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.

Tuesday, March 20, 2018


I by no means consider myself an experienced trader in cryptocurrencies, however as an individual who invested into crypto with a group of friends just over a year ago and have spent hundreds of hours watching graphs for various cryptocurrencies, I thought it would be an interesting topic to explore. There are numerous persuasion techniques used that contribute to an individual investing (that I discussed in my micro essay), however this article focuses on the behavioural changes and persuasive mechanisms involved in cryptocurrencies once invested, that I have experienced and witnessed first-hand. You may recall reading or hearing about some form of cryptocurrency in the past few months, with continuous media coverage and advertisements about cryptocurrencies promising immediate exponential profit gains. In actual fact, cryptocurrencies aren’t all that recent, with the first decentralized cryptocurrency, Bitcoin being created in 2009.
Image result for bitcoin logoWhat are cryptocurrencies?

Articles and prominent crypto investors suggest that due to recent media coverage many may have heard of cryptocurrencies, but as little as 1-5% of the global population actually know what they are.

Put simply, cryptocurrencies are a form of digital currency, operating independently of a central bank.

In order to apply persuasion techniques and behavioural changes associated with investing into cryptocurrencies, I will display it in the form of a graph. This graph is specific to the cryptocurrency Ethereum, the second biggest cryptocurrency, with a market cap of $54.8 billion as of Monday, 19th March 2018, 6:07pm. The reason why I have included a specific time stamp, is to emphasise the volatility of cryptocurrencies, whereby this figure was once $120 billion  and within the next few days could be $40 billion as the trend in this moment of time seems to be that of a decline.

      1 . Social proof

Since cryptocurrencies are rather complex and take a lot of personal investment to grasp a coherent understanding, it seems erratic or somewhat strange, as to why some individuals end up investing one’s life savings into something they have done little research on. Then again, when you take into consideration Kahneman’s suggestion that humans aren’t as rational as we may assume, it may not seem all that erratic.

‘If individuals are rational, there is no need to protect them against their own choices’ Daniel Kahneman.

Many individuals will learn about crypto by observing others behaviour, which touches upon Bandura’s social cognitive theory developed from the famous Bobo doll experiments (Bandura, 1986). Once familiar with crypto it seems logical to suggest individuals look for cues to help determine whether or not an investment seems beneficial. This action is known as a heuristic in the form of social proof, whereby, a study by Weaver et al. (2007) demonstrated hearing the same message from one person three times was as persuasive as hearing the same message from three different people. Now consider hearing it hundreds of times due to the influx of media coverage, which could undoubtedly result in ‘behaviour normality/guidelines’ as to what the appropriate action would be in regards to investing into crypto or not. The availability heuristic (Tversky & Kahneman, 1973) proposes that the ease of retrieval of an event is an indicator of its relative frequency in the environment and thus its importance, which in the case of crypto could influence the decision to invest by conforming to behaviour normalities. The persuasion technique of scarcity and shilling, is also utilised by traders and ICO’S, (initial coin offering (ICO) crowdfunding centered around cryptocurrency, which can be a source of capital for start-up companies) whom stimulate demand in cryptocurrencies by suggesting their limited supply. Studies have shown that people often choose items that are of limited-quantity (Aggerwal, Jun, Huh, 2011,) Shilling refers to traders, AKA the ‘Whales’ whom make it seem like this is the trend, in which many more people will invest, to cause an influx of demand.

        2. Authority

The concept of authority is no new phenomena regarding psychological mechanisms of persuasion. Numerous studies have explored the role of authority (Milgram, 1963; Burger, 2009) and subsequent alteration of behaviour.

In my case it was my best friend who had already seen success in the world of crypto, as well as an individual who I regard as highly intelligent. In many cases, it will be more than one individual who introduces or speaks about crypto and studies have shown that the size of the ‘majority’ matters, but in actual fact it doesn’t take that many (Asch, 1955).  My best friend’s confidence and advice on investing in crypto, relates to prior studies that show people tend to prefer advisers who are more confident, even when they’re not more correct (Price & Stone, 2004).

The majority of individuals who have invested or are seriously considering investing, would most likely have received information or discussed it with other authoritative members in their life, whom more than likely have also invested in crypto. This also applies to the majority of risk averse authority figures in an individual’s life, be it parents, friends or other authoritative figures, whom have a negative opinion of investing, are huge contributing factors on behaviour change as to whether or not investing seems wise.

