15.301/310, Managerial Psychology Prof. Dan Ariely Recitation 7 : Experimental Design Start day – why experimental design so important Imagine you work for Slimfast, trying new diet product line Milkshake, ice, powder, milk replace entire diet for month What is market share? You in charge – figure out what demand will be in market. How going to do it? -similar products Nothing similar This only where mix milk and ice, but supposed to lose 2x weight -hire research firm Ok, you’re research firm now, what are you going to do? -not know about food products What would you ask, how would you ask people? How would you do it -ask about consumption of milk, if want to They say love milk, want to lose weight. Going to buy product? -no, but starting pt Give $10 ask if willing to trade for product Initial purchasing, not long term -give sample Predict before have for market, spend money to develop Work marketing firm or not, Somebody come to you at some pt in life, say we asked people how much they would buy this product for, they said very likely, and for $500 You have to think carefully about how survey was designed, what are questions, what does it mean, how were people interviewed, who wrote it, what was the sample Think all these considerations, take numbers you get, transfer to something meaningful Common challenge, Much like technology Figure out how do it, how interpret numbersHope you get better idea of how to take raw numbers and how to interpret them Today, watch a struggle to present DVD on screen☺ We might be successful Ad, stand in front of group of people, nothing coming Audience shouting “try config.sys,” etc… One says– get an apeoplee How many of you doing surveys vs experiments? Surveys? Experiments? What is the difference between survey, experiment? -Experiment, not measuring preferences, but actions no -survey observations, experiment variables? No, like example, experiments observe -experiment, actually observing? No, My advisor used to say, couldn’t be more wrong. I haven’t had a chance to use this in class yet, but I’m going to. So, the big difference Survey, one state one cell design, measuring only 1 thing. Look – how large is portion of pasta in cafeteria. Experiment? No, a study, measure only 1 thing, only 1 parameter In experiment, we change something. See if weather outside changes portion of pasta in cafeteria If people know cook, changes portions? Survey -1 cell Experiment – multiple cells Reason to have multiple cells, want to manipulate cells, gives us a way to know causality of the effect Here is a study, one cell. Read and quickly answer. (survey) … Rate Hershey’s Kiss liking Which animal? How many to trade for animal? … 15.301/310, Managerial Psychology Lecture 9 Prof. Dan Ariely Page 2 of 9What do you think this study is about? Anybody? -quantify preference through Hershey kisses Yes In general, is this a worthwhile study? Say dif is 8. is it a worthwhile study? So, this is not sensible study if want estimate parameter What we want to see here is if amount of Hershey’s kisses correlated to how much one likes Hershey’s kisses? People who like them a lot ask for more or less in trade for the animal? Who thinks ask less? More? Same amount? Why more? -try to get more out of trade Assuming everyone likes stuffed animal better, people who like Hershey’s Kisses more will get more out of each one, value higher, so ask for less Even though single cell design, might be able to make some sense from it. Why? We had a strong theory that people who like Hershey’s kisses more will ask for less kisses Single cell design Useful to extent parameter interesting or have strong theory Strong theory, have prediction. If doesn’t follow, disprove theory. Most useful about Experiment – show causality. The question is how to design them Hard to say What is an elegant experiment? When see it, know it’s elegant Like a picture, you look and say, I like that. Very hard up front to say what to do to make it beautiful In general good experiment controls for everything else, only change the one thing you are interested in. rest about aesthetic value Example from book of Judges, chapter 6 “the first experiment” (slide) Gideon wakes up, hears God telling him to save Israel 15.301/310, Managerial Psychology Lecture 9 Prof. Dan Ariely Page 3 of 9He says, this sounds like a dangerous task, it’s not every dream that I have that I follow it right away Be a bit More cautious, let’s do the experiment. God, prove to me that this is the case. He is Designing first condition of experiment Puts wool on floor. Says, if wool wet and rest dry, we are getting somewhere Got up next day, Experiment worked – was he happy? Not yet Why? He has not tried this before, maybe it always turns out that only the wool will be wet with dew. He was quite sophisticated experimentally. Ok, let’s do opposite condition, that would be the most discriminating, wool dry, rest wet with dew Now Gideon happy Controlled, did condition, opposite condition, worked out Now I know something else must be causing this 2 conditions, 2 cells This is Example for a good exp Many times, want do multiple exp Series of exp – try get logic across to figure out pt No experiment can be perfect Build case through multiple attempts Single cell designs So we said single cell designs not experiments, but studies Can set parameters, test theories Think about way single cell design, measuring one thing, but can say something Example: I first came to MIT, following experiment - Went to Chapel Hill where I studied psychology Brewery, let us be waiters for 1 week We were tasting waiters Beers to taste, described, what would you like to try? Table by table Some gave menus, told to mark Brought beer, ask how much like beer and if they regret making that choice Wanted to look at if when people make decisions one after other, if influenced by the other people More or less like other people? 15.301/310, Managerial Psychology Lecture 9 Prof. Dan Ariely Page 4 of 9Seeking variety or seeking conformity? How many people think conformity? variety? variety Same experiment in Hong Kong – conformity That’s not the ptoin, it’s if people before you can change what beer you get, and you might not like it very much 1Here’s what happened People who ordered out loud less happy Why? If you ordered Summer Wheat, and I