0:00

For almost ten years,

0:02

Amazon paid staff five

0:04

thousand dollars. To. Quit.

0:07

This sounds wrong, right? If stuff

0:09

want to quip. Why? Would

0:11

you pay them? Why would amazon

0:13

try to entice happy staff members

0:15

with a bonus for leaving. The.

0:17

Most people this paid to quit

0:20

scheme seems irrational. But. My

0:22

guest today disagrees. In

0:25

Today Show Reagan Easy, the world

0:27

renowned behavioral Economist who holds the

0:30

Atkinson in Down Chair and Behavioral

0:32

Economics of the University of California

0:34

explains why this pay to quit

0:36

scheme make sense. On much

0:39

today are you walk me through the

0:41

framing effect. Put. Simply, the

0:43

framing effect suggests that our choices

0:46

are influenced by the way they

0:48

are framed through different wording, settings

0:50

and situations. To. Explain his

0:52

an example: Imagine you're at your local

0:55

supermarket and you see to your guts.

0:57

One says it's ninety five percent fat

0:59

free. the other says it contains five

1:01

percent fat. Which. Do you

1:03

pick? While most people pick the ninety five

1:06

percent fat free option. Now. Both options

1:08

contain the same amount of fat,

1:10

but the way the messages framed

1:13

changes the decision. These frames affect

1:15

us in all walks of life

1:17

today. Eerie explains how framing has

1:20

boosted Coca Cola sales, encouraged thousand

1:22

this to contribute to Wikipedia, and

1:24

how it fueled peloton growth. And.

1:27

Of course you'll learn why Amazon

1:29

paid employees to quit all of

1:31

that coming up in today's match.

1:34

After this quick break. Success.

1:38

Story hosted by Scott D. Clary

1:40

is brought to by a hub

1:43

podcast network the Audi I destination

1:45

for business professionals. Success Story features

1:47

Q and a sessions with successful

1:50

business leaders, quito, presentations, and conversations

1:52

on sales, marketing, business startups and

1:54

entrepreneurship. Back in December last year,

1:57

Scott did an episode with Marketing

1:59

Legit. Seth Godin on how to

2:01

hire well which I think is

2:03

well worth tuning into. So listen

2:06

to Success Story Where ever you

2:08

get your podcasts. Today's

2:11

guest on notch is Uri Gun Easy

2:13

author of the brilliantly book Mixed Signals

2:16

and here he is introduce himself my

2:18

name is or we can be as

2:20

he I'm a barrel economist at the

2:22

University of California San Diego and my

2:24

main topic of researchers and sentence. Now

2:27

the framing effect fascinates me. The idea

2:29

that you can change the decision someone

2:31

will make simply by reef framing The

2:33

choice of re framing the message is

2:35

pretty cool. I spent a

2:38

good our chatting to early about how it works

2:40

and was marked. His can learn from the effect.

2:42

To kick off three offered an

2:44

example of how framing what he

2:47

gave a real world example from

2:49

Coca Cola and how they failed

2:51

to properly frame of vending machine

2:53

promotion that may run the see

2:55

a couple cola at the Great

2:57

Aden let's set with a thermometer

2:59

Dependencies. And then is

3:01

the regular price is a dollar. On.

3:03

Boats days. let's shots people dollars if

3:06

it's make sense right? people That people

3:08

are ring to pay more for a

3:10

cold drink. On hot days.

3:13

right? That's that's what he wanted to do. It's Econ,

3:15

one or one. That's what we do have been. Airlines

3:17

be doing try to move in many other

3:19

places we don't put tells charged isn't prices

3:22

in different days. But.

3:24

Across people got upset that what in in

3:26

why are you. Fall. To. To.

3:29

It's you know, extortion, right? It it's we

3:31

need that the culpable announcing that to charge

3:33

more. People. Were absent. What?

3:35

He should have done is. Different

3:37

He should have said the regular prices.officially.

