Interview with Sandy Vaci, our Faculty Member and Founding Partner of CodeBreakers™ – a company dedicated to bringing the latest cognitive applications to businesses worldwide – about the latest insights in behavioural business approach with practical examples and reflections on the current pandemic crisis from this new, refreshing perspective.
The original article appeared at DigitalHungary.hu (in Hungarian) – the online portal behind the conference series of Internet Hungary and Media Hungary.
Hereby, we share an edited version of this interview (translated to English).
Business is all about influencing others’ decisions. For this, we need to know in advance how people are going to make decisions based on what they do.
Artificial intelligence (AI) and algorithms that predict our decisions are already part of our daily lives. So what is exactly new about the behavioral approach?
Big Data and artificial intelligence-based technologies using past data see patterns based on correlation analyzes and provide forecast for the future. However, the world is changing faster than these databases could update – which could take months, even half a year.
At the same time, the human decision-making mechanism, the “human factor,” is pretty much constant and brings stability to this picture. The functioning of our brain changes very slowly. Building on this, the human decisions remain predictable.
The best forecasts are therefore based on the processing of
the machine learning forecasts through a “human filter”.
How does the “human filter” work?
Let me give you an example.
On a hot summer day, you sunbathe on the shores of the Lake Balaton and you have a bottle of water, but a cold beer would be nice. There are two possibilities. First, you can buy it from the local store. Or you could get it from the bar of a hotel restaurant, but it’s much more expensive.
How much does the same beer worth to you in this two cases?
In the first case maybe 300 HUF, in the second let’s say 600 HUF.
I ask further: why are you willing to pay more in the second case?
Because only that is available, so I adapt.
That’s exactly, what behavioral economics is about.
I have already influenced you by offering the two scenarios. You were willing to spend more for the same product at the same place – just because of the context.
And you get the same result in both cases! While you didn’t think at all, that you didn’t even need it, because you already have the water.
99% of people would have made the same decision. There is nothing wrong with that.
The 30.000 decisions we make every day, it can’t be thought through one by one.
However, it is good to be aware of what, why and how we decide.