I've written a lot about behavioural manipulation and why it's a critical issue for markets. Today @citizensadvice has a new report that throws open the lid on the dodgy tactics firms are using, why they matter, and what we can do about it. 🧵

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The whole thing makes for troubling reading. Gamified gambling to pull people into addiction. Subscription traps that are easy to joing and a nightmare to leave. Buy now pay later defaults that leave people borrowing without even realising. (1/n)

And a whole swathe of tactics - scarcity messaging ('only two tickets left!'), pressure thought countdown clocks, defaults with hidden opt-out buttons, drip pricing that makes a product seem cheap upfront and pricier later - that dance on the edge of deception. (2/n)

One thing I find interesting is regret as a marker of market ill-health, since it complicates the idea of revealed preferences. Did you really choose the purchase if you wouldn't have bought it if the firm had acted in good faith? Did it reveal your underlying preference? (3/n)

The report finds that more than 1 in 4 (27%) people have regretted an online purchase. 1 in 4 have signed up to a subscription by accident. 2 in 5 (41%) think websites often make it too easy to make the wrong choice. (4/n)

Aside from the economic effects, I also worry about the impact this has on consumer trust. Even if you spot the beartrap that someone has laid in your path, and sidestep it, you're not exactly left feeling good about the experience. Trust matters a lot for markets.(5/n)

There's also the more prosaic point that in a cost of living crisis this all adds to the pain. In the last year, the report estimates that people in the UK have spent about half a billion pounds on subscriptions that auto-renewed without them realising. (6/n)

Plus there are some really sharp inequities like gambling, in which the industry is targetting people to pull them into compulsion/addiction, knowing full well it's harmful. 1 in 5 people who gamble online say they find themselves regretting it all or most of the time. (7/n)

On a personal note - I worry about how this interacts with mental health and neurodiversity. We know anxiety/stress reduce cognitive bandwidth, making behavioural biases more pronounced. So this whole sitaution is inequitable too, and could be indirectly discriminatory. (8/n)

What makes this a top tier policy issue, though, is that it's not only a question of equity. It means markets aren't working well. A hill I will die on is that rampant behaviourial manipulation risks changing the character of markets and subverting their power. (9/n)

The whole power of markets rests on the moment of choice. The point at which we select a product/service because it's better. This is the carrot that makes firms hustle to make the best stuff they can. It’s what drives innovation and cuts prices. It's the source of magic. (10/n)

If you want to read 8,000 words on that point, which surely you do, make a cup of tea and sit down with this: medium.com/@jamestplunkett/the-fable-of-the-bees-if-the-bees-were-all-on-facebook-197726ffd38b (11/n)

Anyway, the point is: when manpulation becomes the game, innovation turns into its evil twin. Firms start competing over who can most cleverly optimise their subscription trap/drip price/scarcity warning/countdown clock/checkout default. The power is subverted. (12/n)

And - crucial point - even if an individual company doesn’t like these tactics, it's *really hard* not to use them when everyone else is. I’ve lost count of the private chats I've had with commercial folk who say 'we hate this stuff, but it’s where the market is’. (13/n)

The good news is, there are things govt/regulators can do. For example, the FCA has a nice model of the Consumer Duty - a principle that firms should treat their customers fairly. It's surprisingly powerful because it shifts the responsibilty onto firms... (14/n)

Rather than having a bureaucrat with a clipboard check a list of detailed rules about specific tactics, firms have to weigh up if they're confident they could defend that they're acting fairly/in good faith. If not, the regulator can crack down on them. (15/n)

The govt should use the upcoming Consumer Bill to create a new requirement that firms take consumers’ best interests into account when considering digital design. Note this isn't really about regulating 'more'... (16/n)

If anything, a principles-based approach like this relieves the need for regulatorts to play the silly cat and mouse game in which they find themselves prescribing ever more detail about font size and warnings and checkout design, which firms find new loopholes. (17/n)

I also think there are some quite clever and self-evidently fair and powerful rules we could try, for example: a subscription should be as easy to leave as it was to enter. Of. Course. It. Should. Be. (18/n)

It’s also super important that govt is agile on this stuff. BEIS should review online design practices to understand which one are straightforwardly manipulative. And the Consumer Bill should give BEIS the power to ban the dodgiest practics through secondary legislation. (19/n)

I'll stop there because I could go on about this stuff all day. In essence: online behavioural manipulation is pervasive and still spreading fast, it's inequitable, and it's economically a Really Big Deal.
And here's the report: www.citizensadvice.org.uk/about-us/our-work/policy/policy-research-topics/consumer-policy-research/co... (/End)

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Martin Sandbu @MESandbu · Dec 1, 2022

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Excellent thread

Thread by James Plunkett

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