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IP Wave this Weekend: Should Companies Know Us This Well?

IP Wave this Weekend: Should Companies Know Us This Well?
Image credit: Christina Animashaun/Vox

Behavioural economics, once a niche field, has become the "apple" of many a marketer's eye, offering a glimpse into the consumer's mind. Equipped with this knowledge, businesses are increasingly conducting behavioural "trials" – not in courtrooms, but in the expansive digital market. While these experiments hold the promise of improved user experiences and targeted marketing campaigns, they also raise a "Pandora's box" of ethical and legal dilemmas.

Image Credit: Inc Magazine

One area of concern is personalised advertising, where companies leverage user data to tailor ads to individual preferences. While this may seem like a harmless way to cater to consumer desires, it often operates in a legal "grey area," with users often left in the "dark" about the extent of data collection and its implications for their privacy. The Cambridge Analytica scandal, where personal data from millions of Facebook users was harvested and used to target political ads, serves as a stark reminder of the potential for misuse and manipulation. It serves as a stark reminder that this practice can quickly turn from "clickbait" to a full-blown crisis of trust.

A/B testing, another widely used technique, involves showing different versions of a webpage or app to users to determine which performs better in terms of clicks, conversions, or other desired outcomes. While seemingly innocuous, A/B testing can be used to exploit cognitive biases and nudge users towards choices they might not otherwise make. For instance, a company might test different pricing structures or product descriptions to see which most effectively triggers a sense of urgency or scarcity, potentially leading to impulsive purchases. The lack of transparency in such practices raises concerns about manipulation and the erosion of informed consent.

Furthermore, the use of "dark patterns" in the website and app design deliberately exploits cognitive vulnerabilities, often prioritizing business goals over ethical considerations. You must have experienced them before. some of these include:

  • Confirm shaming: Using guilt-inducing language or design elements to pressure users into opting into marketing emails or accepting cookies.
  • Forced continuity: Making it difficult to cancel free trials or subscriptions, leading users to inadvertently incur charges.
  • Hidden costs: Surprising users with unexpected fees or charges at the checkout stage, after they have already invested time and effort in the purchase process.

Legal landscapes worldwide are gradually adapting to these challenges. For example, the European Union's General Data Protection Regulation (GDPR) has bolstered data protection rights, emphasizing user consent and transparency. Similarly, the California Consumer Privacy Act (CCPA) in the United States grants consumers greater control over their personal data. In India, While some of these practices might fall under existing consumer protection laws, the Consumer Protection Act of 2019, and the Digital Personal Data Protection Bill, of 2023, the rapidly evolving nature of digital manipulation demands a more nuanced approach.

Ultimately, the question remains: Will behavioural economics follow the path of Sherlock Holmes, using its insights to empower consumers and build a fairer marketplace? Or will it become a weapon for manipulation, eroding trust and autonomy under the control of modern-day Moriartys?

This is the crucial question we at the Critical Centre for Emerging Technologies at Advanced Study Institute fo Asia(ASIA) are working to address.

Behavioural Roundup

Media Coverage of 2024 Presidential Debate: A Closer Look

Debate image 2
Image credit: Media Bias Detector

After the first 2024 presidential debate between Joe Biden and Donald Trump, media coverage focused heavily on Biden's age. Over half of the articles emphasized this topic, particularly in right-leaning outlets like Fox and Breitbart. In contrast, Trump's false statements received minimal attention. The study revealed a significant pro-Republican bias, especially regarding Biden's age. Analysis of quotes also showed more frequent use of Trump's statements.

This media bias can shape public perception, so it's essential for readers to critically assess news sources and for journalists to strive for impartiality in their reporting. Read more at Media Bias Detector

Solving Cybercrime: Lessons from Sherlock Holmes

Image Credit: Simon & Schuster

Sherlock Holmes used sharp observation and an understanding of human nature to solve crimes, much like today’s fight against cybercrime. Cybercriminals, like Moriarty, exploit psychological weaknesses through deceptive emails from trusted sources, urging immediate action. For instance, phishing emails trick victims into revealing personal information. Researchers are combining data and behavioural sciences to enhance cybercrime detection. Data science identifies threat patterns, while behavioural science explains human tendencies. Together, they create more effective prevention models. This interdisciplinary approach helps cybersecurity teams anticipate and counter sophisticated scams, offering valuable insights into cybercriminal tactics and improving defence strategies. Read more at the Conversationdefence

The Impact of Political Microtargeting

Image Credit: MIT

Recent U.S. elections have sparked debate about "microtargeting," using online data to tailor political messages. A new MIT study reveals that while targeted ads based on one characteristic, like party affiliation, are 70% more effective, adding more attributes doesn't increase effectiveness. David Rand and colleagues found targeting works but isn't a game-changer. Their research suggests combining data and behavioural sciences can refine detection and prevention models, offering valuable insights. This interdisciplinary approach helps cybersecurity teams anticipate and counter sophisticated scams, ultimately improving defence strategies and informing debates about microtargeting in political campaigns. Read more at MIT

The Cashless Effect

Image credit: Schomburgk, L., Belli, A., & Hoffmann, A. O. (2024). Less cash, more splash? A meta-analysis on the cashless effect. Journal of Retailing.https://doi.org/10.1016/j.jretai.2024.05.003

Over 40 years of research have linked cashless payment methods to increased consumer spending, known as the “cashless effect.” A recent study conducted a large-scale meta-analysis of 71 papers and found a small but significant cashless effect. The study revealed that cashless payment method features do not impact this effect, but consumption situations and economic contexts do. For instance, the effect is stronger in conspicuous consumption and during economic growth, but weaker in pro-social spending. These findings provide valuable insights for retailers, policymakers, and consumers on the influence of payment methods on spending behaviour. Read more at Elsevier.

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Contributions by Farheen, Shivani & Sahil


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