         3.  Inaction Inertia

Another interesting mechanism that applies to the decisions made as to whether an investment seems wise is inaction inertia. If I offer you a chocolate bar for let’s say 50p, but then a week later I say you can buy the same chocolate bar for only 2 pounds would you still buy it? For many individuals, the concept of buying the same product for a higher price would result in a complete avoidance of the product. This has been explored in studies that have found an attractive opportunity that has been missed, results in individuals often declining a substantially less attractive current opportunity in the same active domain, even if it still has positive value (Tykocinski & Pittman, 1998). This concept is also epitomized by the volatility of crypto, whereby a constant decrease and increase of price (sometimes 50% in a day) is more than likely going to send an individuals sense of inaction inertia through the roof.

         4. FOMO

People hate to miss out. Even more so when it comes to money. The fear of missing out, is a factor that in many cases causes an individual to jump on the bandwagon and invest. I have witnessed first-hand my friend’s FOMO’ing in, and as amusing as it can sometimes be… it’s not a pleasant sight. The fear of missing out has been explored throughout many studies. One study mentioned the fear of missing out as ‘a pervasive apprehension that others might be having rewarding experiences from which one is absent, FOMO is characterized by the desire to stay continually connected with what others are doing.’ (Przybylski et al., 2013).

5. The confirmation bias

Studies have shown its only human tendency, to look for, or favour evidence that is directly supportive of hypothesis we favour (Nickerson, 1998). I can relate to this first hand, particularly when having Sunday lunch with my grandparents, whom were aware of my investment. It is very hard to justify investing into digital currency that holds its value based on speculation to traditional grandparents
If anyone ever questioned my investment in something that was so volatile, for me to agree with them, would contradict my initial reasons for investment. Positive remarks and evidence that favoured my initial investment ‘look at my best mate paying off his student loan through crypto’ (Social proof and authority) allowed me to confirm my initial investment was wise. However, in my case and many others when ETH began to drop to the pits of hell, I no longer had the evidence that strengthened my beliefs and initial decision to invest, coupled with other authority figures in my life telling me I was fool to invest, contributed to my behaviour change and ultimate departure off the crypto train.

6.  FUD. Fear, uncertainty, doubt.

Research has shown that loss often outweighs gain (Tversky & Kahneman, 1991). Research suggests, we prefer to avoid loss, more than we are driven to receive gains. Take this example - being able to buy a house from watching your initial investment rise over the months is undoubtedly satisfying.  However, watching your investment crumble sends alarm bells driving your loss aversion screaming when you see half your balance drop overnight. Sadly, many individuals succumb to their loss aversion and results in cashing out on a loss.

To conclude

In general cryptocurrencies are a fairly new phenomena, and in the future, will more than likely play a bigger role in society than they currently do. The technology behind cryptocurrencies such as Ethereum is pioneering and many individuals predict Ethereum to be worth in the tens of thousands one day. I have adopted a rather risk aversive attitude towards cryptocurrencies now, whereby, I suggest only investing money you are willing to lose and that if you do invest forget about it and come back in a few years to avoid being susceptible to the numerous psychological mechanisms that impact behaviour demonstrated in the graph above that contribute to an epidemic of CrypoMANIA.


Aggarwal, P., Jun, Y. S.,  & Huh, H. J. (2011). Scarcity messages. Journal of advertising, 40(3), 19-30.

Asch, E. S. (1955). Opinions and Social pressures. Scientific American, 193(5), 31-35.

Bandura, A. (1986). The Explanatory and predictive scope of self-efficacy theory. Journal of Social and Clinical Psychology, 4(3), 359-373.

Burger, J. M. (2009). Replicating Milgram: Would people still obey today? American Psychologist, 64, 1–11.

Milgram, S. (1963). Behavioural study of obedience. The journal of abnormal and social psychology, 67, 371- 378.

Nickerson, S. R. (1998).  Confirmation Bias: A Ubiquitous Phenomenon in Many Guises. Review of General Psychology, 2(2), 175-220.

Price, P. C. and Stone, E. R. (2004), Intuitive evaluation of likelihood judgment producers: evidence for a confidence heuristic. J. Behav. Decis. Making, 17: 39–57

Przybylski, K. A.,  Murayama, K.,  DeHaan, R. C., & Gladwell, V. (2013). Motivational, emotional, and behavioural correlates of fear of missing out. Computers in Human Behaviour, 29, 1841-1848.

Tversky, A. & Kahneman, D. (1973). Availability: A heuristic for judging frequency and probability. Cognitive psychology, 5, 207-232.

Tversky, A., & Kahneman, D. (1991). Loss aversion in Riskless choice: A reference-dependent model. The quarterly Journal of Economics, 106(4), 1039-1061.

Weaver, K., Miller, T. D., Garcia, M. S., & Schwarz, N. (2007). Inferring the Popularity of an Opinion From Its Familiarity: A repetitive voice can sound like a chorus. Journal of Personality and Social Psychology, 92(5), 821-833.

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