How can companies use behavioral economics to their advantage?
Dan Ariely: So I think businesses are starting to learn something about behavioral economics. I can tell you a couple of examples. Procter and Gamble for example is facing a very interesting dilemma. They tried to create more and more concentrated laundry detergents. It’s good for everybody, it’s less plastic, it’s less shipping, it’s less space, easier to carry. But if you have this big bottle, with 90 loads, or this little bottle that’s supposed to be 90 loads, people are just not willing to pay the same amount for it. Technology is different; it’s actually more complex to do and so on. But you see this little bottle and you say, well I used to pay the same amount for this big bottle, I’m not willing to do it for the little bottle, and that’s really about consumer perception, and their association of size with value and their inability to do it. So Procter and Gamble had just started doing all kinds of experiments to try and figure out how they overcome it. Another company is Express
