Lessons from Behavioral Economics and Psychology

A few years ago, I read Misbehaving by behavioral economist and Nobel Prize winner, Richard Thaler.  Far from being dense or academic, it was a highly readable book that, among other things, included the role of human psychology on how people get influenced, trust, make decisions, and spend their money while living in today’s dynamic and confusing world – all considerations when telling a corporate story.

Thaler draws on the research conducted by two heroes of mine, psychologists Amos Tversky and Daniel Kahneman (a Nobel recipient himself based on his collaboration with Tversky).  Their work influences my own approach to supporting healthcare company clients navigating the challenges and opportunities of building and sustaining positive, trusted reputations. Given so much of communications is about emotional resonance, here are five take aways practitioners can consider for supporting companies in any space.

People aren’t always rational

Unlike traditional economics, people are not rational. Instead, they more often act on emotions rather than information or facts. The learning for communicators? It is not always the attributes of a brand that tell the most compelling or resonant story. Or stating on social media or in boilerplate paragraphs how dedicated your company or executives are to a specific cause. Instead, it’s the impact on stakeholder’s lives the brand or company contribute to, the voices included in a reputation build, the day-to-day conduct of company executives, their empathy and humanity, and the consistent actions behind promises that matter more.

Understanding where there is discontent is more important than promoting happiness

According to Kahneman, focusing on changing circumstances and addressing discontent are more important and a more valuable effort for society than trying to make people feel happy. Why? Because losses or discontent hit harder than gains. Reducing ‘misery’ in community, stakeholder’s day-to-day lives, and workplaces, Kahneman argues, has far more impact on well-being than equivalent efforts to increase happiness, which he considers a fleeting emotion at best.  This may suggest directions for CSR and how corporate reputation investments could be considered and weighted.

Never underestimate the first impression

Despite the familiarity of the expression, ‘You never get a second chance to make a good first impression’ it doesn’t always get taken as seriously as it should.  Or it gets forgotten. That’s a mistake. Psychology underscores that stakeholders make decisions based on their first gut impression. And then they stick to it.  Kahneman says that once a judgment is made, people spend the rest of the time justifying their decision. What’s the takeaway for communicators?  Take the time to get the messaging and actions right – whether it is as everyday as providing a prompt response to a colleague, reporter or agency partner, or rolling out a proactive campaign, or managing a crisis. All contribute to a company’s reputation.  The magic is not in a great line of copy or a slogan. It is in the information and the actions behind the slogan.  Give stakeholders what they need to inform their guts, says Kahneman, so they can trust it.

Ensure the second and the third impression are just as good

Reputations aren’t one-shot deals. While one significant response to a crisis or specific action can make a valuable first impression, the impactful words and deeds must be sustained for that good feeling to last. Nothing new there, or that one misstep can undo years of good work.

The dance of attraction

Persuading stakeholders to think positively about a company and its leaders is like a dance.  Communications are too often built as a ‘push’ –sending out press releases and social media posts about sponsorships or commitments.  Or consider when a campaign is launched, and PR /comms teams are asked to ‘promote’ it.

Instead, consider creating ‘attraction’ instead of ‘promotion’ – more of a two-way dance.  If the aim is to make connections, change minds, build relationships with stakeholders, one partner pushing toward the other can feel intrusive, unsolicited, demanding, something that risks being ignored. Attraction is different. It’s mutual. A joint desire to connect.  The receipt of information that is wanted.  A very human response.

Here’s an exercise from Kahneman you can try with your team to get people thinking ‘attraction’: Picture a ball with two strings pulling it in opposite directions. There are two ways to move that ball: Pull one string harder or reduce the tension in the other. Sometimes, there is pressure on communicators building reputation to “pull harder” which can include making broad statements, making commitments that are more aspirational than authentic. But reducing tension — changing the environment to make it easier for the person to move in the direction you want — is almost always more effective.

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Sandra Stahl
Sandra Stahl is co-founder and managing director at jacobstahl, a Ruder Finn company.

Sandra Stahl has created and led communications solutions for many of the world’s leading pharma, biotech, diagnostic, device and consumer healthcare brands over a 30+ year career. Her skills as a strategist and developer of compelling narratives have enabled organizational-and market- readiness, powered investment, enhanced profiles, amplified landmark data, built reputations and influenced opinion. She is a recognized thought leader regularly published in industry, national and international media, and author of the award-winning book, The Art & Craft of PR (LID 2018). Additionally, Sandra is founding faculty in the PR track in the Branding + Integrated Communications master’s degree program at The City College of New York, now in its 10th year, has delivered lectures at university communications programs around the world including Columbia University in New York and Xavier Institute of Communications in Mumbai, India.

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