three days of work and ten days to finish. Its freelancer had estimated design time. Missing photographs, delayed replies, and a round of approval weren't in the estimate. The client had heard a delivery date. The freelancer had calculated a different thing.

Time-prediction research distinguishes hands-on work from elapsed time. The planning fallacy concerns optimism about when work will be finished, but the cited research didn't test these client delays. Similar past projects could help with an estimate. They wouldn't establish that a bias caused this late delivery.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Status quo

1 Upvotes

The new spreadsheet got thirty minutes to prove itself. The old one had enjoyed three years of practice. After the trial, the team called the replacement awkward and went back to the familiar tool they complained about every week.

Training and switching would still cost time. The question was whether the new tool could repay that time once people knew how to use it. A preregistered replication found a status-quo effect in three of four scenarios, with little support in the fourth. Familiarity and real transition costs can also make staying sensible. The studies can't choose a spreadsheet for this team; a comparison after some learning would be more informative than the first half-hour.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Reference points

1 Upvotes

The quieter flat eventually sounded noisy. After leaving a busy road, he began noticing every upstairs footstep. An old recording restored some perspective. It didn't answer whether the remaining noise needed attention. His notes showed daytime footsteps he merely noticed and late chair-dragging that repeatedly interrupted sleep. Those called for different conversations.

He could ask about the late chair-dragging without treating every daytime footstep as a problem. The baseline for judging noise can change after a move. That might help explain why he noticed sounds he once ignored, but it says nothing about whether they were harmless. The cited loss-aversion research didn't test apartment noise. Actual disturbances and interrupted sleep need checking separately.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Marginal gains

0 Upvotes

The books kept sliding after every rearrangement. He tried smaller stacks and heavier bookends. Each version looked tidier and eventually slipped. Then he emptied the shelf and checked it with a level. The same tilt had survived every experiment because rearranging books never changed the supports.

In another project, the thing nobody has changed might be an approval queue or a file format. It could turn out to be harmless. Testing it would answer a question that another rearrangement hadn't. An optimization model searches among the changes it allows. If the only effective fix sits outside that list, the model won't find it. Checking a support, queue or other assumed constraint is a way to question that list; repeated failure alone doesn't tell you which constraint is at fault.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Sunk costs

1 Upvotes

The scenes she most wanted to write weren't in the manuscript she'd spent a year on. In a separate notebook, she kept inventing scenes for a minor character. Instead of following them, she opened the old manuscript, because leaving it felt like throwing away a year. Leaving the manuscript wouldn't erase what she'd learned. Some pages might even fit the new story. She still had to decide which one she wanted to spend another year writing.

Past spending sometimes makes people continue a project they would otherwise leave. A meta-analysis found this sunk-cost effect in monetary decisions, with substantial differences between tasks. A preregistered replication involving time found mixed results. Neither tested writers and manuscripts.


r/BehavioralEconomics • • 2d ago

Ideas & Concepts Opportunity cost

1 Upvotes

The free chair cost her most of Sunday. There were two buses, a borrowed trolley, and a seller who arrived late. She got it home just before dinner. On Saturday, the plan had been to spend Sunday doing absolutely nothing. That was the part of the budget she hadn't counted.

Rest sends no invoice. Still, if Sunday is your only free afternoon, it's worth asking whether you want to spend it collecting a chair.

Opportunity cost means comparing a choice with the best other use of the resources it takes. Experiments find that reminders of forgone options change choices modestly on average, mostly in hypothetical shopping decisions. There's less evidence about time, and the framework doesn't put a price on an afternoon off.


r/BehavioralEconomics • • 2d ago

Question When does adding an item for free shipping actually make sense?

1 Upvotes

A hypothetical checkout: a lamp costs $48, with $8 shipping. Total: $56.

Add a $12 cable to qualify for free shipping, and the total becomes $60. You avoid an $8 fee but spend $4 more overall—and receive a cable.

If you needed the cable, that could be worthwhile. If you added it only to avoid shipping, the “saving” deserves a closer look.

I make Strange Logic, a small channel about everyday decision-making. I explored this example in a 4:43 animated video using AI-generated visuals and narration.

What do you think best explains the appeal here: avoiding a separate fee, getting another item, or something else?

Video: https://www.youtube.com/watch?v=cwzffpHJkEw


r/BehavioralEconomics • • 4d ago

Question Had a good day in my paper trading test and I'm trying not to let it change my mind. Does pre-committing actually work?