3:41

And and a called they will get a discount and

3:43

cent of the hundred dollar. Exactly

3:45

the same pricing. That and the Co. They pay a

3:47

dollar and a hot day it's a dollar fifty. The

3:50

first one is a surcharge and and

3:52

the second one is I'm a nice

3:54

gotten and giving a disc don't frame

3:56

as a fifty cent surcharge frame it

3:58

a fifty cent discount on. The old

4:00

days. Over the past

4:02

summer I spent a month in Australia

4:04

and I noticed almost every restaurant in

4:07

Australia charges a surcharge for using your

4:09

debit or credit card. And I think

4:11

this is so silly. It makes the

4:14

customer feel like they're getting a bad

4:16

deal having to pay more simply to

4:18

use our cards. And yet such a

4:20

simple solution to get around this. Don't

4:23

say there is a surcharge on cards,

4:25

say there is a discount on cash

4:27

payments. Rights. To percent

4:29

discount for those who pay with cash

4:31

and that subtle were framing that will

4:34

make the penalty or political. This. Isn't

4:36

just my own thought My him, You

4:38

think there is a study from two

4:40

thousand which was commissioned by the Edu

4:42

and it looked at just this. They

4:44

contacted a one hundred and fifty cardholders

4:46

in the Netherlands and found that seventy

4:48

four percent of them regarded credit card

4:50

surcharges as bad and you only forty

4:52

nine percent of them regarded the equivalent

4:54

cash discount as bad. Three Framing you

4:56

author can shift how the majority of

4:58

people perceive it. Very get me another

5:00

example and this time it was from

5:02

A M C Movies cases in the

5:05

States. A very similar thing happened

5:07

a couple of months ago with Amc theaters

5:09

and bag us. So.

5:12

They. Set and they they said

5:14

that state and say look inflation we have

5:16

to respect as what they're going to do

5:18

is charge more for premiums. If

5:21

what, This seat in the center of the. Of

5:24

the theater we're going to charge him or and people got

5:26

upset. You a will read a pencil. It's money. And

5:28

now you're starting to to get more

5:31

medicines? does? What? He

5:33

should have done and say look inflation, cost of

5:35

labor We have to raise prices We're sorry. We.

5:37

Know that you're paying so much. So what we

5:40

have went to do is to try and athiest.

5:42

Also you discount on Sunday so we need to

5:44

sit in the first row of decides will give

5:46

you distance. Executives.

5:49

The same price for the same

5:51

seat. but is it with a

5:53

very different from the think that if you do

5:55

it it's remove the you can think about it

5:57

in other cases not just their meat with

6:02

pricing, so think about going back to work.

6:04

Lots of companies are struggling with this. So

6:06

we had COVID, people stayed

6:08

home and worked from home. It

6:10

worked well, not perfectly,

6:12

but well. And also companies want

6:15

their workers to come back to the office. Now,

6:18

if you tell them, okay, the party is

6:20

over, you need to come back to work

6:22

full time, we saw it in many cases

6:24

that increased us quick.

6:27

They don't want to go back. So say that

6:29

you want them to come back for three days. The

6:32

right way to say it, to frame it

6:34

is, look, COVID is over, and

6:36

we need to come back to the office

6:39

full time, but because you proved yourself to

6:41

be so reliable and so good at

6:43

working together, it's fine with us if you come

6:46

only for three days. That's

6:48

instead of how to, you know, saying

6:50

you will miss time for three days. Basically

6:53

to frame it as you need to come back

6:55

for five days, but because you're so good, you

6:57

will ask me to do it only for three days. So again,

7:00

the way you frame it, I think sends

7:02

a signal about what you care about. It's

7:05

not just all people are stupid

7:07

and don't understand. It's really about the

7:09

signal that you get from it. AMC movie

7:11

theaters shouldn't put a premium price

7:13

on the best seats. They should

7:16

give discounts for the worst seats.

7:18

And your boss shouldn't demand you to be in

7:20

the office for three days. She should offer

7:23

two days work from home benefit for all

7:25

the employees who hit their targets. There's

7:27

another example from Uri's book, which

7:29

highlights how powerful framing can be.

7:31

It's study Yuri ran where he

7:33

looked to see how different framings

7:36

of different discounts would affect purchase

7:38

decisions. He and his team studied

7:40

two different discounts in a real

7:42

world study. The discounts were for

7:44

those people who were in the

7:46

process of buying a car. The

7:48

first discount shown to the first group was $140

7:50

off the full price of a car. Now,

7:55

$140 is a lot of money, but

7:58

compared to the full cost of a new car, car

8:00

it might seem a little small. So

8:02

the team came up with an equivalent discount

8:04

but framed it differently. For the second group

8:07

they offered a $450 prepaid gas card. Suddenly

8:13

it seems like a much better deal.

