Secrets of the Moneylab: How Understanding People Will Increase Your Profits

by Kay-Yut Chen, Marina Krakovsky

Sensational books like Freakonomics have shown how human behaviour follows predictable patterns. But how do you take these radical ideas and apply them to your business? How do you make money from them?Secrets of the Moneylab sets out what business can learn from the findings of the new economics and social psychology. It shows how you can shape desires, use incentives and reduce risks to consistently improve the bottom line.In his experimental lab at Hewlett-Packard, chief economist Kay-Yut Chen is running groundbreaking research into human behaviour. He packs Secrets of the Moneylab with insights inot the invisible forces controlling the world of business.These findings, which defy conventional wisdom and traditional economic theory, will help you engineer your business for success.

254 pages, Kindle Edition

First published October 7, 2010

Reviews

[Sandhya Chandramohan · Rating 5 out of 5]

My biggest takeaway from this book has been the realization that most people are naturally risk averse and in any given situation will sway towards the decision that neutralizes risk. Keeping this simple heuristic in mind can help you make sense of almost every consumer action. This book is filled with such brilliant insights into consumer psychology. It also briefly introduces the concept of prediction markets and the beauty of their workings.

[SC · Rating 4 out of 5]

The authors share very interesting findings gleaned from controlled lab trials. In reality, multiple factors affect human decision making and behaviour. These trials try to distill the essence of what may directly cause a particular behaviour.

For example, classic economic theory of the "invisible hand" says that in a free market, everyone's pursuit of individual interest results in benefit to all. That is not the case in reality. It was observed that some people are actually willing to forgo personal interest and intentionally punish others who they deem to have behaved "unfairly". The concept of fairness is also relative (what one thinks is fair may not be perceived the same way by others).

This book shares the lab trial findings about uncertainty and how people are willing to pay over the odds to reduce it, about the double-edged sword of reputation and also about reciprocity, how people's decision are not totally rationale and feelings also come into play. Very interesting read, highly recommended!