Definitions

Behavioural science: The study of human decision-making, incorporating insights from behavioural economics, social psychology, and other related disciplines.

System 1 decision-making: As coined by Nobel Prize-winner Daniel Kahneman, this is the term for decision-making that is fast, instinctual and largely unconscious, as opposed to the other method, System 2, which is slower, and requires more mental effort and time.

Choice satisficing: Coined by economist Herbert Simon, this means making a choice based on what is good enough, rather than seeking the best option possible (‘maximizing’), thereby saving cognitive effort (thinking).

Behavioural economics

If you are in business, you are in the business of behaviour. You need to understand what causes people to buy and use your products and services, and you need to do these things better than your competitors to survive and grow.

But what do people want? Generally speaking, they want companies to “make it easy” – in the words of the University of Chicago Professor Richard Thaler, co-author of ground-breaking book “Nudge” and winner of the Nobel Prize for Economics.