8:15

$450 free cash spent on fuel not bad.

8:18

Now obviously the deals are the same in monetary

8:20

value but Yuri wanted to see if they

8:23

were perceived differently due to the frame and

8:25

he found that they were. In fact

8:27

Yuri found that the gas card discount more

8:29

than doubled the success rate of the incentives

8:31

so that people were two times more likely

8:34

to go on and purchase the car

8:36

when they were offered the gas card rather

8:38

than the money off. In

8:40

further testing he found that the effect was

8:42

maintained even when the gas card had a

8:44

lower value than the car discount. So car

8:47

shoppers responded more favourably to a $250 gas

8:49

card than a $450 discount on the actual

8:51

vehicle purchase. See there

8:56

is a tendency in marketing and business to think only

8:58

of the concrete details like how much discount can

9:01

we offer? How many days do we need people

9:03

in the office? But Yuri's work

9:05

shows that these concrete details can be

9:08

perceived differently depending on how they're framed.

9:10

So I think we should spend as much time thinking

9:12

about how we frame our incentives as

9:15

we do planning the incentive itself. Yuri

9:17

says this doesn't just benefit the people

9:19

behind the incentive but also customers as

9:21

well. For example if I go to a

9:23

restaurant I'm much more upset

9:26

about spending money on parking than on an extra

9:28

glass of wine. It might cost the same but

9:30

if I buy an extra glass of wine I

9:32

feel well that's worth it I

9:34

want to treat myself. So if I pay

9:36

for parking I feel that I wasted the money. Good

9:39

framing can make diners at a restaurant feel

9:41

they are getting a better deal. Yuri has

9:43

looked at this himself with a fascinating study

9:45

at this time on Singapore taxi drivers. Now

9:48

his goal was to get the taxi drivers

9:50

to walk more. See like

9:52

most taxi drivers around the world the

9:54

Singaporean cabbies spent most of their day

9:56

in their car. Yuri was tasked

9:58

with getting them out and getting them moving.

10:01

Here's how he did it. So what we

10:03

tried to do with the taxi drivers,

10:05

taxi drivers have one of

10:08

the problems of the day was that they don't walk in. We

10:11

wanted them to walk more, we gave them pedometer,

10:13

we gave them all the stats, and we

10:16

had two types of incentives. In

10:18

one case, they got $100

10:20

if they met the step goal

10:24

for the month. In that case,

10:26

we looked for something that cost

10:28

$100, but it was very painful

10:30

for them. Turns out what was

10:33

really painful for them was the leasing of the

10:35

car. So they have to lease the car, and

10:37

every day they have to pay $100. So

10:40

it's about $100 a day for

10:42

leasing the car, depending on the car model and

10:44

things like that, but about this money. And that's

10:46

really painful for them. So many of them, even

10:48

on their day off, for example, will drive just

10:51

to cover this $100. Or they'll tell you, look

10:55

until lunch, I drive to cover

10:58

the leasing, then another two

11:00

hours for the fuel, and only then I

11:02

start making money. So it's really at the

11:04

top of their head and the yield. So

11:07

we had one group that received

11:09

the month $100. The other group

11:11

we said, you'll get a day

11:14

off for leasing,

11:16

which is a more painful, which is a

11:18

painful expense for them. And indeed,

11:21

this group was much more likely to reach

11:23

the step goal that we gave. Yuri

11:26

shares the full results of this experiment

11:28

in his book. He writes that the

11:30

group with the pure cash incentives walked

11:32

1,500 steps more than average, so

11:34

more than those without an incentive. But

11:37

the drivers with the free rent listing

11:39

treatment, so the same value of incentive

11:41

but had to be spent on their

11:43

rent listing, well, they walked 2,000 steps

11:46

more than average. So they walked 500 steps

11:48

more than those with the pure cash incentives.

11:51

So offering the free rental for the taxi

11:53

worked more than offering the same value in

11:55

pure cash. What's more, this

11:57

differentiated behaviour was notable in the far- to

12:00

seven months after the incentive ended.

