Welcome to our August newsletter.

We look at how people expect others to mirror their generosity. And their selfishness. And at how to nudge investors to make the right decision.

Do people trust AI more than their friends?

And why do we value physical goods more than digital goods?

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Every so often we use our Monkey Business newsletter to share useful nuggets, opinions, and findings as food for thought. Sign up here.

Why we value physical goods more than digital goods

The authors of a new study investigated why people tend to value physical goods more than digital goods. They conducted a series of experiments and found that people are more likely to feel a sense of psychological ownership over physical goods, which leads them to value them more.

Psychological ownership is the feeling that someone has over an object, even if they don't actually own it. It can be created by factors such as interacting with the object, having control over it, and seeing it as a part of oneself.

The authors found that people are more likely to feel psychological ownership over physical goods because they are more tangible and can be interacted with in a more direct way. They are also more permanent and can be kept and displayed. Digital goods, on the other hand, are intangible and can be easily copied or deleted.

The authors' findings have implications for marketing strategy. They suggest that companies that sell digital goods should focus on ways to increase consumers' sense of psychological ownership over those goods. This could be done by making the goods more tangible, giving consumers more control over them, or allowing them to customize the goods.

The authors also suggest that the findings could help explain why people are more likely to view the theft of physical goods as morally wrong than the theft of digital goods. This is because people may view digital goods as less valuable than physical goods.

This also has implications for money - both for valuing “real” cash greater than digital money. And also that people might also be more likely to feel psychological ownership over digital money that is stored in a physical form, such as a cryptocurrency wallet.
 

Photo by Polina Tankilevitch

How to nudge investors to make the right decision

Our own Patrick Fagan, addresses this on the Flexible Advisor Podcast.

For example, people who are open to new experiences and more creative are more likely to trust someone who demonstrates a strong ethical code, while people who are conscientious and organized are more likely to trust someone they perceive as being competent and reliable.

People are more sensitive to loss than they are to gain. This is known as loss aversion. In the context of financial advice, this means that clients may be more resistant to new information that could lead to a loss, even if it is in their best interest. In these situations, it is important to use a gentle approach, such as the "foot in the door" technique, to gradually introduce new ideas.

A "Competitor" client is someone who assumes they know more than their advisor and often conducts their own investment research. In this case, it is important to boost the client's sense of status and make them feel special. It is also important to tap into their motivations, such as their desire to be successful and influential.

Listen to the full podcast here.

Photo by Anna Nekrashevich 

Do people trust AI more than their friends?

A recent research study suggested that this might be the case.

In the research, 38% of users in the US admit to sharing data they wouldn’t casually reveal in a bar to a friend.

There is clearly a functional driver for this - the study found that 69% of respondents believe the benefits of Generative AI tools outweigh the security risks. 

As an aside, many claim to struggle to identify Generative AI content vs human-created. Only 21% of respondents believed they could discern an AI-generated piece of text from human-written text.

But perhaps the reason for the shared confidence is one of perception bias. In the bar, we see the person in front of us, and the people around us. So it feels public.

Whereas the perceived intimacy of AI interaction, perhaps creates an illusion of privacy.

In previous pilots, financial services brands have found that people reveal more personal information when told that a chat interaction was with a machine than when told it was a human at the other end.

Even though it was AI in both cases.

Photo by Ketut Subiyanto

Are you selfish?

In which case you may be more likely to reward selfish behaviour in others.

A new study published in the journal Cognitive Science has found that people tend to expect others to mirror their own behavior, even in competitive situations. 

The study's authors, Paul Bogdan, Florin Dolcos, and Sanda Dolcos, conducted a series of experiments involving the Ultimatum Game, which is a zero-sum game in which two players must decide how to split a sum of money.

The researchers found that people who are generous tend to reward generosity and punish selfishness, even when it costs them personally. Conversely, people who are selfish tend to reward selfishness and punish generosity. The researchers also found that people's own behavior is more important than social norms in determining how they expect others to behave.

These findings suggest that people are more likely to cooperate with and trust those who share their own values and behaviors. 

Although our own behaviours can change over time.

The authors explain that while “we filter information about the world through our own view ... you may have groups of selfish people who are more accepting of other selfish people, and in order to be part of that group, newcomers might display the same behavior,” they said. 
 

Photo by RDNE Stock project

As ever, if there's anything we can help with, do get in touch.

James, Patrick and Dan

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