NeuroTactic Overview

Sunk Cost Bias

We discount the value of investments already made in favor of making those investments pay off

SUMMARY:

Even in the cutthroat world of finance, it is difficult to resist our temptation to hold on to bad investments, even when it is in our interest to sell. Stock traders and stockyard workers all have this experience, which is known as Sunk Cost Bias. We have a tendency to keep track of the investments we’ve made into certain products and projects, and when the time comes to admit defeat, we tend to keep moving forward in order to see that investment bear fruit—even if there’s a decreasing chance of that happening.

Sunk cost bias applies to both money and time. The lawyer resists giving up on a big case because she remembers all the sleepless nights, while the entrepreneur resist giving up on a new marketing campaign because she remembers the thousands of dollars she invested.

Your prospects and customers have invested time and money into achieving a certain result. They will have a higher willingness to continue investing to achieve that result than switching to a new alternative prospect, but they must be reminded of the investment (or “sunk cost”) along the way in order to realize how far they have come. 

Be careful with the ethics surrounding this NeuroTactic; although it is powerful, it should not be used to keep customers on a “hamster wheel” by convincing them to continue pursuing a goal that you know is unlikely to be achieved.

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Primary Source:

Arkes, H.R. & Blumer, C. (1985). The psychology of sunk cost. Organizational behavior and human decision processes, 35(1), 124-140

Dream Category:

Routing

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:   ⓘ

Interest
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