12:03

So if you can find something that people

12:05

really care about and use this as incentives,

12:08

your incentives can go a longer way than

12:11

just cash. Now so far we've

12:13

covered incentives where the recipient is gaining something. $200

12:15

to cover the taxi rental, a

12:18

glass of wine at a restaurant for example. But

12:20

of course there are disincentives where something is

12:22

taken away if an action isn't completed. A

12:25

salesperson will lose their commission if

12:27

they don't hit their targets for

12:29

example. Prime customers lose free shipping

12:31

if they unsubscribe. Yuri shares

12:33

how these loss aversion incentives can be just

12:35

as powerful. So loss aversion a bit like

12:38

mental accounting and many other things that I

12:40

regret that they talk in the book is

12:43

a way to make your incentives go further.

12:45

So imagine that there is

12:48

a nice paper by my friends

12:50

in schools they give and

12:52

they try to encourage teachers to do a

12:54

better job. So some teachers they

12:57

give they tell them if you'll meet

12:59

certain goals by the end of the year will give you

13:01

I don't remember the amount say

13:03

three thousand dollars. And to

13:05

other people they the other teachers they say you're at

13:07

three thousand dollars. If you'll meet

13:09

the goals by the end of the year you keep

13:12

three thousand dollars otherwise you have

13:14

to pay us back. In principle

13:16

it's the same the end of the year you'll have it but

13:19

once you get the money you

13:22

really feel that you have it that it's yours already

13:24

and if you'll have

13:26

to give it back it's a loss and

13:28

losses are more painful that common firstly discussed

13:31

it already long ago that losses

13:33

are more painful than gains and that

13:36

way in both cases you

13:38

pay three thousand dollars for each integral but in

13:41

the case where you give the money upfront and

13:43

they have to pay back you

13:45

get a much stronger interest. There's a

13:47

particularly good example of the power of

13:49

loss aversion in Yuri's book he asks

13:51

you to imagine that you are a

13:53

factory worker at a high-tech factory in

13:56

China your job is to

13:58

focus on the production and distribution of

14:00

consumer electronics. On top of earning an

14:02

average weekly base salary of around $50,

14:06

you are also incentivized by a weekly

14:08

bonus when your team's production reaches a

14:10

certain threshold. The bonus is $50 for

14:13

every week and your team does above

14:15

average production. Now this is a fairly

14:17

standard incentive, one that almost all of

14:19

us will have seen at businesses we

14:22

work at, an incentive for hitting targets.

14:24

But imagine if the bonus was

14:26

given another way, imagine if the

14:29

company granted you a provisional bonus

14:31

of $50 right at the start of the

14:33

week, so you get the $50 in your

14:35

bank at the start of the week, you have

14:37

the bonus immediately. And then

14:39

if during the week your team's weekly

14:41

production is below the average, then

14:44

that bonus will be taken away. Again,

14:46

you have the exact same bonus, but in

14:48

one scenario the bonus is gained through hard

14:50

work, and in the other scenario

14:52

the bonus is lost through lazy work. Now

14:55

this example isn't theoretical, it is a

14:57

real world study from a Chinese high

15:00

tech factory. Now the study found that

15:02

workers' productivity did increase in both groups

15:04

compared to the baseline, so those who

15:06

gained the bonus, well their productivity increased,

15:09

and those who lost the bonus if

15:11

they didn't perform well, their productivity increased

15:13

as well. But those in that second

15:15

loss framing variant, those who lost the

15:18

bonus if they were unproductive, they significantly

15:20

outperformed the team of workers who were

15:22

motivated by gaining the rewards. The effects

15:25

persisted for four months after the experiment

15:27

was conducted, so it wasn't just a

15:29

short-term boost, and it shows that losing

15:31

a bonus feels worse than gaining one,

15:33

so people worked harder when they had

15:36

something to lose. Now

15:38

look, we are only scratching the surface

15:40

of how these subtle frames can influence

15:42

decisions, and in a bit Yuri will

15:44

explain how to use framing for a

15:46

small incentive, why Peloton sold

15:48

more when they charged more, and

15:50

of course why Amazon offered staff $5,000

15:54

to quit. All of that after this

15:56

quick break. Many

16:00

of you know I have just

16:02

quit my job to go full-time

16:04

on nudge, but prior to that

16:06

I spent my career working in

16:08

startups. And startups aren't easy. It's

16:11

long hours, small teams, tiny budgets.

