NeuroTactic Overview

Prospect Theory

A painful experience is more powerful than a gain of equal measure

SUMMARY:

If you were given $10 by a random stranger on the street, you would probably feel good. But if someone ran up to you a few seconds later and stole the $10 bill out of your hand, you would feel worse off than you did before you received the $10 in the first place, even though you are no worse off. This is called Prospect Theory.

We feel more pain from a loss than we feel from a gain of equal value. In fact, we take more risks to avoid pain than we do to achieve an equal gain. And as we gain more, we value each of the same types of gain less and less (this is called Diminishing Marginal Utility). This behavior affects everything from our purchasing decisions to our relationships.

Consider bundling together the “painful” elements of your product. Offer annual subscriptions instead of monthly or bundle services together that you know would otherwise be purchased separately. When planning your customer journey, try to add time between benefits, such as limiting the use of your product to a certain frequency or spreading out rewards in your loyalty program.

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Primary Source:

Kahneman & Taversky (1979). Prospect Theory: An analysis of decision under risk. Econometrica, Vol. 47, No. 2, pp 263-292

Dream Category:

Desire

The DREAM framework, created by Vivid Labs, represents a research-backed framework for effective marketing messages. It stands for Desire, Routing, Emotion, Attention, and Memorability.

AIDA Category:   ⓘ

Decision, Action
AIDA is a well-known framework for assembling a marketing message. It stands for the four steps of human decision-making: Attention, Interest, Decision, and Action.

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Explore The Library

There are two methods we use to organize the NeuroTactic Library: the DREAM method and the AIDA method. You can find information on each method below, as well as explore the NeuroTactics inside each method. You can find any NeuroTactic using either method.

D.R.E.A.M. FRAMEWORK

The ingredients of a purchase

These are categories designed by Vivid Labs around the latest research in neuromarketing techniques. Each step represents a unique "ingredient" to a customer's buying decision.

  • Attention
  • Desire
  • Routing
  • Emotion
  • Memorability

Zeigarnik Effect

Dan Russell Oct 06, 2021

We feel a psychological weight when tasks remain unfinished, and we will remember unfinished tasks longer than tasks which have been completed.

Weber-Fechner Law

Dan Russell Oct 06, 2021

We reject immediate increases in pain, but we accept small, incremental increases in pain, even when both final pain levels add up to the same amount

Semmelweis Reflex

Dan Russell Oct 06, 2021

We tend to reject facts, and even evidence, when it is in contradiction of our existing beliefs

Rewards

Dan Russell Oct 06, 2021

We will modify our behavior in ways that earn rewards

Past Commitment Rationality

Dan Russell Oct 06, 2021

We go out of our way to behave in line with commitments we've made in the past

Limited Access

Dan Russell Oct 06, 2021

We value things higher when there are barriers to accessing them

Feedback Loops

Dan Russell Oct 06, 2021

We alter our behavior when provided with real-time feedback on our performance

Context Effect

Dan Russell Oct 06, 2021

We anchor familiar places and experiences with the mood we were in during our last encounter with that place or experience

Confirmation Bias

Dan Russell Oct 06, 2021

We tend to seek out information that confirms our existing beliefs

Category Size Bias

Dan Russell Oct 06, 2021

We tend to believe that options inside large categories are superior to options in small categories

Baader-Meinhof Phenomenon

Dan Russell Oct 06, 2021

We notice something more frequently after noticing it or learning about it for the first time

Authority Bias

Dan Russell Oct 06, 2021

We trust authoritative figures more than our peers

Attentional Bias

Dan Russell Oct 06, 2021

We more readily pay attention to things with which we're already familiar

A.I.D.A. FRAMEWORK

The steps of a buying decision

These four categories are the traditional drivers behind effective marketing. They represent the four stages of thinking or action a customer must move through in order to make a buying decision.

  • Desire
  • Awareness
  • Interest
  • Action

Specificity

Dan Russell Oct 06, 2021

We place more trust in specific statements and offers than those which are vague

Social Proof

Dan Russell Oct 06, 2021

We place more trust in things and people that our peers already trust

Scarcity

Dan Russell Oct 06, 2021

When a resource is limited, its value increases

Reciprocity

Dan Russell Oct 06, 2021

We feel an innate pressure to return a favor

Prospect Theory

Dan Russell Oct 06, 2021

A painful experience is more powerful than a gain of equal measure

Motivating Uncertainty

Dan Russell Oct 06, 2021

Uncertain positive outcomes can increase the perceived value of an offer

Framing Effect

Dan Russell Oct 06, 2021

The way a fact or number is presented affects how we see its relative value

Endowment Effect

Dan Russell Oct 06, 2021

We value things that we own more than things we don't

Endowed Progress Effect

Dan Russell Oct 06, 2021

We are more likely to achieve a goal when we're given a head start

Commitment Expansion

Dan Russell Oct 06, 2021

A small step toward an outcome raises the chances of taking larger steps in the future

Certainty Effect

Dan Russell Oct 05, 2021

Adding clarity and specificity to your message increases trust

Anchoring

Dan Russell Sep 29, 2021

A well-researched marketing technique that puts your price into perspective