Behavioral economics has remarkable applicability to Product Management – particularly when it comes to the topic of cognitive bias.
As humans we all have cognitive biases that can cause us to respond ‘irrationally’ to certain stimulus, and as product managers we have an opportunity to harness these biases to make better products…
That is, unless we get caught in a cognitive bias trap ourselves!
In this talk we will explore some of the more friendly cognitive biases that can be used to make better products such as:
- ‘The IKEA effect’ – A cognitive bias in which people place a disproportionately high value on products they partially created. How can you craft your product’s onboarding experience to harness this bias?
- ‘Prospect Theory’ – in Daniel Kahneman and Amos Tversky’s nobel prize winning research on Prospect Theory, it is apparent that people focus on gains and losses far more than they do on their overall end state.
- ‘Habit’ – a routine or behavior that is repeated and tends to occur subconsciously. According to science, it takes 66 days to form or change a new habit (and not 21 days like the old myth) – so those 30 day product trails won’t cut it!
- We will then explore some of the biggest cognitive bias traps product managers can find themselves in such as:
- Confirmation Bias – The tendency to search for information and interpret that information in a way that confirms existing beliefs – while at the same time ignoring information that might support alternative beliefs. Facebook echo chambers anyone?
- Sunk Cost Fallacy – The tendency of people to irrationally follow through on an activity that is not meeting their expectations because of the time and/or money they have already spent on it. I’m sure we’ve all had a project like that once or twice in our careers…?