1 Upvotes

I'm running a two-week paper trading test (not real money) on prediction-market trades. Earlier this week it had a good day after being down most of the week. Overall it's still clearly negative.

The temptation is to say "it's turning around," or to tweak the rules now. Before I started, I locked the rules and the end date so I can't do either. It feels like a textbook pre-commitment device against stopping on a good day.

For people who think about this stuff: does pre-committing to a fixed test length actually hold up, or do people usually find ways around their own rules? What rule has stopped you from fooling yourself?


r/BehavioralEconomics • • 4d ago

Ideas & Concepts Our reaction to automation seems to track our "money script" more than the actual math. Anyone else notice that?

1 Upvotes

Most of us treat automation anxiety as an arithmetic problem: will I lose my job, will wages drop? But the gut reaction usually shows up way before anyone opens a spreadsheet. Even at a self-checkout: no price changed, nobody is judging you, yet your jaw still tightens.

The framework that explains this is "money scripts," a four-part psychological inventory: avoidance, worship, status, and vigilance. Same news, four completely different reactions:

• Someone with a status script hears a threat to rank: their title, their seniority, where they sit in the room.

• A worship script (the belief that more money will finally make everything okay) hears a threat to the dream of "enough."

• A vigilance script hears confirmation that they were right to hoard and worry all along.

• An avoidance script just changes the subject—which looks calm from the outside, but is really the same panic with the volume muted.

The core argument is that the panic is about identity, not income.

Here is the historical test: the first industrial robot arm, the Unimate, went to work at a GM plant in Trenton back in 1961. It lifted and stacked burning hot die-cast parts. Nobody protested or lined up to defend that work, because no human ego was built around getting burned by hot metal. The panic only arrived decades later when machines moved into roles people had wrapped their self-worth around. The machine didn’t change. What it touched did.

So our reaction isn't a forecast of the future. It's an emotional readout of which script is running, and how much of ourselves is parked in a job title.

When you hear "a machine can do your job," which of those four instincts kicks in first—defending the work, chasing more security, saying "I told you so," or quietly ignoring it?

(We put together an animated visual breakdown on this dynamic—including why we judge algorithms harsher than humans for the exact same mistakes: https://www.youtube.com/watch?v=pYPOn0U0k18)


r/BehavioralEconomics • • 5d ago

Ideas & Concepts A salary hides your hourly rate, so every unpaid hour quietly comes out of it

31 Upvotes

Most salaried people never divide their pay by the hours they actually work, and the result is worth seeing once.

Payroll treats a full-time year as 2,080 hours: 52 weeks times 40. Take a $52,000 salary. Divide by 2,080 and you get $25 an hour. Now say your real week is 45 hours. Your hour is worth about $22. Make it 50 hours and it's $20. Same salary, same contract, and the price of your hour fell by a fifth without anything on the payslip changing.

Those extra ten hours a week add up to 520 hours a year, which is thirteen full work weeks given away. A salary hides the hourly rate, so every unpaid hour comes straight out of it.

There's a second layer. Time behaves like perishable inventory, the way an airline seat does. Once the plane leaves, an unsold seat is worth zero. But airlines price seats dynamically, while most workers sell every hour at one flat rate. The 3am hour before a deadline is priced the same as a slow Tuesday afternoon.

So "time is precious" leaves out the key part: time expires, and it expires at a fixed price.

Have you ever worked out your real hourly rate once you counted the hours you actually put in?

We made a full animated breakdown of this, if you'd rather watch: https://www.youtube.com/watch?v=zM79lJZugIg


r/BehavioralEconomics • • 5d ago

Ideas & Concepts The Ostrich Effect: avoiding what we don’t want to see

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9 Upvotes

The ostrich effect is a cognitive bias in which people ignore or avoid negative information, data, or feedback to escape emotional discomfort or anxiety.

The name comes from the myth that ostriches bury their heads in the sand when they are scared. The term was used by researchers Dan Galai and Orly Sade in a 2006 paper on financial information and investor behaviour.

Common examples include:

-Investors checking their portfolios during market booms but ignoring them during crashes.

-Avoiding unread bills, bank statements, or debt balances.

-Skipping a doctor’s appointment out of fear of a bad diagnosis.

