Use personalization technologies to amplify Behavioral Economics
There has been a sharp increase of interest in personalization technologies recently, as evidenced for example by Optimizely’s shift to reconfigure from testing platform to personalization platform. Personalization technologies in themselves won’t help you though, without a solid strategy to choose which personalization campaigns you should run, how to prioritize them, etc. Behavioral Economics can help […]
Personalization technologies enable Behavioral Economics interventions in online banking
Personalization is a hot topic when talking about digital channels optimization. Technologies, such as Optimizely’s personalization offering, are developing quickly into a mature offering which has the potential to enable quite serious efforts on the front. Though it’s a hot topic, I’ve had many discussions with clients who are looking at examples of possible use […]
Design investing/banking client dashboards UI to mitigate myopic loss aversion
A potential way for banking / investing companies to add value to their clients would be to design their online client dashboards to mitigate as much as possible myopic loss aversion (afterwards MLA) from prompting them to sell the investments that have achieved net gains and keep the ones resulting in net losses, regardless of their […]
Reducing frequency of investment updates reduces myopic loss aversion
Maya Shaton‘s job market paper (2015) shows that after a regulatory change in Israel preventing past returns to be displayed for a period shorter than twelve months, people changed behavior and this change was consistent with a reduction in myopic loss aversion. Her abstract is below and her full paper is available here. I show […]
Wealthfront allows clients to adjust risk tolerance only once a month
In order to prevent its clients from succumbing too much to the Myopic Loss Aversion phenomenon, Wealthfront prevents them from adjusting their risk tolerance more than once a month: We go to great lengths in our communication and our information design to portray things in their most appropriate light and to limit self-destructive behavior. For […]
Citibank’s Lite mobile app: fighting Myopic Loss Aversion
Even though it’s not its stated aim, the app is a good example of a design workaround that helps fight Myopic Loss Aversion for clients: you can access your latest account and transactions info, but taking action requires you to log into the real mobile app, or online banking, etc. making it more difficult and […]
Myopic Loss Aversion
Last updated on: September 8, 2015. Definition Combination of loss aversion and frequent evaluations of risky returns: pleasure felt after observing a gain is inferior to the pain experienced after a loss of an equivalent amount losses are experienced more frequently at narrow time scales More frequent evaluations lead to increased risk aversion. Definition source: my […]