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Why, for example, does adding one highly expensive purchasing option increase average order value? Because people base decisions on relative, rather than absolute, information – context is everything. Behavioural economics can help brands understand these decisions and inform their approach to product development, marketing and communications.  There’s a range of principles that are worth knowing about. Many of these aren’t necessarily new but it is only now that they are coming to bare on the way we do marketing.

Possibly one of the easiest principles to consider is that of chunking.  The term originates from a paper published in 1956 by a famous American psychologist George A. Miller.  Parts are easier than "wholes". The way a task is presented affects people's willingness to take it on and complete it. Something presented as one long task to be conducted in a single act will be less likely to attract people than something "chunked up" into bite-sized stages.  A long survey will probably produce higher conversion rate if broken up into more digestible chunks with clear information that shows where people are in the process. 

Another interesting example is that of social herding. This works on the premise that people are more likely to do things if they think others are doing the same.  They are more likely still if they believe they are being observed or monitored. Herding is not a new phenomenon and can even be traced back to philosophical studies of the early twentieth century.  Modern identification of this has lead to activity such as governments’ approach to curbing energy consumption.  What they found to be the most effective way to get people to reduce energy consumption is not by showing them how much money they can save but rather show them how much more energy above average they use.