Archive for November, 2009

Odd consumer iphone behavior

November 30, 2009

The New York Times, while pondering whether there is a “method in cellphone madness,” finds this behavior “weird.”

When Apple and AT&T started offering the iPhone for $199, plus $30 a month for Internet access, sales shot up, even though the previous deal — $399 for the phone and $20 a month — cost less over a two-year contract.

The $199 iPhone was the 3G model. Was the additional speed worth $40?

Check engine nudge

November 24, 2009

No signal is more perplexing than a car’s check engine light. Is my gas cap loose or is my engine about to die? If your car cries orange a lot, you might be relatively unfazed by the bright light. Oh, is that thing on again?

Based on conversations with friends and some time spent looking through online car forums, it seems that Subaru has linked the check engine light to the cruise control on the popular Outback and Forrester (and possibly other models). When the light illuminates, the cruise control is disabled. In order to regain cruise control, the driver has to take the car to a mechanic who can diagnose any potential engine problems. Why has Subaru settled on this design? To encourage preventative care? To boost the profits of its service centers? Both?

Addendum: In late-model cars, serious engine problems are usually foreshadowed by a blinking check engine light.

Alternatives to the medical checklist?

November 23, 2009

In Maryland, state leaders recently kicked off a program that will send 45 teams of observers to 47 hospitals to record the hand-washing habits of doctors and nurses. Governing Magazine calls the teams, spies. They have to be anonymous in order to alleviate the potential Hawthorne effect.

So far, the medical checklist is the most successful and best known nudge for improving hand-washing habits in hospitals, but the program’s FAQ makes clear it is open to other strategies that include “campaign branding, addition of new members to the multidisciplinary HH (hand hygiene) team, hand hygiene education, signage, environmental enhancements, improved reporting process, new tool development, enhanced communications concerning HH, and others.”

Default doh!

November 20, 2009

Michigan’s state parks, like Washington’s state parks, are suffering from a budget crunch. The Michigan Senate, like the Washington legislature, wants to replace park entry fees with an annual fee that drivers would pay when they renew their vehicle registrations. The Washington legislature has decided to make paying the fee the default option, while offering drivers the option to opt out. Michigan’s Senate wants to make not paying the fee the default rule, which would likely defeat the whole purpose of using the default rule to fund the parks appropriately.

Michigan’s House wants to set an opt-in default rule. So does the Secretary of State. Stay tuned for a resolution.

Hat tip: Brad Scheck

Yea or nay: Vote on a proposed parking lot nudge

November 18, 2009

Reader Richard Whittington passes along an interesting idea he has for revising parking lot choice architecture. The basic proposal is to narrow the parking spaces closer to store entrances. Whittington explains two benefits.

Make parking spaces that are closer to store entrances narrower for the first 20 spaces, then get progressively wider up to the standard width 40 spaces from the entrance. People would park further out from the entrance because it would be harder to exit the vehicle close in and they would not care to have an older banged up vehicle bang up their nice vehicle. It would get people to walk more for better health. Handicapped spaces would continue to be the same large size but would have to monitored much more closely by parking violation dept. This would increase revenue to the city or county. Two, I think, good results from this small action.

There are many ways to tweak this idea for different types of stores and communities. There are also many behavioral consequences, pro and con, to consider. The Nudge blog thinks the heart of the matter is whether a parking lot painted in this way would alienate customers. Let us know what you think by voting in our online poll below.

Confusing choice architecture: Don’t text, but check out our tweets

November 17, 2009

Talk about mixed messages.

At least 22 states that ban texting while driving offer some type of service that allows motorists to get information about traffic tie-ups, road conditions or emergencies via Twitter.

Sadly, the Nudge blog’s home state of Illinois is one of them. Full story here.

Bill Belichick is no bonehead. He just understands probability.

November 16, 2009

Was Bill Belichick’s decision’s to go for a fourth and two conversion at his own 28 with 2 minutes left in the game against the Colts a boneheaded move?

There’s already been a lot of Monday morning quarterbacking by media talking heads (here, here, here, and here) saying yes. The stat gurus at Advanced NFL Stats say no, prompting this response from a commenter:

“Well, he went for it and it didn’t work. Then his team lost a game it was winning by six points with two minutes left.  We don’t need any more proof then that to know it was a dumb decision, no matter what any stat geeks claim.  This isn’t calculus calls. This is the NFL.”

The Nudge blog thinks there was nothing crazy or boneheaded about Belichick’s decision. Sure, it was a close call, but all the Monday morning quarterbacks are suffering from a condition known as the hindsight bias – because something happened means that something was always destined to happen.

Where were all these critics when Belichick successfully went for it on fourth and 1 from his own 24 against the Falcons last month?

Here is the Advanced NFL Stats analysis that we find convincing. Warning: if you are not a football fan, stop reading here.

With 2:00 left and the Colts with only one timeout, a successful conversion wins the game for all practical purposes. A 4th and 2 conversion would be successful 60% of the time. Historically, in a situation with 2:00 left and needing a TD to either win or tie, teams get the TD 53% of the time from that field position. The total WP (winning percentage) for the 4th down conversion attempt would therefore be:

(0.60 * 1) + (0.40 * (1-0.53)) = 0.79 WP

A punt from the 28 typically nets 38 yards, starting the Colts at their own 34. Teams historically get the TD 30% of the time in that situation. So the punt gives the Pats about a 0.70 WP.

