Behaviour Change

PROPAGANDA FOR CHANGE is a project created by the students of Behaviour Change (ps359) and Professor Thomas Hills @thomhills at the Psychology Department of the University of Warwick. This work was supported by funding from Warwick's Institute for Advanced Teaching and Learning.

Friday, February 15, 2013

How to Influence Equity Analysts

Berkshire Hathaway is the holding company of Warren Buffet (the living legend in investment), and the one of the largest corporations in the world. The following analysis covers page 3-5 (starting with How We Measure Ourselves) of the 2009 annual report of Berkshire Hathaway. In the verge of the financial crisis, persuasion and influence may have been all the more important.

The annual report starts by postulating the way the company measures itself. This can be seen as a direct attempt to set the decision criterion. The principle was investigated by Eiser et al. (1984) through asking school students (13-14 years) to memorise one of five possible nutrient ratings of 21 common foods. The control group did not get any information about nutrients. Relative to the control group, the experimental group subjects showed increased liking of common foods that scored highly on the nutrient they memorised.

The next headline ‘What We Don’t Do’ elaborates on a number of practices Warren Buffet and his partner Charlie Munger deem poisonous. The explanations include numerous notes on how others commonly fall for such practices. The annual report thus plays on creating decoys and establishing favourable comparison points (others' wrongdoing).

All along, the annual report is written in a casual style, creating a similarity altercast with shareholders. This contributes to source credibility, and increases affection for Berkshire Hathaway. 

I appreciate that there are many more persuasion and influence techniques that may be identified in those few pages, it is a brilliant piece of persuasive text from a very unlikely source (accounting).

Eiser, J.R., Eiser, C., Patterson, D.J., Harding, C.M. (1984) Effects of information about specific nutrient content on ratings of “Goodness” and “Pleasantness” of common foods, Appetite,  Vol. 5(4), pg. 349–359.


Robert Cialdini highlighted how they build source credibility in their annual reports (it's worth watching, his rhetoric skills are excellent, but ignore the part on the holding company-no product):

1 comment:

  1. This is brilliant and the clip with Cialdini is excellent.


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