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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

238. Reciprocity: The Amazing Power of Giving (Refreshed Episode)

Today’s episode is all about reciprocity, one of my very favorite concepts and approaches to life and business. For me, it is natural to give first and I enjoy being generous. I don’t recall the specific names of the love languages, but nurturing relationships is something that matters a lot to me (or whatever they call it) would definitely be one of mine. 

I have seen time and time again how this comes back so much bigger when you give first and don’t just do it to get stuff in return. 

Life and business are a long game. It is so much better to be giving and generous up front and know that things will work out and take care of you eventually. This is also why I had last week’s refreshed episode about the brainy benefits of gratitude and why I always talk about reciprocity around the holidays and why this episode, which originally aired as number 23 of the podcast, was an obvious choice for me to refresh for you today. This is also leading into Friday’s brand new episode which will look at nonprofits and how generosity and giving and behavioral economics are the same and different when we step outside the typical customer/company relationship and into charitable giving. Now…let’s dig in on reciprocity (which is much more than just free gifts).

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SHOW NOTES:

  • [00:39] Today’s episode is all about reciprocity, one of my very favorite concepts and approaches to life and business.
  • [01:21] Life and business are a long game. It is so much better to be giving and generous up front and know that things will work out and take care of you eventually.
  • [02:49] Reciprocity is what happens when someone gives you something (whether you want it or not, whether you value it or not) and you feel obligated to give them something in return. 
  • [04:03] Melina shares one of her favorite examples of reciprocity from The Big Bang Theory.  
  • [05:44] Our brains tend to overvalue the gifts we are given and compensate in a way that exceeds the value of the original gift. 
  • [08:42] The gift of kindness and a little effort goes a long way. 
  • [09:20] Reciprocity presents itself in many ways but there are three categories: the free gift, the small ask on the path to something bigger, and the big ask to get something more realistic.  
  • [09:44] The free gift is a little something that is given freely and helps make you a little more endearing in the eyes of the recipient.  
  • [12:37] Another way to give out free gifts is with samples.  
  • [15:17] Reciprocity and free gifts are often used when asking for donations.
  • [17:44] Other examples of free gifts are sales or discounts.  
  • [19:05] Discounts will often cost you more so use them sparingly and with a lot of strategy. 
  • [22:16] Be of service to other people; reciprocity is a key reason why.   
  • [22:55] The next category of reciprocity is a small ask to get something bigger.  
  • [25:56] What is the gift you can give that can encourage businesses to donate later? What you want to do is ask for them to perform a small and simple task they are unlikely to refuse. Then when you come back for a donation they are more likely to say yes. 
  • [28:47] Getting someone to say yes once to something small increases the likelihood that they will say yes again.  
  • [30:06] In the last category you start with a big, ridiculous, or even unreasonable ask to make the thing you actually want to ask for seem more reasonable and appealing by comparison. 
  • [30:57] Melina shares about a study on a university campus asking for volunteers. 
  • [34:38] If you are going to use the big-then-small tactic it should be the same person both times and you should do them really close together. One obvious place to use this tactic is in negotiations of any kind. 
  • [36:06] Melina shares a story about setting rates and pricing. 
  • [39:02] Melina’s closing thoughts

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