Statistically, the better decision would be to go for it, and by a good amount. However, these numbers are baselines for the league as a whole. You’d have to expect the Colts had a better than a 30% chance of scoring from their 34, and an accordingly higher chance to score from the Pats’ 28. But any adjustment in their likelihood of scoring from either field position increases the advantage of going for it. You can play with the numbers any way you like, but it’s pretty hard to come up with a realistic combination of numbers that make punting the better option. At best, you could make it a wash.

For those who are curious, .60 is the probability of succeeding on fourth down and .53 is the probability the Colts will score a touchdown given a Patriot’s punt plus any increase in the probability of a Colts’ touchdown given that the Patriots don’t convert on fourth down.

Here’s another way to look at the decision with an additional probability assumption.

Let y = the probability the Colts score a TD, given that the Pats punt. The Advanced NFL stats equation calls y the winning percentage.

Let x = the increase in the probability that the Colts score a TD, given that the Pats do not convert.

0.6 + 0.4 (1-(y + x)) > (1-y).

Rearranging terms, x < 1.5 y.

Suppose the Colts probability of scoring would have been 0 if they took the ball over on their own goal line, and 1 if they take over on the Pats’ goal line. This basically means the Colts would definitely not score a touchdown if they had to go the length of the field, and would definitely score if they got to start at the Patriot’s 1-yard line. Suppose also that this probability increases linearly with field position. That means x is the net yardage of the punt (divided by 100), and y = .70 – x. (.7 is the probability of scoring when taking over on the opponents’ 30.)

Plugging terms into the algebraic condition x <1.5 y produces x < .42. So Belichick should punt if the expected net yardage of the punt is more than 42 yards. Guess what New England punter Chris Hanson’s lifetime indoor punting average is? 42.9 yards. His 2009 average is 39.6 yards.

Belichick’s critics treat the Colts’ touchdown as an inevitability. But the probability of a Colts’ touchdown was not 1. The New England defense could have held them to a field goal and still won the game.

Hat tip to Thomas Hubbard to whom all hate mail should be sent.

Addendum: For more on fourth down conversion calculations by Berkeley economist David Romer check out his paper, “Do Firms Maximize, Evidence from Professional Football.”

Richard Thaler on and the rise of the penny auction

November 15, 2009

Richard Thaler’s latest Economic View column ponders the attraction of penny auction sites like that let people bid for merchandise in one cent increments, while charging them lots of cents for the right to place a bid. In the end, the winner gets a great deal, $20 for a laptop or $15 for an iPod, with the rest of the item’s cost (plus the auction site’s profits) paid for by losing bidders. Consumer electronics aren’t the only items Swoopo has put up for bid.

Swoopo has even sold cash using this format — specifically, checks for $1,000. My colleague Emir Kamenica and I looked at 26 such auctions we found in a data set posted on the Swoopo Web site. For each of these, the average revenue to Swoopo was $2,452. Winning bidders also did well: Of the winners, all but two made money even after accounting for the cost of their bids, with an average profit of $658. Still, the important point to remember is that, collectively, bidders are losing money. Only the lucky last bidder is a winner.

Swoopo also has put up blocks of bids for auction. Since these bids cost Swoopo nothing, every penny earned is pure profit. One recent auction for 50 bids ended with a winning bid of $.60.

Sixty cents also happens to be the amount charges people for each bid placed. As Thaler observes, it wouldn’t be hard for smaller competitors to come in and undercut Swoopo’s price. On the Times web page for Thaler’s column, three of’s lesser known competitors are advertising through Google’s web ads. None of them seem to be competing with Swoopo on price: BidRodeo ($.70 per bid); Bidfire($1 per bid); BidCactus ($.75 per bid). Hard to imagine what else they are competing with Swoopo on. Free shipping? Strange, indeed.

A wake-up call for anyone who thinks posting calories will be the silver bullet that changes eating habits

November 14, 2009

Based on the scientific literature, we know that people who seek out and use calorie information are likely to be different from other eaters in many ways, including their motivation to cut calories. Sure, it’s possible that some people who looked at the information were persuaded to consume fewer calories, but it is equally plausible that those who were intending to order lower-calorie meals were more likely to seek out the calorie information.

By helping consumers make more informed decisions, calorie posting may be desirable even if it fails to reduce calorie intake. But effective policies to deal with obesity will need to involve much more than posting calories. People eat too much because calorie-dense foods are convenient and cheap, with large portion sizes priced to encourage overeating.

That’s Julie S. Downs, George Loewenstein, and Jessica Wisdom on the effectiveness of calorie posting nudges.

Wharton’s Kevin Volpp thinks a revised menu design might be a better nudge.

Incentivizing convenience of ordering low calorie food, by clustering these options together at the top of the menu, seems to have a significant impact. This indicates that traditional measures of informational provision are not always sufficient to motivate changes in unhealthy behavior.