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 […]