Many times, we avoid facts that could bring real disappointment. For example, when we know an exam went badly, we may want to avoid facing the result. We may seek out information that pleases us and reject information that doesn’t.

I felt like exploring this kind of avoidance. When checking our weight or reflecting on past mistakes, we may try to avoid what we see.

Perhaps it hurts the image we hold of ourselves, the image we rely on to maintain a sense of who we are. That image gets shaken, and our instinct for self-preservation kicks in.

We have expectations about how we want things to be, and we project those expectations onto reality. It can be painful, sometimes almost unbearable, to realise that things are otherwise.

Avoidance, then, may not only be about the uncomfortable fact outside us; it may also be about protecting the version of ourselves we are unwilling to question.

This connects, though not in exactly the same way, to denialism. Climate denialism takes things a step further: it involves arguments against established evidence, not simply avoiding information. In some cases, denying or dismissing facts can help people continue acting in accordance with their desires or interests. Avoidance and denial aren’t identical, but both can protect us from information that challenges what we want to believe.

Despite many warnings from Earth itself, we want to keep going on and on with our own projects.

How do you see the relationship between avoiding uncomfortable facts and protecting our image of ourselves?

Sources:

https://acharyaprashant.org/en/articles/climate-change-a-crisis-of-honesty-1_09e5187


r/BehavioralEconomics • • 7d ago

Research Article Waiting for a reward also means deciding whether to believe the promise

11 Upvotes

A smaller reward now, or a better one later. The marshmallow task is usually presented as a test of whether a child can resist temptation.

But the second reward is a promise. If you don’t expect the adult to deliver, taking what’s already there could make sense. That’s a possible interpretation of the choice, rather than a way to read a child’s whole background from it.

Kidd and colleagues tested a related idea by having an adult keep or break earlier promises before the waiting task. The reliable-adult group waited about 12 minutes on average, compared with about 3 in the unreliable-adult group. It was only 28 children, and a later school extension found a smaller difference with an inconclusive main planned test. So the size and consistency still need care.

IMO it’s an interesting case of how the situation changes the meaning of a choice. How should we interpret impatience when we also have uncertainty about whether the delayed reward will arrive?

I made a short video about this for The Confound. It also covers why the later achievement findings get more complicated once background and early skills are included: https://www.youtube.com/watch?v=E-Z5TNiVO4c

Sources:

- Original reliability experiment: https://pmc.ncbi.nlm.nih.gov/articles/PMC3730121/

- School extension: https://doi.org/10.1016/j.jecp.2020.104821


r/BehavioralEconomics • • 9d ago

Ideas & Concepts Commitment bias: why announcing goals helps some people and not others

3 Upvotes

Public commitment turned homeowners into billboard hosts and sent neighbours to the polls. It also lets people coast. Same mechanism, opposite results, and one thing separates them.

Check out the breakdown here: https://youtu.be/4oVoUcNMik4


r/BehavioralEconomics • • 11d ago

Ideas & Concepts Judges who knew the dice were rigged still sentenced to the number. The costly psychology of "I'll go first"

94 Upvotes

In a famous legal experiment, experienced German judges were asked to roll a pair of dice before deciding a prison sentence for a shoplifter.

The dice were secretly loaded to only land on 3 or 9.

The judges knew the dice were completely random and irrelevant. Yet those who rolled a 9 gave an average sentence of 8 months, while those who rolled a 3 gave 5 months. Seasoned legal professionals with decades of training, visibly influenced by a toy.

When real estate appraisers were tested, their valuations tracked listing prices almost identically—even while every single agent adamantly denied being influenced.

That is what makes anchoring so dangerous: it doesn't feel like pressure, it feels like your own independent opinion.

Most advice screams: "Always make the first offer to set the anchor."

Yet in high-stakes negotiations, going first frequently backfires—it leaks information about what you know, triggers an immediate regret trap if accepted, and can instantly collapse a deal if the other side has strong alternatives.

Worse, lawmakers are already intervening (like Massachusetts banning employers from asking for salary history entirely, treating a simple question as a price move).

It turns out whether your anchor wins or loses has very little to do with the number itself, and almost everything to do with the "shape" of the ask and how you occupy the room before anyone even speaks.

Put together an animated breakdown exploring the exact papers, the precision effect, and how tandem counter-anchoring works here: https://youtu.be/-5Eiue_jRUo

When you negotiate, do you force yourself to say the first number, or do you prefer waiting to counter?