Everyone likes to believe that they are rational, especially when it comes to money. But people often make irrational choices, despite what economists would have us believe.
While irrationality might seem like a bad thing, it can be harnessed to help people achieve their goals. By understanding human foibles, financial services providers can design products that will direct that behavior down positive paths. Both individual customers and the provider’s bottom line can benefit from recognizing that even seemingly bad behavior can be turned towards good outcomes.
In the latest episode of our podcast, we talk with Kristen Berman, the co-founder of Irrational Labs, and Brad Swain of the Common Cents Lab at Duke University, about what their research shows when it comes to money management and what that can mean for product design.
For example, people of all kinds will often say they want to achieve a goal but do things that are counter to that goal just because something else is easier. Leveraging the path of least resistance preference can turn into more savings for customers and less risk for providers.
Our guests talk about why encouraging borrowers to pay off their loans early might be a win-win for lenders and borrowers. They also talk about how financial can build good behaviors into the onboarding process for accounts and loans.
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If you want to learn more about our guests’ research, you can visit the Irrational Labs Web site at
and the Common Cents Lab web Site at
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