202. Checking in with Dr. Marco Palma

The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Today’s episode is an update on all the exciting stuff going on at the Human Behavior Laboratory at Texas A&M University. Last week I was able to spend two full days in the Human Behavior Lab (one of my favorite places in the world if I’m honest) and today’s episode is featuring the director of the lab, Dr. Marco Palma.

This is actually his third time being on The Brainy Business podcast. (He might be the first one to do that…?) Since the first time he was on the show (way back in episode 33 when I visited the lab for the first time) we have done so much together, including creating the certificate in Applied Behavioral Economics. I am honored to teach so many amazing courses for that program which has led to relationships and conversations with wonderful people around the world. (Sneak peek! Some of those projects are going to be featured in the coming weeks, and I am very excited to showcase more of my own work in the podcast.) The lab has done tons of experiments since I was there in January 2019 for that first interview, and about 40 of them have been published in the last few years. Don’t worry, we won’t try to cover all of them today. Instead, Dr. Palma and I selected a choice few that really resonate and can be applicable for listeners like you.

Show Notes:

• [00:52] I spent two full days last week in the Human Behavior Lab at Texas A&M University.
• [01:33] Dr. Palma has been on the show before (this is actually his third time – I think he might be the first to do that).
• [05:29] There have been many changes since the last time I featured the lab on the show: in terms of the infrastructure, they are hiring new people, and students have graduated and started their own labs.
• [06:43] ] One of the fascinating parts about studying human behavior is that we are all, to a certain degree, experts.
• [08:26] Marco’s tips for choosing between a PhD, masters or a certificate program like the one we have at Texas A&M.
• [10:04] It is an exciting time to be at Texas A&M because of all of the different dimensions of human behavior that are being studied from different angles.
• [12:05] The lab has done tons of experiments since I (Melina) was there in January of 2019 and about 40 of them have been published.
• [13:05] Dr. Palma shares about their charitable donations experiment.
• [14:20] In the paper they concentrate on matching 1-to-1 versus giving seed money with charitable donations. The matching scheme is supposed to motivate people to give because then their money can go further.
• [17:04] The general idea is that matching funds are always a good idea because they encourage others to donate, but as Dr. Palma shows, there could be a negative behavioral message being shared underneath the surface that actually decreases donations in this type of approach.
• [19:10] Being able to communicate that a percentage of your money goes directly to the charity goes a long way and is a way to differentiate yourself. You want to be able to stand out and be a high-quality charity.
• [20:10] Next Dr. Palma shares about their calorie labeling experiment. In this paper, they are looking at the policies requiring large restaurant chains to display the calorie content of food on food menus. The intention of the policy was for people to realize the number of calories in food and act accordingly in trying to reduce calorie consumption.
• [22:57] Some studies have shown this works, some show that people don’t change their consumption, and others show that they eat more calories when the numbers are shown on the menu. How can all three things be true at one time? Dr. Palma shares about their research and why relativity matters.
• [24:32] You’re not going to change how you eat in response to the calories if you expect something to have a lot of calories because you didn’t really learn anything new.
• [25:43] It’s dependent on the menu you see, your expectations, and realization of reality. In this context you can have scenarios where you increase calorie consumption, you make no changes in calorie consumption, and in which you actually have a reduction which is the intention of the law.
• [28:32] In another paper they were looking at decision-making under time pressure.
• [29:49] Once you have a set (number of choices) we are very good at optimizing the thing that we like the most.
• [31:04] However, generating a choice set is very difficult for us to do (businesses should focus on this!). If someone else constructs the choice set for us and gives us a choice among 3-5 options, we are actually pretty good at choosing something that we would probably like. We tend to choose things we value a lot.
• [32:15] The less cost we have to invest in making a decision will lead to an increase in satisfaction. Not only is the business going to gain, but the customer is also going to be happier.
• [33:00] Making decisions when you are hungry or emotional tends to change the way that we act.
• [34:58] In another paper looks at how hunger might change our cognitive capacity.
• [36:22] They found there was no difference in the cognitive performance of normal-weight individuals whether they had the option to order food or not. Obese individuals had a lower performance relative to the normal weight individuals so they were more affected by being hungry – unless they were able to pre-order their snack. Why?
• [37:51] The obese individuals anticipated the food and the anticipation was enough to increase their cognitive capacity. (It essentially eliminated the negative impacts of feeling hungry.)
• [39:37] Melina shares her closing thoughts.
• [41:44] If you enjoy the experience I’ve provided here for you, will you share about it? That could mean leaving a rating/review or sharing the episode with a friend (or 10!)

Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.

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Get the Books Mentioned on (or related to) this Episode:

• Influence is Your Superpower, by Zoe Chance
• You Have More Influence Than You Think, by Vanessa Bohns
• What Your Customer Wants and Can’t Tell You, by Melina Palmer
• The Voltage Effect, by John List
• The Elements of Choice, by Eric Johnson

Connect with Human Behavior Lab:

• Human Behavior Lab Website
• HBL on Twitter
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Top Recommended Next Episode: Announcing! Certificate in Applied Behavioral Economics from the Texas A&M Human Behavior Laboratory (episode 115)

Already Heard That One? Try These:

• Inside the Texas A&M Human Behavior Lab (episode 33)
• Using Biosensors to Unpack Human Behavior, with iMotions’ Jessica Wilson (episode 182)
• The Most Important Step in Applying Behavioral Economics: Understanding the Problem (episode 126)
• Influence Is Your Superpower with Yale’s Dr. Zoe Chance (episode 189)
• You Have More Influence Than You Think with Vanessa Bohns (episode 197)
• Anchoring (episode 11)
• Relativity (episode 12)
• Herding (episode 19)
• Framing (episode 16)
• NUDGES & Choice Architecture (episode 35)
• Time Pressure (episode 74)
• The Overwhelmed Brain and Its Impact on Decision Making (episode 32)

Other Important Links:

• Brainy Bites - Melina’s LinkedIn Newsletter
• Texas A&M Certificate Program
• Human Behavior Lab Research

Check out What Your Customer Wants and Can’t Tell You on Amazon, Bookshop, Barnes & Noble, Book Depository, and Booktopia