16:13

It makes marketing hard work. But it doesn't

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have to be. HubSpot for

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much you can save, visit

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hubspot.com/startups. Okay,

16:58

welcome back to the show. Now many of

17:00

the incentives we've talked about so far are

17:02

fairly large, big sums of money. But many

17:04

of us, we can't offer that. Many of

17:07

us need to incentivise people without a big

17:09

budget. At a previous company I worked for, I

17:11

needed to get 500 reviews for

17:13

our product. I only had a $1,000

17:16

budget, so the max I could offer each person

17:18

for a review was just $2. This

17:21

is not the most enticing offer out there. I'll

17:23

give you $2 for a review, you're not going

17:25

to do that, are you? So I asked Yuri

17:27

what I should have done instead. How should I

17:29

have framed my incentive when I only had such

17:31

a small amount of cash to offer? So

17:34

my student, Alex Fim, is my

17:36

former student, has a very

17:39

nice experiment in which he looks at

17:41

this. So he gave a task

17:43

to people and the more effort

17:45

they put, the more money they

17:47

get. In one case, he just asked them

17:49

to do that and they did okay. In the

17:51

other case, we told them here is a small

17:54

amount of money. The more you'll do, the more

17:56

money you'll get,

17:58

but that was a very small amount of money. didn't

18:00

get natural effect. And

18:02

then you had a pro social incentives. They said, if

18:05

you press out or if you do, you put

18:07

more effort, the money will go to charity. And

18:10

that was actually much more effective than paying

18:12

people. Now, the interesting

18:14

part was that paying out of the

18:17

effect was kind of flat in the sense that when he

18:20

raised the amount of money that he gave to

18:22

a significant amount of money, it

18:24

didn't have impact when the money went to charity,

18:26

it did have an impact when the money went

18:28

to the cell. So if

18:30

I'm working for a small amount of money,

18:33

it's better to motivate me you can just

18:35

give the money. Like I said, $5 just

18:37

donate to charity, let me choose a charity

18:39

to donate. You can give

18:41

me a lot of money, just give it to me

18:43

as cash. Don't, not, not

18:45

the charity. If you've only got

18:48

a small incentive to give, don't give

18:50

that incentive as cash directly. Offer the

18:52

equivalent cash, but as a donation to

18:54

charity. Preto Manje, the cafe

18:56

that many of you will have seen in

18:58

London and across the world, will have a

19:01

similar practical example of this. To improve their

19:03

customer service, they give out 50 pound bonuses

19:05

to staff they perform well, 50 pounds

19:08

is not huge compared to the average salary. So

19:11

that devised something interesting. Instead of

19:13

letting staff pocket this incentive themselves,

19:15

they forced the recipient to give

19:17

the voucher to a colleague who

19:19

had helped them. Now you

19:21

might think this would make people less motivated.

19:23

And in fact, the opposite was true. Just

19:26

like what Yuri shared earlier, staff are motivated

19:28

by this charitable gift more than they are

19:30

by pure cash. Staff appeared to work harder

19:33

when the incentive was a chance to gift

19:35

the 50 pounds rather than when

19:37

the 50 pounds was given to them directly. Now

19:40

many of us who are building incentives

19:42

will have no money to offer. So

19:44

how can we motivate people without offering

19:46

them any cash? Well, Wikipedia has a

19:48

really interesting solution to this. See,

19:51

in 2007, there was a big

19:53

drop in the number of contributions and

19:55

edits on the Wikipedia website, the number

19:57

of actual editors editing the site was

19:59

falling. sharply. You may well notice already that

20:01

Wikipedia relies on editors just out of the

20:04

kind will of their heart. They don't do

20:06

it for any money, and

20:08

they didn't have any money to incentivize these

20:10

people. So they had to come up with

20:12

another tactic to keep the editors from leaving.

20:15

So Wikipedia founder Jimmy Wales

20:17

designed the Wikipedia Awards. These

20:20

awards, they vary by scarcity and significance,

20:22

ranging from Editor of the Week, a

20:24

recognition award from the community that is

20:26

frequently handed out to thank editors for

20:28

their work, to a much

20:31

bigger award, the Wikimedia of the Year,

20:33

an annual award presented at the Wikimedia

20:35

conference to celebrate the major achievements of

20:37

an individual. And then the top award

20:40

is Order of the Day, which is

20:42

awarded very rarely to a Wikimedia developer

20:44

for exceptional service to the community. These

20:47

rewards are all intangible with

20:49

no financial incentive. But

20:51

despite this, they were incredibly successful.

