Interaction Cost
The interaction cost is the sum of efforts — mental and physical — that the users must deploy in interacting with a site in order to reach their goals. Zero interaction cost and is the holy grail of usability as a field. Most of the time, users have to look around, read, possibly scroll, find …
Mental Accounting
Mental accounting refers to the tendency for people to separate their money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. According to the theory, individuals assign different functions to each asset group, which has an often irrational and detrimental effect on their …
Prospect Theory (Loss Aversion)
A theory that people value gains and losses differently and, as such, will base decisions on perceived gains rather than perceived losses. Thus, if a person were given two equal choices, one expressed in terms of possible gains and the other in possible losses, people would choose the former. Also known as loss aversion.
The Ulysses Strategy
Built on behavioral finance insights, the Ulysses Strategy requires clients to pre-commit to a rational investment plan. The phrase “Ulysses contract” derives from a strategy that Ulysses adopted on his journey home from the Trojan wars, which took him and his ship’s crew close to the Sirenusian islands. The islands were famous for being home …