You are not a rational decision-maker: Traditional models of consumer behaviour and economic theory suggest that humans are rational beings that deliberate carefully and make decisions to maximise self-interest.
From this premise comes the idea that if the reward and/or punishment is great enough behaviour change will naturally follow. And yet, there is much evidence that humans do not always behave as the economic model predicts.
Behavioural Economics seeks to explain why human behaviour does not always follow economically rational patterns and to bridge the gap between rational economic theory and the rather messy, sometimes unpredictable reality of human behaviour—and provide improved understanding and ability to influence behaviour.
There are many examples, where the ‘carrot and stick’ paradigm is relatively ineffective. For example, traditional campaigns in road safety, water-saving, anti-smoking, blood donations etc, have all come up against diminishing returns.
Lachlan Drummond has worked with senior management in Corporate Affairs at ANZ to use the lessons of Behavioural Economics to drive positive behaviour change for its Saver Plus program. He has also presented at the Australian Market and Social Research Society Conference and given seminars in the area.