Monday, September 18, 2023

Examine How Sharing Exaggerates Knowledge

When I recommend to you an article about retail pricing, your estimate of my knowledge about that topic increases. My recommending also increases my self-impression that I know a lot about retail pricing.
     These University of Texas findings seem trivial until you hear the rest: It happens even if I’ve read nothing at all in the body of the article I’m recommending to you. The act of sharing based on my seeing only the article title, for instance, misleadingly exaggerates my confidence in the depth of expertise about the topic.
     Considering the widespread online sharing of links among consumers, these findings argue for staying alert to your customers and clients making inadequately informed decisions. This holds true not only for those receiving links, but also for those sending out recommendations.
     One of the researchers’ studies found that consumers who share investment advice subsequently choose riskier investments. This may not be bad. A prior study by a different set of researchers concluded that subjective overestimation of financial literacy can have beneficial effects. Given the proper support, those self-confident consumers are more likely to plan well for retirement than are those who accurately assess their financial literacy. The degree of self-perceived financial ability was a better predictor of financial wellbeing than was actual financial skills.
     But this is an exception. For most consumer decisions, overconfidence is a liability. As you guide these shoppers toward properly informed choices, embrace their self-perceptions of expertise: 
  • Respect them. Do your floor staff know where all the merchandise is located? Are they aware of the comparative features of brands in their department? Can they explain them to the customer if asked? Customers want sales staff who know it all, but without acting like stuffy know-it-alls. 
  • Surprise them. Experts are attracted to categorization in ways that surprise them. Sporting equipment might be categorized by the sizes of the items. Power tools might be categorized by the type of job they could be used to complete. Clothing might be categorized by color. Foods might be categorized by country of origin. 
  • Impress them. Experts want to know technical specifications. At the same time, they often make product selections without prolonged thought. They don’t request features lists because the experts think they already know what the products can do for them. Experts are interested in technical specifications largely to justify to themselves and others that they’ve made the right choices.

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