20:54

Janna Gallis, who studied the Wikipedia

20:56

Awards in 2017, reported that these

20:58

awards increased newcomer

21:01

retention by 20%. Editors who joined

21:03

were 20% more likely to stick

21:05

around simply because they had a

21:07

chance to win one of these

21:09

rewards. And this effect, it would

21:11

last for more than one year after

21:14

an initial award was given. You

21:16

were more likely to stay after

21:18

receiving one award for more than

21:20

a year. Scares public recognition worked,

21:22

and it probably worked more than

21:24

paying the editors would have done.

21:26

Offering zero cash incentives that can work.

21:28

And Yuri has a word of warning

21:31

when it comes to cash incentives. In

21:33

fact, he says that sometimes offering too

21:35

large of a cash incentive, too much

21:37

money, well, that can be a turnoff.

21:39

In his book, he writes how he

21:41

strongly advises against the $1 million lottery

21:43

setup for those who had got the

21:45

COVID vaccine. See, in Australia, those who

21:47

got the vaccine were entered into a

21:50

lottery where there's a chance to win

21:52

$1 million. Yuri didn't

21:54

like this incentive. Here's why. So

21:57

imagine that Pfizer,

22:01

you know, someone from Pfizer, or

22:03

someone from my

22:05

university contacts a student, which happens

22:07

a lot, or contact normal people.

22:10

And at the end, look, we have

22:13

a new field that, you know, against

22:15

edX, doesn't have too bad of side

22:18

effects. Can you please are you

22:20

willing to participate in our study and

22:22

take this one and just stay over

22:24

here for another few hours so we

22:26

can observe you? And we

22:28

know it's safe. It's not a problem. We'll give you $50

22:30

for your asset. Many people will

22:33

agree to do it. And in fact, that's how

22:35

they do many of these studies. Now,

22:37

I imagine the same story, but instead of $50, I'll pay you $50,000

22:39

to stay. Maybe

22:42

you'll take it, but you'll be very worried, right? You

22:44

know, why are they paying you so much money? There's

22:47

something must be wrong. You don't pay $50,000 to get

22:49

time, right? You

22:52

get $50,000 to do something with, right?

22:55

So again, it signals that something

22:57

is wrong with you. So that's why I did

22:59

what I didn't like about giving this lottery to

23:01

people. You don't want people to associate, oh,

23:04

I'll take the vaccine because

23:06

of the money, but it has to be a lot of money

23:08

for me to pay. So incentives

23:11

that I liked much more and were done

23:13

in many places were smaller

23:15

amounts, let's say $50, but you have

23:17

to spend in some local establishments. And

23:20

then I can really tell you, look, you want

23:22

your coffee, your neighborhood coffee to survive, the books

23:24

are to survive. You need to

23:26

get vaccinated, put on your mask and go

23:28

out and visit them. And we're going to

23:31

give you money to spend in these local

23:34

establishments. They think that that sends the right

23:36

signal, but it's not all, you

23:38

should get the vaccine because you might get

23:40

rich. It should be, look, it should get

23:43

the vaccines because that way we can open

23:45

up, we can save these local establishments and

23:47

get back to normal. Now,

23:49

before rounding up, Yuri had one

23:51

other fantastic example for me. He

23:54

explained how Peloton actually sold more

23:56

bikes when they increased their price.

23:59

Here's why. So. Pricey Cars Quality.

24:01

That something that we do. We want

24:03

their. You. Want to buy a

24:05

bottle of wine? Usually repay to be by the

24:08

twenty five dollars. Tonight we're going to celebrate something

24:10

so we'll go to the store into their. The

24:12

sedative get a san suited all about of

24:15

why did. We. Associate

24:17

higher price with Bipolar to which is

24:19

trying many kisses. If played

24:21

by of a speaker, the more expensive speaker will

24:23

probably be best. Isis or buy a laptop there.

24:25

You know it's it's it's usually works but not

24:27

always with wine. You know, who knows, Soda.

24:30

Fountain story to see. Also said that when

24:32

dated as divide the charge about a thousand

24:34

dollar bit under thousand two hundred. And.

24:36

People didn't want to buy. They saw that it's

24:39

probably a low quality because why else would they

24:41

sell it so that. They. Doubled

24:43

the price and. Immediately

24:45

everyone both old not be

24:47

soda. Six two thousand dollars?

24:50

it's must be a very high quality. John.

