Segregation EffectOpen Access

Segregation Effect

Positive experiences feel better overall when we spread them out

Whether it’s binging on a box set or mindlessly consuming a whole bar of chocolate, we enjoy things more when split into multiple time chunks.

Thaler (1985). Mental accounting and consumer choice. Marketing science, 4(3), 199-214.

The study

Setup

Setup

87 students were told that two men won in lotteries: Mr A won $50 in one lottery and $25 in another. Mr B only entered one lottery and won $75. The students were then asked who they believed to be happier.

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Results

Results

Results showed that students believed the segregated Mr A to be happier with his winnings.

Study graph
np_read_2490885_000000

Thaler (1985). Mental accounting and consumer choice. Marketing science, 4(3), 199-214.

Key Takeaways

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1

Segregate the good.

Two small gains trump one large one. Be it team victories, feature announcements, product packaging or loyalty benefits, where can you break up the good into smaller, bite-size pieces?

Takeaway image
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2

Highlight silver linings.

Separate a small gain from a larger perceived ‘loss’ to reduce consumer pain. For example, instead of offering a temporary price reduction, offer a special rebate equal to the proposed discount.

Takeaway image
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Don't separate too small. We have a low-end threshold below which we experience no joy (Morewedge et al., 2007). Breaking a cookie into crumbs results in almost zero joy. Banks offering current account holders low monthly 'loyalty rewards' would do well to reframe them into larger, more meaningful chunks, or not do it at all. After all, no one wants to be reminded of the meaninglessness of their loyalty.

Takeaway image
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Takeaway image
Takeaway image
Segregation Effect

Segregation Effect

Positive experiences feel better overall when we spread them out

Whether it’s binging on a box set or mindlessly consuming a whole bar of chocolate, we enjoy things more when split into multiple time chunks.

The study

Setup

87 students were told that two men won in lotteries: Mr A won $50 in one lottery and $25 in another. Mr B only entered one lottery and won $75. The students were then asked who they believed to be happier.

Results

Results showed that students believed the segregated Mr A to be happier with his winnings.

study graph
np_read_2490885_000000

In detail

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Open access, foundational Nuggets

Scarcity

Scarcity

We value things more when they’re in limited supply

Social Proof

Social Proof

We copy the behaviors of others, especially in unfamiliar situations

Prospect Theory

Prospect Theory

A loss hurts more than an equal gain feels good

Reciprocity

Reciprocity

We’re hardwired to return kindness received

Framing

Framing

We make very different decisions based on how a fact is presented

Loss Aversion

Loss Aversion

We feel more negative when losing something than positive when we gain it

Default Effect

Default Effect

We tend to accept the option pre-chosen for us

Anchoring

Anchoring

What we see first affects our judgement of everything thereafter

Fast & Slow Thinking

Fast & Slow Thinking

We make knee-jerk spontaneous decisions that can cause regretful damage

Dynamic Norms

Dynamic Norms

We’re more likely to change if we can see a new behavior developing

Salience

Salience

Our choices are determined by the information we're shown

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A loss hurts more than an equal gain feels good

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