24:52

Farley the Peloton see I said this himself

24:54

during an interview of Yahoo Finance. He said

24:56

in a very very early days we charged

24:59

one thousand two hundred dollars for the telethon

25:01

bike and what turned out was that we

25:03

had from customers to the bike must be

25:05

poorly built if you're charging just one thousand

25:07

two hundred dollars for seen as a membership

25:09

is wealth Amazon which is that it on

25:11

on top and some of the cost of

25:13

the bike was been factored into the membership

25:15

at John Farley said they chances He said

25:17

we charged two thousand dollars for the bike

25:19

and sales increased because people said oh it

25:21

must be pretty quality. Bike this is ninety

25:24

psychology as the violent effect is something

25:26

I've covered before are plenty of studies,

25:28

especially with luxury goods. The shade of

25:30

people buy more when the price is

25:32

higher and is enough. For example of

25:34

how really framing your product just by

25:37

changing the price can change perception. Any

25:40

way to finish up your. he told

25:42

me about one of the smartest incentives

25:44

he's ever had, and honestly, this one

25:46

did surprise me. It's not a discount,

25:49

it's not a type of commission, it's

25:51

Amazon offering employees five thousand dollars to

25:53

quit. His why disincentive

25:56

works. I love it's I

25:58

think that's one of the smartest. Reprinted

26:00

you can think about say in many cases.

26:03

If you ask your worker, do you like

26:05

what is your that Alexander? Yes because stepfather

26:07

to the company depends on how much to

26:09

say swim. If. I work at my

26:12

university and they don't want the bitter and

26:14

and are just because that on my way

26:16

for my pension more I. Saw,

26:18

I'm not going to be very good at putting

26:20

bring another into the would research teaching committees. I

26:22

am just not going to be a good citizen

26:24

help either. But. But. Were often.

26:27

It's hard to really figure out who

26:29

these people. And. The Canucks we

26:31

do something that is called that incentive compatible.

26:33

So instead of asking people, are you happy

26:35

here The one. We. Give people London

26:37

and say the to go through for a

26:40

company to the company can. You.

26:42

Tell your work as a into the segment of people

26:44

that say that you have added of them and you

26:46

need to let gold. Twenty years can. You.

26:49

Tell them you know what's. Yours.

26:51

Five thousand dollars if you want to quit. When

26:53

up wanted to quit we wanted to say but

26:55

if you want to quit that's absolutely fine. No

26:57

hard feelings, just take the five thousand bonus. And

27:00

will depart as friends. Like

27:03

What? You do by doing this is

27:05

get the people that are not that happy

27:08

with stay the third kind of on defense.

27:11

They. Will take you to people to die excited about

27:13

working for you. They're not going to take. So.

27:16

He shall issue. To

27:18

the right to multitude of you can you

27:21

can find the sweet spot where it's going

27:23

to be. Twenty percent of the people are

27:25

depending on when that when. It.

27:27

Gets people will leave and say do this to select

27:30

a heap of the people that will say are people

27:32

that really want to be the. Producer.

27:34

Savvy, I'd really want to work for you. They

27:36

really showed the be really wants work for you

27:38

because otherwise to put. And.

27:42

And not a side benefit is that.

27:44

His. Son call the feeling that. So.

27:47

I could have received his five thousand dollar.

27:49

We chose to say i must really like

27:51

it and then be the people who say

27:53

we left the showed himself. That

27:55

it was the right decision that made the

27:57

right decision by saying so. That. Could

27:59

be. And. Yet it benefits to

28:02

this. The framing effect

28:04

is incredibly powerful. Subtly changing

28:06

how you frame your incentive

28:08

or disincentive can dramatically change

28:10

behavior. A. Can encourage Singapore taxi

28:13

drivers to walk more Chinese manufacturers

28:15

to Y Cada wikipedia editors to

28:17

contribute more and even pet him

28:19

on jay staff to be a

28:21

little friendlier. Incentives They are much

28:23

much bigger than just framing. There was heaps

28:25

more to cover and if you're interested in

28:27

learning more, I'd suggest into the two previous

28:29

episodes I did with Uri to search for

28:31

not podcast and you're going easy near find

28:33

them. Do also check out your his book.

28:35

Mixed signals have left the link to that

28:37

in the show nights. It's fantastic and if

28:39

you've enjoyed today so please do you leave

28:41

me a five star of you. I view

28:43

this and this really helps and do make

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sure you're subscribed. I'm following not to have

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